So, you’ve found a property you’d like to make an offer on – exciting!
As you may already know, the process of buying property in Tasmania can be quite different from other Australian states. Below is a simple overview of how the offer process works in Tasmania, including what to expect and the obligations buyers should be aware of before submitting an offer.
Navigating Timeframes and the Agent’s Process
Speak with the agent to understand how they will be managing the offer process. For example, will there be a deadline for submitting offers, or will offers be presented to the seller as they come in? If multiple offers are received, will all/any buyers be given an opportunity to revise their offer?
It’s also worth asking whether factors beyond price may influence the seller’s decision, such as settlement timing, conditions, or a rent-back arrangement.
Understanding the process upfront can help you plan your approach and avoid missing an opportunity to submit a strong offer.
Upfront Due Diligence (Before You Sign)
Before submitting an offer, it’s important to complete some basic due diligence on the property. This may include checking the zoning, identifying any overlays or restrictions, and ensuring the property suits your intended use.
We also recommend having a local conveyancer or solicitor review the contract and title documents before signing. They can identify any easements, covenants or unusual conditions, and assist with drafting any special clauses needed to protect your interests or suit your specific circumstances.
Drafting the Offer (Understanding the REIT Contract)
Once the contract and title have been reviewed and you are comfortable proceeding, the next step is preparing your offer. In Tasmania, offers are typically submitted on a signed contract rather than via a simple written or verbal offer. The contract used is generally the standardised Contract for Sale of Real Estate in Tasmania, approved by the Real Estate Institute of Tasmania and the Law Society of Tasmania.
Below is a breakdown of key fields in the document and things to consider when completing it.
- Contract date: This is to be left blank. Should your offer be accepted, the vendors will date it when they sign the contract.
- Purchaser: Full legal name(s) of the purchaser.
- Purchaser’s Solicitor/Conveyancer: Details of your solicitor or conveyancer.
- Property: Confirm the details are correct and match the property you wish to buy.
- Chattels: These are the items that will remain at the property and typically include, but are not limited to, fixed floor coverings, window furnishings, light fittings, fixed heaters/heat pump, stove/oven, hot plates, rangehood, dishwasher, and garden shed.
- Sale Price: What you are offering to pay for the property.
- Deposit: Generally, 5% – 10% of the purchase price is standard, but a lesser amount can also be negotiated.
- Deposit Payment Time: The deposit is normally payable within three (3) business days. Ensure these funds are readily available.
- GST Treatment: Both GST Treatment and GST Withholding Treatment will depend on your individual circumstances and as such you must make the selection based on your situation, but in most cases, it is unlikely that the sale of residential property will be a taxable supply.
- Completion Date: Also known as the settlement date. A settlement period of 30-60 days is most common in Tasmania; however, it is negotiable.
- Availability: You will need to select the option that best suits the circumstances of the purchase. If you are buying an owner-occupied home, you would typically select “vacant possession”, meaning the property will be empty and all possessions removed prior to settlement. If you are purchasing an investment property with an existing tenant remaining in place, you would generally select “right to receive rents and profits”, meaning the tenancy will continue after settlement and you will receive the rental income from that date forward.
- Purchaser’s Required Purpose: If you intend to use the property as a residential dwelling, it’s important this selection is made.
- Vendor Warranty: This is where Tasmania often gets a bad rap, known as the ‘buyer beware’ state! Your conveyancer or solicitor can help assess the level of risk regarding council compliance and other relevant matters. Factors typically considered include the age of the property, whether it remains in original condition or has been renovated over time, who the vendors are (for example, if the property forms part of an estate), and whether completion certificates are available for any works that have been undertaken. Depending on your risk tolerance and circumstances, the conveyancer can help determine your selection or inclusion below:
- ‘Without qualification’ is an ‘as-is, where-is’ sale with no obligations on the Vendor to attend to any outstanding council matters.
- A warranty stating that ‘to the best of the Vendors knowledge’ there are no outstanding completion certificates or occupancy certificates’ places some obligation on Vendors to attend to outstanding council matters if they are found to have been aware of them.
- For full protection, the inclusion of a Council Compliance Clause or Due Diligence Clause is recommended. This makes your offer conditional upon there being no outstanding council matters or other identified issues. It also allows council records and plans to be reviewed prior to you being obligated to settle on the property, which is otherwise not typically part of the standard conveyancing process. These clauses are generally drafted by your conveyancer or solicitor.
It is important to note that the inclusion of any additional clauses or requests will factor into the attractiveness of your offer.
- Neighbourhood Disputes About Plants Act 2017 (Tas): This should be prepopulated and completed by the selling agent/vendor and highlights if there are any current disputes.
- Strata Titles Act 1998 (Tas): This should also be completed by the selling/agent and will identify if the property is strata titled.
- Cooling Off: Whilst the standard Tasmanian contract provides for a 3-business-day cooling off period, this clause is often not used in practice. Instead, agents and vendors will generally prefer buyers to include specific conditions within the contract – such as finance, building inspection or due diligence clauses — rather than relying on a broad “cooling off” provision.
- Finance Clause: Be guided by your bank or broker when completing this section of the contract. The finance amount is the amount you need to borrow to complete the purchase. If your lender is unable to provide formal approval for this amount within the specified timeframe, the contract may be terminated and your deposit returned. The “financier” refers to the lender providing the funds, and the finance period is the amount of time allowed for formal finance approval to be obtained.
- Subject to Sale: This clause is relevant if you need to sell another property to proceed with the purchase. There are generally two parts to a subject to sale condition – a “subject to contract” clause and a “subject to completion” clause. Depending on your circumstances, one or both may be appropriate.
- Inspection Clause: This clause relates to the building inspection condition and requires you to nominate a defect limit. If the inspection identifies defects that are deemed likely to cost more than the nominated amount to rectify, you may terminate the contract. If the estimated cost of repairs is below the defect limit, the contract will remain binding. The defect limit can be expressed as either a fixed dollar amount or a percentage of the purchase price.
- Shorter Period Clause: Also known as a 48-hour clause or sunset clause, this allows the vendor to give notice requiring the buyer to satisfy or waive their contract conditions within two business days. If the buyer is unable to do so, the contract may come to an end and the vendor can proceed with another buyer. Buyers can request that this clause not be included in the contract.
Submitting the Offer and Reaching “Exchange”
Once your offer has been drafted and signed, it can be submitted to the agent for presentation to the vendor. There may then be some negotiation between the parties (and other buyers) until agreement is reached and the vendors sign and date the contract.
A property is considered to have “exchanged” once the contract has been signed by both parties and dated. At this point, the contract becomes legally binding.
The contract date is important, as the timeframes for any conditions included in the contract are generally calculated from this date. For example, if the contract includes a 14-day building inspection clause, the inspection must be arranged, completed and the condition satisfied within that timeframe.
From exchange through to settlement, your conveyancer or solicitor will manage the conveyancing process, while you may continue undertaking any further due diligence permitted under the contract conditions.
The Pre-Settlement Inspection and Final Steps
A day or two prior to settlement, you should complete a pre-settlement inspection of the property. The purpose of this inspection is to ensure the property remains in the same condition as when you agreed to purchase it and that no damage has occurred in the meantime. It is also important to confirm that all chattels included in the contract remain at the property and are in working order.
Your conveyancer or solicitor will generally manage the transfer of funds and will instruct you accordingly in the lead up to settlement day.
The final step is settlement, where the purchase funds are exchanged and ownership of the property is transferred into your name. Once settlement has been completed, you will be notified and can collect the keys to your new property.
Buying a property can feel overwhelming at times, particularly when navigating contracts, conditions and timeframes. Hopefully this guide has helped provide a clearer understanding of the process involved in submitting an offer on a property in Tasmania. If you do have any questions or would like further guidance along the way, please feel free to reach out to us at angie@myhobarthome.com.au and suzette@myhobarthome.com.au