Buying real estate is one of the most significant financial decisions most people will make. Whether you are purchasing your first home, an investment property, or a commercial site, there are legal risks involved that can lead to costly disputes or financial loss if not managed properly. Below are the top five legal mistakes to avoid when buying real estate.
1. Signing a Contract Without Legal Review
One of the most common mistakes buyers make is signing a contract before having it reviewed by a property lawyer. Real estate contracts contain legally binding terms that can be difficult, if not impossible, to change after the fact.
A property lawyer will:
- Review the contract for unfair or unfavourable terms
- Ensure essential conditions are included (such as finance, building and pest inspections)
- Advise on risks such as penalties, deposit conditions, and settlement obligations
Seeking advice before signing protects your legal and financial interests from the outset.
2. Failing to Conduct Proper Searches and Due Diligence
Property searches reveal vital information that may not be visible during a physical inspection. Overlooking this step can expose buyers to hidden risks, such as:
- Unregistered easements or encumbrances
- Zoning or development restrictions
- Outstanding rates or land tax liabilities
- Structural issues flagged in building reports
Your property lawyer can arrange comprehensive searches to ensure there are no surprises after settlement.
3. Not Understanding the Cooling-Off Period
In Queensland, residential buyers typically have a five-business-day cooling-off period after signing a contract. During this time, you can terminate the contract for any reason, but a penalty of up to 0.25% of the purchase price may apply.
It is important to know:
- When the cooling-off period starts and ends
- How to validly exercise your right to withdraw
- The consequences of waiving this right, especially under pressure from sellers or agents
A property lawyer can guide you through this process to avoid accidental contract breaches.
4. Overlooking Legal Restrictions on Property Use
Zoning laws, planning overlays, and title restrictions can limit how you use or develop the property. Buyers may assume they can renovate, subdivide, or build without checking legal requirements, only to face council refusal or compliance issues later.
Engaging a property lawyer before purchase ensures you understand:
- What you can legally do with the property
- The process for obtaining approvals
- Any limitations that affect future value or use
5. Misunderstanding Financial and Tax Implications
Buying property involves more than the purchase price. Buyers often overlook additional costs or tax implications, such as:
- Stamp duty obligations
- Land tax (for investment or multiple properties)
- GST on certain transactions (e.g. new or commercial properties)
Your lawyer can explain these costs upfront, help you budget accurately, and liaise with your accountant if needed to ensure tax compliance.
Final Thoughts
Buying real estate is exciting but complex. Avoiding these common legal mistakes can save you time, money, and unnecessary stress. Engaging a property lawyer early in the process provides peace of mind and ensures your rights are protected throughout the transaction.
Contact our experienced team today for practical legal advice when buying property.
