Knowledge: Land

If you’re the DIY type, then you probably want to design and build your own home. You may even already have spent months with your architect and finally have the perfect design. Now, all you need is the land to build on. There are many new land releases and developments in Melbourne. If you are searching for land information, you have landed at the right place. Get Find and use our complete land information online at Clarity Online. Before you buy, read on.

General

What’s with encroachments? Mi casa is not su casa.

Sometimes, fences or other fixtures, like garages or sheds, may not be totally located on their owner’s land, but partly (or even fully) on the neighbour’s land. It might have been like that for years and nobody’s even realised. Depending on how long the encroachment has been there, you could actually even lose that part of land.

Hopefully, you can have a chat about it with the neighbour and they’ll simply move it (easy for a fence, but not a brick garage), however, it can get complicated: Who pays for it? Who does the work? Why should I move what was there when I bought my own property? And so on. If you’ve got any doubt about possible encroachments, you should arrange a licenced surveyor to undertake a check survey (and do this before you sign a contract!).

If you’re worried about a dispute, head to our Advice Centre and we can help out.

Whether you're buying your home or vacant land, you need to be sure that:

  • you are purchasing the correct parcel of land
  • the physical boundaries of the land as fenced or otherwise marked accord with the title boundaries
  • all buildings (if any) are erected within the boundaries and that no buildings on adjoining lands encroach on your land

How could I not be buying the land I think I’m buying?!

Good question!! The contract will set out the title details, including the plan and lot numbers of the property that you’re buying. You should definitely check to make sure that the lot you think you’re buying is the correct parcel of land on the plan and on the certificate of title. You’d be surprised how often these might not match up.

Example:

You’re told that the property you’ve looked at, liked, and plan to make an offer on is 900m2. You could see as you were walking around that it’s a corner block. You like the position and you like the size.

When you get the contract, the Vendor’s Statement, which contains the plan and the title, states that the property is Lot 2 on the plan. Hang on! Lot 2 is only 450m2 and it’s not on a corner, but next to the corner block. Something’s not right. One possible scenario is that there are two titles for the one property – Lot 1 and Lot 2 – which are both 450m2 and Lot 1 is on the corner. Time to go back to the agent and make sure you’re getting the entire parcel of land you were shown and that you want to buy and that the contract clearly states it.

To take away: never assume that the contract is going to reflect exactly what you think it should. Mistakes can be made. If you are unsure, our Advice Centre is here for you.

Restrictions

If you’re buying vacant land, chances are you’d like to build on it in the future. That might seem obvious, but there are a range of scenarios that could possibly prevent you from doing so.

You’ll need to check that there are no restrictions on the title.

For example, a covenant might impose restrictions that:

  • specifies or prohibits types of building materials
  • limits the number of homes you can build on the land
  • restricts sub-division of the land
  • restricts the types of uses that the land can be put to

If there’s a covenant on the land you’re looking at buying, you’ll find it on a search statement of the certificate of title. It should be provided to you as part of the Vendor’s Statement.

If you’re not sure how a covenant affects your land, please visit the Advice Centre and we’ll take a look and explain.

Other types of restrictions exist, too, so it’s important to check things like council planning regulations, zoning and overlays.

Wherever you buy land, planning schemes will apply. Your lot may fall under one zone or more, and your land could also be subject to overlays. These should be listed in the vendor’s statement.

If you’re researching land and curious about planning issues before you’re ready to ask for the vendor’s statement, you can easily find out the zoning and overlays that apply. Most state governments have an online planning map, where you can punch in an address and see what zone it falls under. Local council planning departments might also help you over the phone.

If you’re buying land in residential/neighbourhood zone with the intention to build, your house plans will need to comply with council and other planning regulations. You will need to obtain a permit to build that satisfies these conditions, and usually it will be your architect who will help you obtain the required permits.

Other types of zones and overlays include (but there are more!):

  • Industrial Zone
  • Commercial Zone
  • Rural Zone
  • Environmental Overlay
  • Vegetation Protection Overlay
  • Heritage Overlay

For example:

If your land is in a rural zone, the planning scheme may have strict requirements for connection to a water supply, restrictions on the sub-division of land or conditions for building a dwelling. You could end up with requirements that lead to an increase in the cost of building, or it might mean you won’t be able to get a permit to build at all.

In some circumstances, you can also encounter restrictions on the number of dwellings that can be built within a designated area. Without checking the planning restrictions, you might buy a block of land and then discover that it’s within a zone that doesn’t allow more than one dwelling within a certain number of hectares. So, if your nearby neighbour already has a house... yikes!

These issues are easily identified (if you know where to look) and can be avoided. So:

  1. Ensure you know which planning scheme and overlays apply to the land you want to buy.
  2. Seek planning advice to understand how they affect your specific plans for using or building on the land.

 

Adjustments

With the ownership of property comes responsibility for certain costs and expenses after the actual purchase.

The vendor pays for all property outgoings until the day of settlement. These can include council and water rates, possibly land tax and owners corporation fees. You will pay your portion of these outgoings from the settlement date onward.

For example, council rates are payable for the period of 1 July to 30 June each year. If your settlement takes place right in the middle on January 1st, then the statement of adjustments will show that the vendor pays for half the year and you pay for the other half.

Another example is if the Vendor has a mortgage registered on the certificate of title. Their mortgage must be discharged when you are registered on the certificate of title, and there is a fee payable to the land titles office to do so. The vendor pays this fee and it will be noted on the statement of adjustments.

So, who’s responsible for working out adjustments? We are - it’s part of the transfer (a.k.a. conveyancing) process. If you’ve already signed up with Clarity, you might be familiar with our Transfer Portal. This is where we upload your Statement of Adjustments for you to view before settlement.

If you haven’t signed up yet, it’s free to do so, and you can save and share the relevant information that you find in our Knowledge Centre and in our Articles.

Off-the-plan

An off-the-plan contract simply means that the vacant land, or ‘lot’, that you’re buying forms part of a plan of subdivision, which isn’t registered yet. That land that the plan relates to will initially be owned by a developer, who is the vendor. When the vendor has completed development and/or construction of all the development, i.e. roads, parkways, footpaths, services and other infrastructure, the vendor will register the plan of subdivision with the titles office. Once the plan is registered, settlement and transfer of the lot to you will take place within the time agreed to in the contract of sale. It’s usually 14 days.

Off-the-plan contracts allow the developer (the vendor) a certain period of time to finish the development and complete the transaction. The transaction is completed by settlement and transfer of the title to you. The contract of sale will specify that time as the registration period.

The registration period will vary between developments. It may be 12 months or even 60 months. Generally, there’s no way that you can require the vendor to transfer the land to you any sooner than specified by the registration period in the contract.

But! There are scenarios in which registration can happen sooner than anticipated in the original contract.

  1. Sometimes developments are completed ahead of schedule (a developer’s dream!) and in these cases, the vendor will require you to settle and take the transfer of your apartment earlier than you may have planned for.
  2. If a development is already underway when you buy off the plan, then the contract (which would have been drawn up at the start of the development) may have allowed a certain registration period, for example, 36 months. If you signed up 24 months into the development, then settlement may take place in 12 months’ time, even though your contract allows for the original period of 36 months.

Remember, the registration period doesn’t specify when you settle, it only specifies how long the vendor has to complete the development. If the development is completed earlier, the vendor will require you to settle earlier.

Most off-the-plan contracts provide that a vendor (the developer) may make minor variations

  • to the size of lots within a subdivision, and/or
  • to the number or location of lots within a subdivision.

They may also create additional lots within the subdivision.

If the vendor makes any or all of these changes, they must tell you about them. Unless those changes materially affect the lot that you’re buying, you can’t do anything about it (like terminating your contract).

The change may materially affect your Land, if the alteration to its size is significant. Many contracts will contain conditions that say any change in size of up to 5 percent is not material. You may be able to terminate your contract and get your deposit back if you act within fourteen days of receiving the vendor’s notice of the change.

To avoid this, you can try to negotiate a special condition in the contract that requires you get a minimum size lot. If this concerns you, upload your contract and Vendor Statement through the Advice Centre and we can ensure that this is done correctly.

Whether you're buying your home or vacant land, you need to be sure that:

  • you are purchasing the correct parcel of land
  • the physical boundaries of the land as fenced or otherwise marked accord with the title boundaries
  • all buildings (if any) are erected within the boundaries and that no buildings on adjoining lands encroach on your land

How could I not be buying the land I think I’m buying?!

Good question!! The contract will set out the title details, including the plan and lot numbers of the property that you’re buying. You should definitely check to make sure that the lot you think you’re buying is the correct parcel of land on the plan and on the certificate of title. You’d be surprised how often these might not match up.

Example:

You’re told that the property you’ve looked at, liked, and plan to make an offer on is 900m2. You could see as you were walking around that it’s a corner block. You like the position and you like the size.

When you get the contract, the Vendor’s Statement, which contains the plan and the title, states that the property is Lot 2 on the plan. Hang on! Lot 2 is only 450m2 and it’s not on a corner, but next to the corner block. Something’s not right. One possible scenario is that there are two titles for the one property – Lot 1 and Lot 2 – which are both 450m2 and Lot 1 is on the corner. Time to go back to the agent and make sure you’re getting the entire parcel of land you were shown and that you want to buy and that the contract clearly states it.

To take away: never assume that the contract is going to reflect exactly what you think it should. Mistakes can be made. If you are unsure, our Advice Centre is here for you.

Restrictions

If you’re buying vacant land, chances are you’d like to build on it in the future. That might seem obvious, but there are a range of scenarios that could possibly prevent you from doing so.

You’ll need to check that there are no restrictions on the title.

For example, a covenant might impose restrictions that:

  • specifies or prohibits types of building materials
  • limits the number of homes you can build on the land
  • restricts sub-division of the land
  • restricts the types of uses that the land can be put to

If there’s a covenant on the land you’re looking at buying, you’ll find it on a search statement of the certificate of title. It should be provided to you as part of the Vendor’s Statement.

If you’re not sure how a covenant affects your land, please visit the Advice Centre and we’ll take a look and explain.

Other types of restrictions exist, too, so it’s important to check things like council planning regulations, zoning and overlays.

Wherever you buy land, planning schemes will apply. Your lot may fall under one zone or more, and your land could also be subject to overlays. These should be listed in the vendor’s statement.

If you’re researching land and curious about planning issues before you’re ready to ask for the vendor’s statement, you can easily find out the zoning and overlays that apply. Most state governments have an online planning map, where you can punch in an address and see what zone it falls under. Local council planning departments might also help you over the phone.

If you’re buying land in residential/neighbourhood zone with the intention to build, your house plans will need to comply with council and other planning regulations. You will need to obtain a permit to build that satisfies these conditions, and usually it will be your architect who will help you obtain the required permits.

Other types of zones and overlays include (but there are more!):

  • Industrial Zone
  • Commercial Zone
  • Rural Zone
  • Environmental Overlay
  • Vegetation Protection Overlay
  • Heritage Overlay

For example:

If your land is in a rural zone, the planning scheme may have strict requirements for connection to a water supply, restrictions on the sub-division of land or conditions for building a dwelling. You could end up with requirements that lead to an increase in the cost of building, or it might mean you won’t be able to get a permit to build at all.

In some circumstances, you can also encounter restrictions on the number of dwellings that can be built within a designated area. Without checking the planning restrictions, you might buy a block of land and then discover that it’s within a zone that doesn’t allow more than one dwelling within a certain number of hectares. So, if your nearby neighbour already has a house... yikes!

These issues are easily identified (if you know where to look) and can be avoided. So:

  1. Ensure you know which planning scheme and overlays apply to the land you want to buy.
  2. Seek planning advice to understand how they affect your specific plans for using or building on the land.

 

If your lot is in a new estate, or a new stage of an existing estate, the contract may require you to build a house on the land within a certain time period after settlement. Two years would be the average time period in this scenario (but be sure to check your specific contract!).

It’s important to be aware of the details of this requirement, so that you can ensure your financial position allows you to cover the cost of building your house by the required date. 

So, if you’re intending to buy a lot and hold vacant land with no intention to build in the foreseeable future, then you may reconsider buying land in certain developments.

It’s not unusual for off-the-plan contracts to prohibit you from selling your apartment until after settlement or until all the apartments in the development have been sold.

So, if you’re planning to buy an off-the-plan apartment as an investment and sell it before settlement, make sure you check the contract to know whether you’ll be able to.

Also keep it in mind if you have any doubt about your ability to actually get finance to complete settlement, which could be years after you sign the contract. Personal circumstances and finances can change in the time that it takes developments to be completed, so you should go into the purchase knowing what you’re locked into, i.e. you may not be able to simply on-sell the property, if you realise that you can’t get finance when you need it.

If you have a contract and want advice on its terms, you can upload it to our Advice Centre and we can take a look.

Land Fill

The vendor must tell you (in the contract of sale) about any works affecting the natural surface level of the land in the subdivision. This includes works that have been carried out, are in the process or are proposed, for both your land and neighbouring land.

Where the land (or parts of it) is filled land, you will need to establish whether the land is suitable to build on or develop in the way that you are planning. You’ll also need to make your own enquiries about the kind of work that may be required to make it suitable.

If you’re concerned about it, you can make your contract conditional on having your own contractors assess the site and the soil to ensure that development in the manner that you intend is feasible.

It’s pretty crucial stuff, so if you need a special condition prepared or want advice on this issue, please let us know when you upload your contract and Vendor Statement through our Advice Centre.