The ability of a foreign national to make the purchase of real estate in Australia requires governmental permission. Before a foreign national can commence seriously the pursuit of real estate to purchase in Australia, he or she must seek and obtain permission to purchase real estate from the Foreign Investment Review Board.
Whether a person is seeking to purchase residential property or investment real estate, it is important to initiate the approval process with the Foreign Investment Review Board early on. Indeed, most people apply for approval from the Board at least ninety days prior to launching a more concentrated search for real estate to purchase in Australia.
When it comes to a foreign national investing in residential or commercial real estate in Australia, getting approval from the Foreign Investment Review Board really is the most cumbersome portion of the entire process. Once this approval has been tendered by the governing Board, the process of satisfying the legal requirements to purchase and own real estate in Australia surprisingly is rather simplistic.
Overall, most real property in Australia is sold either through what is known as a conventional channel or through auctions. In considering the conventional course of purchasing real estate in Australia, when a foreign national identifies a property that he or she is interested in purchasing, he or she need only convey an offer to the seller.
In Australia, this initial offer can be verbal or in writing. Once received by the seller, the seller will either accept or reject the offer that has been tendered. In many instances, if the offer is not at the price the seller has set for the property, the seller may counteroffer. In any event, if an offer (or counteroffer) ultimately is accepted, a Contract for Sale will then be drafted.
After the acceptance of the initial offer (or counteroffer), the buyer is obliged to make what is known as a holding deposit. Generally speaking, the holding deposit is 10% of the total price agreed upon for the sale of the real estate in question. During the period of time in which the Contract for Sale is being prepared and drafted, a buyer or seller maintain the ability to back out of the transaction. If this occurs, more often than not, the buyer is entitled to a refund of the entire holding deposit.
Once the terms and conditions of the Contract for Sale fully are hammered out, the parties to the sale will sign the agreement. The Contract for Sale sets forth all of the conditions, restrictions and requirements that must be satisfied in advance of the ultimate and final sale and conveyance of the property. The primary conditions generally are the buyer obtaining financing and the seller making certain that there are no encumbrances on the real estate that would preclude its transfer to a new owner.
In most locales in Australia, once the Contract for Sale the deposit that is made by the buyer becomes irrevocable — in short, the buyer can’t get his or her deposit money back. However, in some Australian states there is a ten day “cooling off period” following the execution of the contract for sale. Within this time period, if the seller decides to back out of the contract, he or she can do so without losing the security deposit. There may be some financial penalty to backing out of the deal, but the majority of the initial deposit will be refunded.
At this juncture, the parties merely wait for the final wrap up of the obligations under the contract for sale that each party assumes pursuant to that agreement. The seller obtains appropriate financing in most instances and the buyer makes certain that the property is in proper condition for sale both physically and legally.
In summery, for many foreign nationals seeking to buy real estate in Australia, the most difficult hurdle to surmount is that of gaining authorization from the Investment Review Board. However, once that is in hand, there are many opportunities to purchase real estate of all varieties in the country.