Buying a property from our parents (in law)

Hi there

Not sure if this is the correct place, if not please direct me elsewhere

My wife and I are purchasing a property from her parents. The house has a market value of $440,000.00 and they are selling it to us for $400,000.00

Our mortgage broker has advised us that we need a solicitor to prepare:
- A favorable purchase agreement
- Letter stating the property will be transferred to our name
- Transfer document

Having contacted a local solicitor we have been quoted $1000 +GST for the above. This seems a little expensive to me. Can anyone advise if this is a fair rate and if we are likely to need any other legal services?

Thanks

Tony

 

I would think that fee is reasonable.

OSR will likely require a valuation to support the market value which will be used for transfer duty. Take care too that if the parents are on Centrelink benefits the $40k discount could be seen as a gift and affect pensions for 5 years. The property also may have been an exempt asset and now be subject to income and asset tests too.

 

My answer from the other thread:
Buying a property from our parents (in law)


Dangerous advice from a mortgage broker.

You should have legal and taxation advice on this. I would suggest a full contract of sale and probably market value purchase with a gift back to you of $40k

Why would $1000 seem excessive?

 

Depending on what the purpose of the purchase is for, it might be worth considering how future Christmas dinners will play out if the property doubles or halves in value just after purchase...

 

Dangerous for a broker to be saying that?
I think itis a positive OP has a broker who is "aware" of the issues surrounding such a transaction, hence said "you need a solicitor to prepare xyz".
Obviously outside their field of expertise, however knowing when to raise the flag and refer to another professional is a good sign of a broker who is not simply transactional based.

But I understnad what you are saying, dangerous to assume and follow blindly without seeking real legal and tax advice.. 100% agree.

 

Yes it is good that they raised a red flag. But clients tend to take what a broker says as legal and tax advice - and as that is all there is to consider.

One legal risk is that it is an undermarket value transaction - which can various consequences under the succession act, family law act, bankruptcy act etc. Although just 10% under is not that much. There are also the various taxation consequences to consider.