Foreign purchase of property

The Foreign Investment Review Board requires foreign buyers to secure its approval before taking interest in an Australian residential property and entering into an unconditional contract of sale. The most common types of residential property that require FIRB approval are new dwellings, vacant land with a view to build, and new apartments.

TNS Conveyancing can assess whether you are obliged to seek FIRB approval. We can guide you through the approval process and give further legal advice about your property purchase to minimise the risk of heavy penalties.

With a dwelling exemption certificate, foreign purchasers do not need to secure individual FIRB approvals for the Australian property covered by the certificate. However, the exemption certificate only applies for purchases up to $3 million in a single development; otherwise, an individual FIRB approval will be required.

Similar to FIRB approval, applications for a new or near-new exemption certificate are considered on a case-by-case basis. Should you be eligible, our conveyancers can assist you with completing and submitting your applications to the Australian Taxation Office.

From the term itself, an unconditional contract is one that has no conditions attached to the sale. This means that once the contract is signed, both parties are legally obliged to follow through with the sale. Fair warning: entering into an unconditional contract may speed up the property sale but it carries a higher level of risk.

Foreign persons must not enter into unconditional contracts of sale prior to receiving FIRB approval. Otherwise, they may be liable for hefty penalties (civil and criminal) for failing to comply with our foreign investment rules. Our conveyancing team can review your contract of sale and make sure you don’t lock yourself into an unfavourable agreement.

Foreign persons can also enter an option agreement to buy or sell interest in a property within a specific period and on certain terms and conditions. The agreement may include a call option, put option or put and call option. With a call option, the prospective buyer can acquire the property by requiring the developer or owner to sell it. Meanwhile, a put option lets the property owner require a buyer to proceed with the purchase. Option agreements may also require FIRB approvals.

TNS Conveyancing can draft option agreements and facilitate negotiations to ensure that the terms and conditions meet each party’s requirements. We can also help you work out a plan of action for any contingencies that could arise between signing the option agreement and completing the foreign purchase of property.

Foreign persons may also acquire an interest in a property through lodging a caveat or mortgage. Be careful as this may also trigger FIRB issues and you may potentially also need FIRB approval prior to holding a security interest over a property.

Doing due diligence is even more important when buying real estate in a foreign country. The more you know about the property, the smarter your decisions will be at any point of the conveyancing. Contract review is just one of the many parts of the due diligence process. We can assist in investigating and assessing the advantages and potential risks of every legal and financial aspect of your real estate purchase.