Top 5 Legal Risks Every First Home Buyer Must Know — and How to Avoid Them

Buying your first home is one of life’s biggest milestones. But behind the excitement of house-hunting and signing contracts lies a maze of legal risks that can turn your dream into a costly nightmare if not handled correctly.

At IAT Lawyers, we regularly assist first home buyers across Australia to navigate the complex property law landscape — ensuring every legal step is handled with care, clarity, and confidence.

In this article, we’ll uncover the five most common legal risks that first home buyers face, and share practical strategies to avoid them.

1. Signing a Contract Without Legal Review

One of the most frequent — and dangerous — mistakes new buyers make is signing a Contract of Sale before seeking legal advice.
Once signed, it becomes a legally binding document, even if you later discover unfavourable terms.

Why It’s Risky

• Hidden clauses can allow the seller to withdraw or impose penalties.
• Cooling-off rights vary by state and can be limited.
• Contract terms may not reflect what was verbally agreed with the agent.

How to Avoid It

• Always have your property lawyer or conveyancer review the contract before you sign.
• Ensure special conditions (such as finance approval, building inspection, or pest inspection clauses) are included.
• Clarify all obligations, settlement timeframes, and deposit terms in writing.

At IAT Lawyers, we conduct comprehensive pre-contract reviews to identify red flags and protect your interests before you commit.

2. Overlooking Title, Easements, and Zoning Issues

Many first home buyers assume the property title is straightforward — but that’s often not the case.
Easements, restrictive covenants, or zoning controls can severely limit what you can do with your new property.

Common Issues

• Easements: These give others (like utilities or neighbours) rights to use part of your land.
• Covenants: Legal restrictions may prevent renovations, fencing, or even certain building designs.
• Zoning: Determines whether your property is residential, mixed-use, or restricted for development.

How to Avoid It

• Request a title search and property report before purchase.
• Ask your lawyer to check for easements, caveats, and council zoning certificates.
• Confirm that future plans — such as building a granny flat or extension — comply with local laws.

A professional property lawyer can uncover these details early, saving you from unexpected disputes or development rejections.

3. Missing Out on Stamp Duty Concessions and Grants

First home buyers in Australia are often eligible for government benefits, including:

• The First Home Owner Grant (FHOG)
• Stamp duty concessions or exemptions

However, eligibility rules vary between states, and failing to apply correctly can mean missing out on thousands of dollars.

Why It’s Risky

• Strict deadlines apply for grant applications.
• Certain property types (off-the-plan, investment, or rural properties) may not qualify.
• Incorrect information can delay settlement or trigger penalties.

How to Avoid It

• Confirm eligibility with your lawyer before signing the contract.
• Gather all required documents (citizenship, residency, purchase price proof).
• Ensure your conveyancer lodges the grant and duty forms on time.

IAT Lawyers ensures all entitlements and concessions are accurately claimed for first home buyers, helping you save both time and money.

4. Underestimating Hidden Purchase and Settlement Costs

First home buyers often budget only for the purchase price and deposit — but many other costs can catch you off guard at settlement.

Hidden Costs Include

• Conveyancing and legal fees
• Building and pest inspection fees
• Stamp duty and registration charges
• Council and water rate adjustments
• Insurance premiums

How to Avoid It

• Request a comprehensive cost estimate from your lawyer before proceeding.
• Ask about rate adjustments that might affect your settlement statement.
• Always insure the property from the contract date, not after settlement.

Having a clear financial picture ensures you’re fully prepared for all legal and administrative obligations.

5. Failing to Meet Settlement Deadlines

Settlement is the final and most crucial step in your property purchase — and missing it can be costly.
Failure to settle on time may allow the seller to charge default interest, cancel the contract, or even keep your deposit.

Common Causes of Delays

• Bank loan approval delays.
• Missing signatures or incomplete documents.
• Miscommunication between lender, conveyancer, and the buyer.

How to Avoid It

• Obtain unconditional finance approval early.
• Keep in close contact with your lawyer during the final week before settlement.
• Use an experienced property conveyancing team to coordinate communication between all parties.

At IAT Lawyers, we manage every step of your settlement timeline, ensuring no deadlines are missed.

Bonus Tip: Always Work With a Qualified Property Lawyer

Property law in Australia can be intricate, with rules differing between states and territories.
While some buyers rely solely on agents or unlicensed conveyancers, these professionals cannot provide legal advice or identify complex risks.

A qualified property lawyer can:

• Review and negotiate your contract terms.
• Advise on your legal rights and obligations.
• Liaise directly with banks, councils, and government bodies.
• Protect your interests in case of disputes or defective titles.

Partnering with a law firm like IAT Lawyers ensures your property purchase is legally sound, transparent, and stress-free.

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