When a foreign non-resident or temporary resident buys property in Australia, a special condition needs to be included in the Offer and Acceptance to prevent problems down the track.
Almost all residential purchases entered into by a person who is not ordinarily a resident in Australia (known as a ‘foreign person’), or by a temporary resident, will need to be approved by the Foreign Investment Review Board (FIRB).
Applications are required for a specific property, so no foreign person will be ‘pre-approved’ to buy properties in Australia. Once submitted, FIRB will review the application to ensure compliance with foreign investment policy, and buyers will generally receive a response within 30 days.
Most foreign person applications for new housing and temporary resident applications for existing homes are accepted (provided the buyer is buying the home exclusively to live in), but it’s still essential that the Offer and Acceptance is made subject to FIRB approval.
In a recent settlement case, a contract came through that was not subject to FIRB approval, even though the buyer was a temporary resident. Fortunately, the buyer had already submitted the FIRB application and was given approval fairly quickly.
However, had approval not been granted, the buyer would have been unable to complete the purchase and would have been forced to terminate the contract – probably losing their deposit, and possibly giving them cause to seek answers as to why this wasn’t brought to their attention by the agent involved.
When a buyer is new to the country or is a temporary resident, ask questions to uncover whether they need FIRB approval. By ensuring the contract is subject to FIRB approval as appropriate, you help to avoid risk to the buyer, the seller, and to yourself.
See firb.gov.au for full details on the foreign investment approval process.
Image by Epsos.de via Flickr.