Conveyancing 101

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Buying and selling a property is one of the biggest and most exciting financial decisions people will make in their lifetime. Although it may seem like a daunting process, with the right team behind you, it will be more than fantastic!

A conveyancer is a property law specialist who will work on your behalf when you buy or sell property. Your Conveyancer will deal with all legal matters and queries involved in a property transaction.

We love everything about property and give you a little insight of how your property transaction will flow below.

 

BUYING A PROPERTY

 

Finance

When you are ready to begin your property journey, you will need to determine whether you need to borrow funds from a bank. If this is the case, your first stop will be to speak to your broker or banker. This will determine your budget and whether you are a viable candidate to lend funds to.

 

Finding a property

You will then be ready to seek out a real estate agent. Whether you are buying or selling, you must have confidence in your agent to ensure that you are comfortable with negotiations and the property details. Your agent will guide you through the property and any concerns you may have prior to signing the Contract.

 

Appointing a Conveyancer

Your next stop is finding a Conveyancer that you are happy with, and that’s where the magic begins. Your relationship with your conveyancer is one that is built on trust, together with plenty of guidance every step of the way.

 

Obtain legal advice on the Contract prior to signing

Before signing any form of contract, you should seek professional legal advice and this is where your wonderful Conveyancer comes in handy. We cannot stress enough how important it is to make sure that the Contract contains everything that you and the Vendor agreed upon before you sign. Once your real estate agent has provided you with the Contract of Sale, you should immediately contact your Conveyancer. They will then look over the Contract and provide you with advice and recommendations on whether you should request any amendments to the Contract and/or include any additional relevant Special Conditions.

 

Things to consider adding into your Contract when buying

If you are borrowing funds from a bank or lending institution, it is so important to include these details in the finance section of the Contract of Sale. You should insert an approval date that allows your banker or broker sufficient time to obtain your unconditional written finance approval. You should understand that conditional approval does not mean that your finance has been approved. It means that there are other conditions that need to be met before the bank will give you formal unconditional written finance approval. There is nothing more dangerous than making your purchase contract unconditional on the basis that you have received conditional approval. Many things can go wrong from here such as; you not meeting the conditions that the bank requires resulting in you not receiving any finance approval. You would then unfortunately be bound by and unable to terminate your purchase Contract.

You should also consider including a Special Condition for both pest and building inspections. The cost of the reports may seem costly and irrelevant at the time but if you don’t invest in these reports, you may find problems after settlement. The property may be riddled with termites or have a major structural building defect and that will then unfortunately become your own problem.

We understand that everyone’s situation is different and you can always request to add additional Special Conditions that are relevant to your situation. An example would be if you were selling another property to finance the purchase of this property, you could add a Special Condition that states the Contract of Sale is conditional upon the sale of your other property.

 

Signing the Contract of Sale

Once you are comfortable with your Contract of Sale and your offer has been accepted by the Vendor, you may sign the document with your real estate agent or your Conveyancer. This will then be signed by the Vendor and all parties will be provided with copies of the fully signed contract. If applicable, your conveyancer will then immediately provide a copy to your broker or banker to ensure that the finance clause is met in a timely manner.

 

Cooling off period

Once you have made your offer and have signed your Contract of Sale, you have 3 business days to advise if you wish to use your cooling off period. If you decide that this property is just not for you, you must advise you agent and Conveyancer immediately within those 3 business days, and your Conveyancer will attend to the written notice. The Contract of Sale will then be at an end.

 

Unconditional Contract of Sale

Once you decide to proceed with your Contract and your finance has been approved and the Special Conditions have been satisfied, congratulations, your Contract of Sale has now become unconditional and everything has become real.

 

Stamp duty and government registration fees

You should ensure that you are aware of these fees and whether you are eligible for any concessions. You will need to take these into account when organising your finances as these are an additional cost on top of your purchase price. You can find out more about these fees by following the link below.

 

https://extranet.sro.vic.gov.au/SRO/calcs.nsf/landtransfer.xsp?OpenForm

 

Deciding on your manner of holding on your Certificate of Title

If you are purchasing the property with another person, it is important to decide how you want that ownership held. There are two options which are:

Joint Tenants

This means that the property is owned equally by the proprietors and that on the death of either proprietor, the property automatically passes to the surviving proprietor.

Tenants in Common

This means that the proprietors own a share or part of the property and it will not automatically pass to each other upon death. This is why it is most important to have a valid current Will in place as this will determine how the deceased proprietors part or share of the property will be transferred.

 

Final Inspection

Leading up to your settlement date you should contact your Real Estate Agent to book in a time for a final inspection of the property . You should book for a few days prior to your settlement date. Ask the agent if the utilities are still connected to the property and if not, you should arrange to have them connected in your name so that your can inspect all appliances, lights and heating cooling. When you attend the property, you are making sure that everything is as it was when you first inspected it. If there are any problems, you should contact your Conveyancer so that they may contact the Vendors representative with the issues you have.

 

Default

At this point, if any problems arise and for any reason you cannot proceed to settlement on the contracted settlement date, you must be aware that you will then be in default under the Contract of Sale that you have entered into.  This is why it is so important to settle on the Contract settlement date. The Vendor will have the opportunity to charge you penalty interest that accrues per day together with any legal fees that they incur. They can also serve a Default Notice on you which will give you 14 days to effect settlement and if you do not settle within that period, the Contract will be at an end and the Vendor will be entitled to retain you 10% deposit and also consider pursuing you in further proceedings.

 

Statement of Adjustments

The statement of adjustments relates to any rates, taxes, rental or outgoings that are required to be adjusted. This ensures that the Vendor pays the portion due up to the date of settlement and that you are only liable for the portion from the settlement date to the end of the next due period. Your Conveyancer will go through these adjustments with you and provide a more in-depth explanation as every transaction can differ.

 

Property Exchange Australia (PEXA)

As of October 2018, it is compulsory to effect all transfer transactions via the electronic Conveyancing platform, PEXA. Below is a link with further information.

https://www.pexa.com.au/buyers-sellers

 

Settlement

Leading up to settlement, your conveyancer will be in touch to go through all settlement figures and rates adjustments. This is the time to have all your finances in order and any additional funds required for settlement ready and clear to go for settlement.

Once settlement has taken place, your conveyancer will contact you to confirm and you will then be able to collect all keys to the property from your Real Estate agent and pop the champagne!

 

SELLING A PROPERTY

 

Appointing a Real Estate Agent

This is such an important decision, as you will work hand in hand with your agent in the marketing and selling of your precious property. You must be satisfied with their fees and their suggested selling price of your property. Once you have appointed an agent, it’s go time!

 

Appointing a Conveyancer

As mentioned above, your next stop is finding a Conveyancer and be happy with their service and guidance, they will be your new best friend!

 

Section 32 Vendors Statement

A Vendor is required to provide details relating to the property to any purchaser. This is called a Section 32 Vendors Statement and is required by section 32 of the Sale of Land Act. Your conveyancer prepares this document on your behalf after you have provided them with all the relevant information and documents that are required to be disclosed. Prior to preparing your Section 32 Statement, your conveyancer will sit with you and ask you a series of questions or maybe go through a questionnaire regarding your property. Depending on your circumstances, some documents that you may need to provide would be; current rates notices, any documentation relating to any building approvals, owners corporation details, copy of any current leases, copy of any  Power of Attorney in place and anything else that may be relevant to your property at that time.

An agent cannot sell the property without this document. Having the section 32 statement prepared as quickly as possible is fantastic but whilst time is important, getting it correct is the key. You must make sure that before signing this document, you have disclosed everything correctly and not missed any important information.

If your property has an Owners Corporation active, it will mean sometimes there will be a delay when gathering the required documents, such as an owners corporation certificate which can take up to 10 business days.

Please be aware that if you do not provide full and correct disclosure then a purchaser may withdraw for the contract at any time.

 

Signing the Contract of Sale

Once you have accepted the purchasers offer and are comfortable with your Contract of Sale, you may sign the document with your real estate agent or your Conveyancer. You have now entered into a Contract to sell your house, woohoo!

 

Cooling off period

Once the purchaser has made an offer and has signed the Contract of Sale, they have 3 business days to elect to use the cooling off period. If they decide to do this, they must advise the agent and their Conveyancer within those 3 business days, and their Conveyancer will attend to the written notice to you. The Contract of Sale will then be at an end.

 

Unconditional Contract of Sale

Once the purchaser decides to proceed with the Contract and their finance has been approved and any Special Conditions have been satisfied, congratulations, your Contract of Sale has now become unconditional and full steam ahead!

 

Discharging your Mortgage

Now is the time to advise your bank that you have sold your property and organise a discharge of Mortgage and for your bank to tell you how much they require at settlement. Your conveyancer will advise you on how to do this. When you are filling out your paperwork, keep in mind that if you have other properties that are secured by the same mortgage/loan, it may be worthwhile booking an appointment with your banker to discuss your options and valuations of your remaining property.

 

Insurance

It is important to keep your property insured all the way up to settlement date. This ensures that if anything happens to the property, your insurance will cover it and the sale can continue

 

Default

If, for any reason the purchaser cannot proceed to settlement on the contracted settlement date, they will then be in default under the Contract of Sale that they have entered into with you.  You will then have the opportunity to charge the purchaser penalty interest that accrues per day together with any legal fees that you may incur. You can also serve a Default Notice on the Purchaser which will give them 14 days to effect settlement and if they do not settle within that period, the Contract will be at an end and you will be entitled to retain the 10% deposit and also consider pursuing the purchaser in further proceedings.

 

Final inspection

The purchaser is entitled to a final inspection prior to the settlement date. They will be inspecting the property to make sure it is in the same condition as at the day they purchased it. You should ensure that everything is in working order or as it was at the day of sale. If items are damaged or broken that weren’t previously, the purchaser will more than likely request for them to be repaired or an agreed amount, not exceeding $5,000, can be held back from your sale proceeds at settlement.

 

Property Exchange Australia (PEXA)

As of October 2018, it is compulsory to effect all transfer transactions via the electronic Conveyancing platform, PEXA. Below is a link with further information.

https://www.pexa.com.au/buyers-sellers

 

Statement of Adjustments

The statement of adjustments relates to any rates, taxes, rental or outgoings that are required to be adjusted. This ensures that you only pay the portion due up to the date of settlement and that purchasers are liable for the portion from the settlement date to the end of the next due period. Your Conveyancer will go through these adjustment with you and explain in more depth.

 

Settlement

Leading up to settlement, your conveyancer will be in touch to go through all settlement figures and rates adjustments. You will also need to make sure your Conveyancer has your correct banking details for your sale proceeds to be transferred to you at settlement.

You do not need to attend settlement, your Conveyancer will organise everything for you.

You will also need to make sure you hand all keys and remotes to the property to your Real Estate Agent on the morning of settlement.

Once settlement has taken place, your conveyancer will contact you to confirm and you can pop the champagne!

 

 

Please note the above is intended to be commentary and general information. Commentary and general information should not be relied upon and substituted for legal advice. Formal legal advice should always be obtained, if you would like to receive advice specific to your circumstances please contact our office on 9743-1333