Perhaps you’re new to the property market and have been asked by your agent for your conveyancers or solicitors details. Or maybe you just don’t know where to start with the purchase or sale of your home. Unless you’re a lawyer or have plenty of free time on your hands, you will need a professional conveyancer to handle the legalities of purchasing or selling a property. Once you sign a contract of sale to purchase a house, that’s only the beginning of the process. There are many considerations that need to be looked at and checks that should be carried out before the sale is finalised, otherwise known as “settlement”.
So, when you hand over your hard-earned money to a conveyancer to handle the transaction, they actually put it to good use by handling a range of matters to ensure your rights are protected and the sale goes smoothly. In broader terms, a conveyancer is responsible for
making sure you meet all the legal obligations involved in your property transaction. Along with protecting your rights throughout the process, the scope of work
that a conveyancer covers will vary depending on the complexity of the property transaction.
Tedious legal paperwork and document handling
One of the most important and essential responsibilities of a conveyancer is the preparation of all the documents needed in your real estate transaction. Your conveyancer will manage the transfer documents to ensure the property is rightfully and legally transferred to or from your name. It’s also the conveyancer’s job to ensure that the documents comply with legal regulations in your respective territory or state.
Searches and preparation of the statement of adjustments
A conveyancer will carry out all the relevant searches required in your respective jurisdiction and also prepare all the relevant settlement documents. A lot of people don’t know this but when you purchase property, any debt or negative interest on the property will be transferred to you once it settles in your name if you don’t do your due diligence. The conveyancer’s job is to protect you by undertaking the relevant enquiries and ensuring the relevant adjustments are made at settlement. If there is any debt on the property (which is quite common even in small amounts), the conveyancer prepares the statement of adjustments and ensure you don’t inherit any of these issues (if you are the buyer). Some examples of searches that a conveyancer may do include:
- Title search: to ensure the property belongs to the seller and confirm whether any debts or liabilities exist on the property
- Local authority searches: check whether there are any future plans to develop the area upon which the land lies (ie. build a motorway, develop an apartment complex etc)
- Risk of bushfire, flood etc: weigh up the risk of whether the land is prone to bush fires or severe flooding
- Structural: ensure the property is structurally sound
- Pest report: check there are no pre-existing problems with insects and termites, the last thing you want is to provide an offer and find out there is a termite infestation
- Strata (if apartment): find out whether the building is running on a deficit or is able to sustain the running of the complex
The seller will attach the mandatory searches to the contract of sale. Any additional searches will need to be obtained by the buyer. Searches like pest and strata are generally not included by the seller. As a buyer, you of course don’t need to do all the searches and can instruct your conveyancer as to which ones best suit your particular situation. For instance, if you are purchasing a house then a strata search is not going to help you. Some checks can be undertaken after your offer has been accepted however some checks like pest and title are best done before entering into any contract of sale.
Contract of sale preparation (Seller)
If you’re selling your property, your conveyancer will prepare the Contract of Sale and Vendor Disclosure Statement
as well as make sure all your special requirements and conditions are included in the final contract. Having a solid contract written up correctly is very important in ensuring a smooth settlement. If there are mistakes in your disclosures or contract, this can compromise your sale and create expensive corrections down the track. Any queries from the buyer or buyer’s solicitors/conveyancers will also be handled by your conveyancer. This leaves you free to look after moving out or continuing to expand your property portfolio.
Contract of sale review (Buyer)
If you’re buying, your conveyancer will review the Contract of Sale and Vendor’s Statement to look for any potential errors, unusual clauses or raise any red flags. They will also inform you of what the contract entails, any important dates throughout the settlement period, and give you advice on any conditions which can be added to protect you. Having your conveyancer read and explain this information before you commit to the purchase protects you from potentially expensive risks, such as buying a house with an illegal extension. In today’s property market, you may feel pressured as the buyer to make a decision straight away, especially if you are looking to buy in a high-profile area. However, it is always best to ensure you understand all your obligations before signing on the dotted line.
A conveyancer can assist you with understanding the various clauses in a Contract of Sale and make an informed decision as to whether you wish to proceed with the purchase. Some states have more flexibility for the buyer to get out of a sale with minimal penalty while other states have highly restricted timeframes. So, it is wise to be familiar with the various requirements depending on which state you wish to purchase as it may be in your financial interests to hold off handing over any monies to the seller until you have seen a conveyancer. Auction is a common issue as buyers are pressured into entering into a contract straight away only to later find out there may be a termite infestation or a government planning proposal underway.
New South Wales
In New South Wales, there is a cooling off period of 5 days, which begins after exchange of contracts has occurred. The “exchange” occurs when both the buyer and the seller have signed the contract and the initial deposit is received by the seller. A seller may require that a buyer waive the cooling off period by signing a section 66W certificate. If this is something you have been asked to do, you may not be able to get out of the contract without forfeiting your entire deposit. If you sign a Contract at an auction, you will automatically waive your rights to the cooling off period. The best way to approach auctions is to get a copy of the contract before the property goes to auction and consult a conveyancer. On the other hand, if you have a 5-day cooling off period, you can get out of the contract by forfeiting only 0.25% of the purchase price as a penalty. The advantage of a cooling off period is that some searches are difficult undertake without entering into the contract and this extra breathing space ensures you don’t commit to something without full confidence. The cooling off period is also used to finalise finance.
Contract of sale in Queensland also have a 5-day cooling off period however there are additional opportunities for the buyer to opt out of the contract. With NSW, regardless of the reason as to why the purchaser decides to not proceed with the sale, they will be required to forfeit the 0.25% of the purchase price. However, in QLD, there is a bit more flexibility. This is because, unlike NSW, a seller does not have to include any additional documents to the contract of sale in QLD. So, the 5-day cooling period gives the purchaser the time to undertake the relevant searches. On top of this, the purchaser is also allowed ample time, usually 21 days to receive a satisfactory pest and building report. Where the buyer is not satisfied with the report, they may in fact get out of the contract without forfeiting any monies. Another thing about buying property in QLD is that in the event the buyer’s finance falls through, the buyer may again not proceed with the sale. Unlike NSW, the buyer is given up to 21 days to obtain a formal loan approval. It is only once the buyer is satisfied with the pest and building report and able to obtain formal loan approval does the contract become unconditional, and the buyer is “locked in”.
The cooling off period in Victoria is 3 days only and will start once the buyer signs the contract, even though the vendor may not in fact sign it until much later. So, bear in mind that once you sign as the buyer, your cooling off period starts immediately. This is different to NSW, where the cooling off period only begins once the contracts have been “exchanged”. The other difference in Victoria is that where the buyer decides to exit the contract within the cooling period, they will forfeit $100 or 0.2% of the purchase price (whichever is greater). Given the very short period in Victoria and the way in which it starts, it is probably best for you as the buyer to undertake all relevant checks before signing the contract. Ask a conveyancer for advice on the contract and then see whether you feel like proceeding with the sale.
There is no cooling off period in Tasmania so the moment you sign the contract, you will be locked in. This makes is extremely critical that you obtain the relevant advice and checks from a conveyancer.
Conveyancers and solicitors,
such as the team here at Conveyancing.com.au, may also be able to provide further guidance on issues throughout the process including estate planning
and tax impacts of buying or selling the property. Most importantly, our firm has a fixed professional fee and does not charge extra for advice which is within our limits.
It is not the conveyancer’s job to tinker with your direct financing arrangements, but they do play a vital role in arranging the settlement with your bank. A conveyancer can facilitate the financing process by ensuring that your bank receives all the required details and supporting documents for settlement. If there are any adjustments and payments to be made as part of the settlement, your conveyancer will calculate these amounts for you. For instance, if the vendor has already paid council rates up until December 20 and you settle the purchase on September 1, you will need to refund the vendor the amount that covers that period (September 1 – December 20). Your conveyancer will calculate these exact amounts to ensure that all payments are correct and final as of settlement date.
Your conveyancer will take care of the bulk of the communication for you. This means calling, emailing, or sending letters to other parties involved in the transaction. This is just another aspect of a conveyancer’s job to take care of the stress and time-consuming conversations for you.
Conveyancers coordinate the settlement with all the parties involved. This includes arranging, booking, and physically attending the settlement. They will also contact your bank to ensure that you are able to pay the seller at the appointed time without any delays. While you can expect conveyancers to take care of most of the legalities for you, remember that not all of them will deliver exceptional service. You should always screen your prospective conveyancer to find one with experience, expertise and a strong reputation.