What is Conveyancing
Conveyancing is the legal process of buying and selling property and the transfer of a legal ownership or title of a property from one party to another.
The steps in a conveyance are:-
- Negotiating and entering into a contract. A deposit is usually paid at this time and is held by a stakeholder (agent or solicitor) until the contract completes
- Satisfying any conditions such as finance approval and building inspections, until the contract then becomes ‘unconditional’.
- Organising for settlement which involves liaising with financiers to ensure funds are available for settlement and calculating settlement adjustments eg rates
- Settlement where important legal documents are exchanged along with, of course, the payment of the purchase price.
Following settlement the registration of the property transfer takes place with the Land Titles Office – this is where the conveyancing process concludes.
When should I Consult my Solicitor
It is always a good idea to give your solicitor a chance to look over a Contract before you sign it. This ensures that –
- any requirements you may have can be included in the Contract; and
- any standard or additional terms already contained in the Contract can be explained to you prior to you being locked into a Contract
Should I use a Conveyancer or a Solicitor?
A conveyancer is the person responsible for the day to day running around of your conveyancing file in order to get the matter to settlement.
Our conveyancers are supervised by our Solicitors. Conveyancers are also known as settlement agents in some states.
In some States, Conveyancing firms operate to conduct conveyancers only. As they are generally not solicitors they are not able to manage or handle any complex legal issues that may arise during the conveyancing process.
Whilst no one wants problems to occur with their contracts, when they do, having our team of experienced and expert lawyers support, advise and guide you through it is one of our strengths.
What is settlement?
Settlement is the day when the payment of the purchase price occurs. Representatives from the Seller and Buyer and their respective financiers meet to exchange documents. All documents are checked to ensure accuracy and completeness, and are then exchanged along with payment of the purchase price. It is also sometimes known as “Completion”.
What is transfer duty/stamp duty and do I need to pay it?
Transfer duty (or Stamp Duty) is a State tax imposed by your State Government on the purchase of property. Whilst both parties to a contract are liable for the Transfer duty as far as the State government is concerned, the terms of the standard contract of sale, imposes the liability on the Buyer. The amount of the duty is determined by the purchase price of the property less any concession you may be entitled to.
Different States have differing rates of duty and then when you have to pay it also differs from state to state.
What are registration fees
Registration fees are the fees that a Buyer pays to register the property transfer with the titles office. This fee is determined by the purchase price of the property. This fee is payable at the time of registration, however your solicitor (or your financier) will generally collect this fee prior to settlement in readiness for registration.
What is the normal time for a conveyance?
Whilst time frames are set initially in the contracts, due do the unpredictable nature of conveyancing it is difficult to give definite timeframes. Delays can occur with financing applications, financing documentation which can all affect settlement time frames.
It is therefore important to let us know if something is delaying the process eg difficulty in organising your building or pest inspector to financing requirements so that we can manage any time expectations with the contract.
Different states will also have differing time frames for settlement. They range from 28 days to 60 days.
Paying a deposit
In some States like Queensland, there is no minimum amount of a deposit specified. However, a deposit cannot exceed 10% of the Purchase Price, or the Contract becomes an instalment contract. A deposit is generally paid by cash or a personal cheque and held by the real estate agent or seller’s solicitor in a trust account until after settlement. Following settlement it is released to the Seller, less any commission owing to the agent. In this case, the amount of deposit paid during a conveyance will be deducted from the purchase price at settlement. However if the Seller agrees a deposit can be paid by way of deposit bond or bank guarantee. If the deposit is paid by a deposit bond or bank guarantee, the original bond or guarantee will be held until settlement, when it is returned to the Buyer. Accordingly no adjustment for payment of a deposit is made in the settlement figures.
If the Contract is legally terminated (i.e. the Buyer could not obtain sufficient finance) the deposit is refunded back to the Buyer.
Are there critical dates to be aware of in the conveyancing process?
There are several key dates, including:
- The contract date – the date when all parties have signed the contract and agreed to its terms. Other key dates may be expressed with reference to this date e.g. “Finance approval is 28 days after the contract date”.
- The end of the “cooling off period” – this is the period during which a buyer can terminate the contract for any reason. The Seller does have a right to charge a percentage of the purchase price if a Buyer terminates a Contract using the cooling off period. (Every State is different and is somewhere between .02% to 0.25 %. WA does not have a cooling off period).
- The finance approval date – the date the buyer must advise the seller that finance approval has been obtained.
- The building and pest inspection date – the date by which a buyer must advise the seller if they are satisfied with results of the their building and pest inspections. This condition provides that a Buyer either satisfies this condition or terminates the Contract based on the results of the inspection. However a lot of Buyers negotiate to have the Contract terms amended, if there are items in the report that they are concerned with however they still wish to continue with the purchase of the property. If this is the case, it is important that the Buyers Solicitor is informed as soon as possible so that they can negotiate with the Sellers Solicitor and obtain confirmation in writing of any negotiations prior to the due date of this condition
- The settlement/completion date – the date on which payment is made for the purchase.
Time of the essence
In Queensland it is a standard condition of the Contract that “time is of the essence”. Basically, this means that the time limits and deadlines for conditions and settlement that are specified in a contract must be strictly adhered to. Failure to meet a deadline can result in the termination of a contract.
Time is not of the essence in other states unless the contract is specified to be the case.
What are special conditions in a contract?
As most conveyancing transactions are different and the parties may have different needs, many contracts may also have special conditions added, prior to the Contract being signed. Special conditions are negotiated and agreed between the parties and can override the standard terms. Even innocuous looking conditions can have a detrimental impact on rights. It is best not to sign a Contract until you understand the effect of any special conditions that are added to the Contract.
Insurance
In most States the risk of the property passes on the buyer after the contract is executed. In WA the risk only passes after settlement. To be safe the best course of action is to ensure that you have a cover note of insurance in place for the Property from this date.
What ‘searches’ are conducted in a conveyance?
The types of searches conducted will vary depending on the reason for purchasing a property. Searches are done to assist a buyer in evaluating the property to be purchased. It helps identify any legal, property or ownership issues. E.g. whether land is on the contaminated land registry, if it has heritage listing, if there are any caveats over the title, any easements, if the building has the relevant approvals etc.
Searches are also done to make sure any arrears in rates, water, and land tax are dealt with at settlement.
Is it important to let us know what your requirements are for the property so that we can structure the contract to include special conditions to make sure that we can search the property properly. The information from the searches we obtain will help you assess whether you purchase the property or not.
Without the special conditions to allow for certain searches, your rights to terminate from any adverse results may be limited.
What are adjustments?
At the time of settlement, fees and charges relating to the property will either be paid or unpaid for the period in which the settlement date falls. These fees and charges include things like rates, water, body corporate levies and, state taxes (for example, land tax).
Adjustments are made to the purchase price so that each party bears their share of the fees and charges.
Arrears in fees like rates are also attended to so that the buyer settles on the property without the arears.
When does the title to the property transfer to the buyer
At settlement the transfer documents are handed over to the Buyers financier in exchange for the balance of the purchase monies. The financier lodges the transfer documentation together with their mortgage with the Titles Office to record the change in the legal ownership.
This can weeks or months depending on the time each financier takes to lodge the transfer documentation with the Land Titles Office to officially record the change in legal ownership of the property.
The local council will then be automatically notified by the Titles Office of the ownership change and all future rates notices are sent to the buyer.
How can we help you
We can help you by:-
- reviewing the Contract, prior to you signing to make sure the Contract has been drawn correctly or,
- drafting certain conditions that you may require to be in the Contract,
- Managing the Contact to settlement and registration of the property transfer.
- In some circumstances we are also instrumental in negotiating the deal.
