Having been in business for so long, we’ve managed to collect a long list of questions we get asked. We’re always happy to chat through any questions you have. However, as a starting point, here are those common ones that come up fairly regularly.
What is conveyancing?
Conveyancing is the legal process of transferring the title of a property from a seller to the purchaser.
What is a conveyancer?
Licensed conveyancers in NSW are professionally qualified to advise clients in legal matters involved in buying or selling property or businesses.
Why use a conveyancer?
Licensed conveyancers have an in-depth understanding of the law concerning the transfer of property. They are required to hold professional indemnity insurance and fidelity insurance. Licensed conveyancers only focus on property transfers and are not distracted by other areas of law.
What is the difference between a conveyancer and a solicitor?
Licensed conveyancers specialise in real estate property transfers. They do not carry out other areas of law such as wills and litigation. In general, more people use a licensed conveyancer because they are more price competitive and easily contactable.
What is a contract for sale?
In NSW an agreement to sell real estate (including houses, units and vacant land) must be in writing and this is called the contract for sale or simply, the contract. Real estate agents must have a copy of the contract when they are marketing the property. The contract contains all the required documents and states the agreement that has been reached between the seller and the purchaser.
What is a disbursement?
A disbursement is an expense incurred during the process of searching and obtaining certificates from councils and other authorities.
When should I organise my finance?
Most buyers will need to borrow money for a purchase and will approach a bank or mortgage broker to arrange finance. Usually, buyers will obtain ‘pre-approval’ from their finance provider, which is a preliminary approval for a certain amount but is not related to a particular property. When you find a property to purchase you will need to make a further application for unconditional approval. The finance provider will carry out a valuation of the property before they provide an unconditional approval. It is recommended that you obtain unconditional finance approval before you exchange contracts.
What is gazumping?
In NSW a property sale is generally only binding on the seller and purchaser when contracts have been exchanged between the two parties. Gazumping occurs when you have a verbal agreement with an agent or seller to buy a property at an agreed price, but the property is sold to someone else usually for a higher price.
What is exchange?
Exchanging contracts is the process of creating a binding agreement between the seller (vendor) and buyer (purchaser). Individual contracts are signed by each party and then when they are identical, they are dated and the contracts become binding on both parties. Exchange of contracts is very important. Both parties must now complete in accordance with the agreed terms e.g. 28 days settlement period. Exchange of contracts occurs when selling by negotiation (also known as private treaty) or at auction.
What is settlement?
Settlement is when the seller hands over the title and discharge of mortgage (if required) and the buyer hands over the money. The contract will usually state when settlement is to take place. The majority of settlements are now taking place online in an electronic workspace.
What is “buying off the plan”?
Buying ‘off the plan’ usually means buying from the developer before the house/unit/vacant land has been built or registered by NSW Land Registry. The contract needs to describe all the things the developer will do and the time by which the developer needs to do those things. Buying off the plan may mean you get a discount in a rising market by the time it settles, also correspondingly in a downward market you may be paying too much. Delays in registration and changes to plans can impact when settlement takes place. It is important you understand the final product may be different from your expectations or be worth less than you have paid by the time it is finished.
What is a cooling-off period?
When you buy a residential property in NSW, you have a five-business day cooling off period after you exchange contracts. The cooling off period runs from as soon as you exchange and ends at 5pm on the 5th business day. The standard contract provides that if the purchaser does cool off, they must pay the vendor an amount of 0.25% of the purchase price. A cooling off period does not apply if you buy property at auction or exchange contracts on the same day as the auction after it is passed in. The buyer can waive the cooling off period by giving a section 66W certificate. It is also possible to reduce or extend the cooling off period by written agreement with the vendor.
What does the agent do and what does the conveyancer do?
A real estate agent and conveyancer have very different roles in the buying and selling of property.
The agent is engaged by the seller and is generally paid based on the sale price they obtain for their client. The agent is generally responsible for the creation of the deal between the two parties. The agent can speak to the seller and the buyer at the same time to ensure the agreement stays on track. A good agent will ensure the matter runs smoothly from start to finish and the deal is kept on track until settlement.
The conveyancer will handle all the legal aspects, coordinating financial payment and paperwork associated with the transfer of the property.
For the buyer, the conveyancer will research the property and certificate of title, explain all legal documents, ensure the deposit has been paid, carryout searches, liaise with the bank, calculate settlement figures, prepare clarify and lodge legal documents.
For the seller the conveyancer will order documents and create the contract for sale, explain all legal documents, liaise with the bank, confirm settlement figures and lodge legal documents.
What is stamp duty?
Stamp duty is a tax levied by the State Government on all property purchases based on the purchase price. First home buyers can get a reduction on stamp duty depending on the purchase price.
What is the deposit?
A deposit is paid by the purchaser and is required to create a contract. The deposit is usually paid just before exchange of contracts and held by the real estate agent in a trust account. The usual deposit amount is 10% of the purchase price but this can be negotiated. It is very unlikely your bank will provide funds for the deposit.
What is the final inspection?
The purchaser is allowed to do a final inspection in the 3 days before settlement. It is recommended to carry out the inspection after the vendor (or tenant) has moved out and the property is vacant. The vendor needs to maintain the property in the same condition as at exchange of contracts.
The vendor does not have to clean the property (many vendors do) but the property should be free of rubbish and in a tidy condition, as it was when contracts were exchanged. If a property is left in a mess, often the purchaser will look for and notice more issues, than if the property was left in a tidy condition.
Why should I look at council building records?
A purchaser should check the council building records before exchange of contracts to ensure all buildings are approved and completed satisfactorily. If buildings have been built without approval or have not been fully completed, these issues should be corrected and addressed before the purchaser becomes the owner. Once the buyer owns the property any existing issues in regard to illegal or incomplete building work will become the buyer’s problem.
The team at Edmonds Conveyancing is ready to discuss any conveyancing matters. Contact us today to get started.
The Australian Institute of Conveyancers also updates their information regularly. You can visit them at www.aicnsw.com.au/for-the-community/general-questions/.