Conveyancing might seem like one of the less exciting aspects of buying or selling a property but it is a crucial and essential element of the process.
It can also be somewhat of a mysterious exercise, particularly if you’re a first homebuyer. The steps involved in conveyancing – the legal process involved in transferring a property from one person to another – is outlined below.
A smooth transfer is always the desired result, but this requires proper adherence to the process, including filing the correct documentation at the correct times. This process is made much easier when you consult a law firm experienced in conveyancing matters.
Before the contract of sale is signed
Say you’re the seller (or vendor) and have found a buyer for your property. The first step of the conveyancing process is the need to have a draft contract for the sale drawn up by your solicitor. You will also need to fill in and sign a number of legal forms from various government departments and source (or have your legal representative/conveyancer source) certain information to ensure the title deeds are in order; to detail any charges still owing on the property that may affect the sale; to prove the rates and charges are fully paid and up to date; and to detail whether any other restrictions (such as environmental regulations) exist over the property.
Sellers need to be aware this pre-contract stage can take a couple of weeks to complete. Once it is and all other terms such as the price are agreed with the buyer, both parties will need to sign the prepared contracts and proceed to the exchange stage.
Once this process commences, the contract for sale becomes binding on the buyer and seller. Those managing the process for the seller meet with the representatives of the buyer to confirm the documents are the same and exchange the signed contracts. The contract is now legally enforceable and it is incumbent on both the seller and the buyer to comply with its terms or face certain financial penalties.
While binding, most contracts will also include a five-day cooling-off period (unless purchased at auction or, if the buyer is satisfied with the pre-contract negotiations, waived altogether). In this period the buyer can change their mind and cancel the contract, but by doing so they forfeit 0.25% of the purchase price to the seller.
If after signing the contract the buyer discovers some ‘adverse’ matter which affects the property, such as a new council regulation affecting development options, for example, they may have grounds to exit the contract. To do this the buyer will need to show the seller failed to disclose the adverse matter and also that they were unaware of the matter and would not have signed the contract had they known about it.
From the moment the contract is signed, its settlement will generally occur within six weeks or another period agreed to and set out in the contract. The buyer will also need to pay stamp duty within 90 days of the contract date or prior to settlement (unless a recipient of a first homebuyer’s grant or if buying off the plan).
This final stage in the conveyancing process sees the buyer takes possession of the property and all remaining financial matters between the parties are finalised.
Before they take possession of the property, a buyer may conduct a pre-settlement inspection. If the property is to be sold with vacant possession, the seller will need to make arrangements to vacate the premises before settlement. The seller should empty the property of all possessions and leave it in a clean and tidy condition.
If it’s discovered there are any remaining issues regarding the property, settlement can be postponed until the seller addresses them but the contract itself, at this stage, can’t be terminated.
Ahead of the agreed settlement date, the buyer will need to organise the financial arrangements for payment of the seller. At an agreed time and place, the legal representatives of the buyer and seller will meet. The buyer will then pay the balance of the property’s purchase price, authorising the agent to release the deposit minus the agent’s commission. The seller then has to give the buyer the executed transfer document and title documents. Before this can happen, any existing mortgage over the property must be paid off and any caveats lifted.
The exchange must also be registered with NSW Land Registry Services in the new names of the buyers. If the buyer has borrowed to fund the purchase, the lender will instead take the deed, register the transfer, and then hold the deed until any mortgage loan is paid out. Provided all the documentation is in order, the keys and other access devices to the property will then be handed over.
It should be noted that the services of a conveyancer mean neither the buyer nor the seller need be present at this settlement stage.
The place of insurance
If there is an insurance policy covering the property, sellers are advised to keep their coverage until settlement is completed and then contact their insurance company if the cover is no longer required.
This is because the risk of damage to buildings or other fixtures remains with the seller until after settlement, unless the contract states otherwise. This means that any damage to the property after the exchange of contracts can give a buyer grounds to get out of the contract by giving notice in writing within 28 days of becoming aware of the damage.
Conveyancing can sound like a complex and drawn out process but it can be made much simpler by engaging trusted representatives who are experienced in this area. While you decide the big issues like price, financing and any restrictions over the property, they will do the legwork on documentation and timelines to ensure the transfer of property is as smooth as possible.
At Felicio Law Firm we offer a ‘Fixed Fee – No Ifs or Buts’ pricing structure (dependent on the property type) for all conveyancing matters, with many years experience in the process from contract to settlement on residential, rural, commercial, strata and industrial properties. Call us today on (02) 4365 4249.