The purchasing of a property can be rather complicated and it is necessary to have a professional person such as a Solicitor to conduct the complicated aspects of conveyancing on your behalf. We will try to make the transaction as simple as possible for you and we will endeavour to ensure that the transaction runs smoothly and that you take possession of your new property with a minimum of fuss and as expeditiously as possible.
However, in achieving those goals we must ensure that we obtain all necessary searches and enquiries on your behalf and that those searches and enquiries prove to be satisfactory. Because we are often dealing with a large number of Government Departments, some delays can be expected. We initiate our enquiries in all respects always at an early stage so as to minimize any possible delay. We will let you know further in this bulletin of expected time schedules.
In relation to the sale of residential properties, where Real Estate Agents exchange Contracts there is a "cooling off period". The minimum cooling off period is five (5) business days, however, this can be extended by agreement between the parties. If during the cooling off period the purchaser withdraws from the Contract, the purchaser forfeits an amount equivalent to .25% of the purchase price.
The purpose of the five (5) day cooling off period is to generally enable the purchaser:-
- To seek the advice of a Solicitor on the contents of the Contract.
- To ensure that finance is formally approved.
- To obtain any quality reports desired.
The exchange of Contracts can be effected either by an Estate Agent or by your Solicitor. Where an Estate Agent effects the exchange and a Purchaser has not obtained legal advice, then an agreed cooling off period will always apply where the property is residential property.
Where the agent has effected the exchange, you should contact your Solicitor immediately in order to obtain the advice required in relation to the Contract, and instruct him to obtain any quality reports that may be required by you. However, where you do not sign the Contract with the agent and he does not effect an exchange of Contracts then it is usual for a Purchaser to instruct his Solicitor to waive the cooling off period. The effect of this is then that the Contract for Sale becomes immediately binding on the Purchaser and the Purchaser has no right to withdraw from the Contract.
Where the cooling off period is waived the Solicitor ensures, before exchange, that:-
- The Purchaser understands the contents of the Contract.
- That finance has been formally approved.
- That any quality reports required by the Purchaser are received and have proved to be satisfactory.
After you have selected your new home, the first major step will be the exchange of Contracts. At that stage the parties become bound to the Contract and you, as Purchaser, will be required to purchase the property as it is at the date of Contract.
It is for that purpose that we recommend that you give consideration to the obtaining of certain quality reports. The usual quality reports requested by Purchasers are:-
- A Pest Report - a pest report is carried out by a qualified pest controller. No work is done on the property but the report contains information as to any present or past infestation by pests. It is always very wise to obtain this report whether or not you intend to fumigate the premises prior to moving in.
- A Building Report - again a qualified building inspector or builder carries out a full inspection of the premises and reports as to its state of repair. Such a report can in some instances, be expensive. Some Purchasers are happy to rely upon their own inspection or an inspection by a valuer or a friend who is in the building trade. It is a matter for yourself.
- Engineering Reports - these are normally obtained where a Building Report makes mention of structural damage to the property.
- Survey Report - this report is obtained to confirm that the structures upon the property being purchased sit wholly within the block. It will also confirm whether any structures upon adjoining properties encroach upon the property that you are proposing to purchase.
- Buiding Certificate - this is a Certificate obtained from the local council to confirm that council will not make any "upgrade or demolition orders" in relation to any strructures upon the property. To obtain a Building Certificate, a survey must be provided to council.
It is a matter for yourself as to whether or not you obtain all or any of the above reports. However, we do ask that you give us your early instructions to obtain these reports. We obtain them on your behalf and will forward copies to you.
Please instruct us at the earliest opportunity as to which (if any) reports you require.
Where you are purchasing vacant land it is imperative that you satisfy yourself prior to the exchange of Contracts that you can develop the land in the manner that you wish to. So far as the zoning of the property is concerned, this information will be contained in the Section 149 Certificate in the Contract for Sale. There will be other information in this Certificate that will be of assistance. We will convey the contents of this Certificate to you at your first appointment.
Also, within the Contract for Sale there will be disclosed any covenants or restrictions as to user that might be on the title. These can often govern the type of building that might be erected on the property including the size, the materials from which it is constructed and even colours. Any restrictions as to user will be explained to you at your first appointment.
One area that may not be covered by the Contract or covered by our normal searches is the question of the geotechnical nature of the land itself. In this regard, we would respectfully suggest that you satisfy yourself in relation to fill or landslip. If you wish, you may instruct us to carry out specific searches or enquiries on your behalf in this regard.
Where you are purchasing a property upon which there are erected improvements (usually a residence and other ancillary improvements) it is always prudent to obtain a Building Certificate from the Local Council. This is a Certificate issued under Section 149(D) of the Environmental Planning and Assessment Act and it effectively is an advice by the Council that all improvements on the property are acceptable to them. It prevents the Council from making orders in relation to the improvements on the property (provided there is no change from the date of the Certificate) for a period of seven (7) years from the date of that Certificate.
Whilst we have said it is prudent to obtain the Certificate, it is not essential to do so and we do need your instructions to obtain one. The following should act as a guide in your consideration as to whether or not to instruct us to obtain a Certificate:-
- Where the property is a new home, the Certificate is generally provided by the builder. If it is not, we would recommend to you that you obtain the Certificate.
- Where the property is an existing residence but there have been changes to the property (e.g. conversion of a garage to a living area or the addition of a significant pergola) then it is advisable to at least obtain evidence of approval to those changes. If that evidence is not available then we would strongly recommend that you instruct us to obtain a Building Certificate. You should advise us from your observations whether or not such changes have been made to the improvement of the property.
- Where the property is an existing residence and does not appear to have any significant changes, then whilst it is still prudent to obtain the Certificate, it is again not absolutely essential. If, however, there appears on the Survey Certificate any breach of Local Government Ordinances, we will (subject to obtaining your instructions) apply for a Certificate.
If you are purchasing your property for investment purposes there may be significant taxation implications. This may also apply even if you are purchasing the property for your own use.
Taxation implications may involve income tax and/or capital gains tax. You should give consideration to your tax position.
It is not our role to advise you on the tax implications. Before proceeding to an exchange of Contracts, therefore, you should seek the advice of an accountant so as to be fully aware of all of the implications of the purchase in relation to all taxation matters.
The Binding Contract
The contract becomes absolutely binding in one of two ways:
- Where there has been no waiving of the cooling off period, then it becomes absolutely binding upon the expiration of that cooling off period.
- Where the cooling off period is waived, then it is absolutely binding at the point of exchange.
As pointed out previously, you purchase the property as it is in its present state of repair and condition. Once the Contract is absolutely binding, there is nothing you can do about any defects in the actual physical quality of the property itself. It is therefore essential that before you allow the contract to become absolutely binding, you have satisfied yourself in relation to contents of the Contract, your finance and the quality of the property.
After quality reports have been obtained and your finance has been formally approved, we proceed to a formal exchange of Contracts (the exchange). Once this is done then all parties to the Contract are bound to proceed to completion in accordance with the terms of the Contract. From the date of formal exchange of Contracts until the date of settlement should take somewhere between three and five weeks depending upon the circumstances of each case.
The Solicitor handling the matter should be able to give you a more accurate estimate after perusing the Contract. During this period, the Solicitor is carrying out all the various conveyancing necessities such as provision of particulars of title to mortgagees, answering mortgagee's requisitions, raising of requisitions with Vendors, attending to stamping of documents, obtaining of surveys, statutory enquiries, Registrar General's searches and any other necessary documentation. During this period of time, you will be called upon to sign such documents as are necessary to complete the conveyancing transaction.
If there is any problem with the searches obtained during this period, then this will be brought to your attention immediately. Your rights pursuant to the Contract for Sale will, at that stage, be discussed. Any monies found to be owing in respect of the property which form a charge over the property will be paid before the final completion or on the final day of completion. These will be the responsibility of the Vendor.
After the binding Contract, the Solicitor handling your matter will continue to undertake the various searches necessary to ensure that you obtain a good title free from undisclosed encumbrances and charges. At the same time, the conveyancing technicalities such as the provision of particulars of title to mortgagees, the answering of mortgagees requisitions, the raising of requisitions with Vendors and consideration of replies, attending to stamping of all documents, obtaining of survey, statutory enquiries, Registrar General's searches and any other necessary documentation. During this period you will be called upon to sign such documents as are necessary to complete the transaction.
The usual time to complete a transaction is five (5) weeks. The time for completion can be shorter or longer subject to agreement between the parties. Some matters are delayed beyond the agreed completion date for various reasons. If this situation is likely to occur, you will be notified by the solicitor looking after your matter at the earliest opportunity. Within the first ten days after exchange, we endeavour to fix a date for settlement with the Vendor's Solicitors. You will be consulted in this regard and we will use our best endeavours to select a date to comply with your wishes. If there are any unforeseen problems that may delay the matter, then you will be notified immediately such problems come to light.
If there is any difficulty with the results of searches obtained on your behalf, then this will be brought to your attention immediately. Your rights pursuant to the Contract for Sale will at that stage be discussed.
When the exchange of Contracts takes place that is the time that the 10% deposit is paid. It is a normal practise to pay 10% of the full purchase price. Quite often, however, a Purchaser does not have a full 10%. In those circumstances, we endeavour to negotiate with the Vendor to reduce the deposit payable. We point out that it is only by agreement that a deposit less than 10% can be paid.
If you are selling your own home at the same time as purchasing another property, it may well be that you are unable to fund the full 10%. There are a number of options available to you in these circumstances. Firstly, you could borrow the funds. Secondly, we can request the Purchaser's Solicitor on your sale to release the deposit to you. Purchasers and their Solicitors often agree to this, but usually only on the basis that the deposit which is released will only be used as a deposit and not for any other purpose. A third alternative is to use a Deposit Bond. This is where a financial institution such as a Bank or a Building Society provides a bond in lieu of the deposit. You would normally pay a premium for the provision of this Bond and the amount of such premium will depend upon the amount of deposit. Simply ask your Marsdens Solicitor for details in this regard.
By law we are governed by the Legal Profession Reform Act. This Act provides that we cannot take action for the recovery of legal costs until thirty (30) days after a Bill of Costs has been given to you. We do point out, however, that at the expiration of this thirty (30) day period, interest pursuant to the Act will apply. We would also point out that where an agreement has been reached in respect of costs and you have been provided with a quotation, this right will not necessarily be available to you. We have provided you with a quotation. That quotation indicates when payment is required. We note that that quotation has been accepted by you.
If you consider that any charges are unreasonable, then you have a right to have your Bill assessed by an Assessor as appointed by the Supreme Court. However, we point out that where you have accepted our quotation this in effect constitutes an agreement as to costs and this right may not necessarily be available to you.
Once the Contract for Sale has been exchanged, it immediately becomes liable to stamp duty. The regulations of the Office of State Revenue (the Department that collects stamp duty) provide that duty must be paid within a period of three (3) months from the date of exchange. If you are borrowing to fund your transaction, your financial institution will however require stamp duty to be paid on your Contract and Transfer prior to settlement. This means that despite the fact that you have three (3) months to pay the stamp duty, your bank will require stamp duty to be paid before completion.
If you are eligible for the First Home Owners Grant (FHOG), we will complete with you forms to obtain the stamp duty exemption. So far as the $7,000.00 grant is concerned, in most instances your bank will have you complete the appropriate forms to have the $7,000.00 made available on completion. Please note that where we are requested to obtain the $7,000.00 grant, this cannot be made available on completion and can only be paid after the registration of the Transfer at Land and Property Inforamtion.
In circumstances where you, as a first home buyer, are entitled to a discounted stamp duty, the documents will be prepared by this office. The discount of fifty percent (50%) on stamp duty is available only to first home buyers who meet the income restrictions. Income restrictions are varied from time to time by the Government and you should speak to the Solicitor handling your matter to ascertain whether or not you qualify.
When you purchase a property you will become liable for Council Rates, Water Rates and in some rare cases, Land Tax. The Vendor to you is also liable for those rates. The standard Contract for Sale provides for these rates to be adjusted on completion. This means that the Vendor will be liable for that proportion of rates from the beginning of the rate year up to the day of completion and you will be liable for that proportion of the rates from the day of completion up to the end of the rate year. When we call for your balance of purchase money, an estimated amount for rate adjustments will similarly be requested.
When all enquiries have been completed and your mortgagee's requirements have been satisfied, your solicitor will then endeavour to arrange an appointment to “settle" your transaction. This involves a meeting of your Solicitor's representative, the Vendor's representative, your mortgagee (if any), and any discharging mortgagees. As you might well appreciate, the logistics of even arranging the settlement are extremely complicated.
You are entitled to take possession of your property at the time of settlement. Prior to settlement taking place, it is recommended that you undertake an inspection of the property to confirm that the property has not been damaged between exchange and settlement. This inspection should be arranged through your Real Estate Agent.
Upon settlement we, as your Solicitors, carry out the adjustment of all the necessary figures including all rates and taxes assessed on the land. Where rates had been paid by the Vendor, an adjustment will be made in the Vendor's favour for your proportion of the rates for the balance of the rate year. If the rates remain unpaid at the date of settlement, then the Vendor must make an adjustment in your favour for that proportion of the year during which the property was owned by the Vendor. These adjustments are all made by your Solicitor immediately prior to the settlement.
In any event, we endeavour to allocate a time for settlement at the earliest possible date. This gives you at least some firm guide as to when you will be able to move in.
If You Have Any Problems
If at any time you are not completely happy with the service you are receiving, then we ask that you tell us your concerns.
We further recommend that you mention any problems to the Solicitor handling your matter or the Partner in Charge. If either the Solicitor or the Partner is not available or you do not feel it appropriate to discuss the problem with either of those persons, then feel free to contact our Managing Partner, John Adam. We guarantee to you that any concern will be addressed courteously and expeditiously and, hopefully, to your complete satisfaction.
We also point out to you that should we not be able to satisfy your complaint, then the Law Society Professional Standards Department can be contacted to take the matter further. We trust that you will never have to take any matter this far, however, we feel it is your right to know all the alternatives available to you.
As stated previously, this is not meant to give you a comprehensive statement of what a conveyancing transaction is all about. However, it is meant to give you an idea of what occurs during the course of a conveyancing transaction.
Your Solicitor within our organisation is only too happy to answer any of your general enquiries or specific enquiries either on the telephone or during the course of an interview.
Solicitors within our organisation recognise the significance of this transaction to you and we treat it with the same importance that you do. If you have any difficulty, enquiry or problem, you should not be backward in coming forward to discuss it with your Solicitor.
Should you wish to discuss your needs, please contact Peter Crittenden on 4626 5077 or email email@example.com .