The present state of the conveyancing law in New South Wales places a substantial onus upon vendors of properties. The first onus could be described as the onus of “disclosure". In summary the effect is that the vendor must disclose certain prescribed information about the property. He must also annex certain prescribed documents to the Contract for Sale. From a practical point of view the vendor should go even further than the disclosures prescribed by law and should disclose to a purchaser as much information as possible about the property. In the long run this will assist in the sale of the property and most certainly assist in completing an exchange of Contracts and eventual settlement of the property.
The second onus is the onus to provide a copy or the original proposed Contract for Sale at the point of sale. Effectively therefore, where the property is being sold privately, the vendor must be in possession of the proposed Contract for Sale (it will suffice for your Solicitor to be in possession of that Contract ) or where it is listed with an estate agent, the vendor must, through his Solicitor, provide a copy or the original proposed Contract for Sale to that agent. A practice has been agreed between Solicitors and agents to provide the agent with the original and a copy of the proposed Contract for Sale so that the agent may fill up or complete the Contract for Sale when a purchaser has been located and where appropriate, effect the actual exchange of Contracts for Sale.
The Contract for Sale of residential property usually used in New South Wales is a Contract devised by and adopted by the Law Society of New South Wales and the Real Estate Institute of New South Wales. It is said to be a "Plain English" Contract and it is, in our view, a very fair Contract. We do, however, make some minor amendments to the Contract where appropriate. This will be explained later.
Given the heavy onus placed upon a vendor, it is wise that you have chosen a professional person such as a Solicitor to carry out the work on your behalf.
1. Compulsory Disclosure - Documents
The Act and Regulations require a vendor to make disclosure in relation to the land by attaching to the Contract for Sale certain documents. Those documents may be summarized as follows:
- A Zoning Certificate under Section 149 of the Environmental Planning & Assessment Act from your local Council.
- A Drainage Diagram.
- All necessary documents from the Registrar General's Office including a copy of the Plan of the land, a copy of the Folio of the Register and a copy of all Deeds or Dealings creating Easements or Covenants purporting to burden the land.
- Where the property is Strata Title, a copy of the Strata Plan in addition to the above documents.
- Where the land is Crown Land, a copy of the Tenure Card.
If the documents are not annexed to the Contract, then the purchaser may rescind (withdraw from the Contract without losing any deposit) within fourteen (14) days from the date of exchange of Contracts.
It is therefore the policy of this office to immediately apply for all of the documents not provided by you or your agent. This will avoid any delay in having the property put on the market at the earliest opportunity. Therefore we would need payment for covering the cost of these documents as well as initial professional fees on the preparation of the Contract. If you are unable to pay at that time you should notify us and we will enter into a mutually satisfactory arrangement for payment.
2. Compulsory Disclosure - Building Matters
2.1 Survey and Building Certificate
The Act and Regulations provide a warranty by the Vendor that, as at the date of the Contract and except as disclosed in the Contract, there is no matter in relation to any building or structure on the land that could justify the making of an order by the local authorities, (i.e. the Local Council) or, if there is such a matter, a Building Certificate has issued in relation to the building or structure since the matter arose. If one is discovered by the Purchaser then the Purchaser may rescind the Contract (withdraw from the Contract without losing any deposit).
The type of thing that could cause problems include unauthorised structures such as pergolas and swimming pools as well as possible conversions of, say, a garage into a living room. On this basis we strongly recommend that there be annexed to your Contract for Sale the following:-
- An up to date Survey Certificate;
- An up to date Building Certificate from the Local Council; and
- Any information about improvements to the property whether Council approved or not.
In relation to (1) and (2) above, we will request your mortgagee (if any) to provide us with copies of any existing documents. If, however, the mortgagee does not have these documents, then we would strongly recommend that you obtain fresh documents for annexure to the Contract for Sale. The cost of these documents will be no more than $620.00 which includes our professional fees pertaining to the documents. We will advise you whether or not your mortgagee actually has the documents. If the mortgagee does not have the documents and you adopt our recommendation to obtain them, then we require the payment of the sum of $620.00 at that time. The obtaining of these documents will most certainly expedite your sale when a Purchaser has been located.
2.2 Subject To Building Certificate
Where you have not obtained a Survey Certificate and Building Certificate for annexure to the Contract then quite often a Purchaser will need to obtain a Survey Certificate and Building Certificate for both their own protection and for their mortgagee. Occasionally a Purchaser's solicitor will therefore request that the Contract for Sale be made "subject to" the issue of a Building Certificate. This means that the Purchaser will apply for and pay for their own Certificate, but if the Certificate is not issued by the Council, then they will be entitled to withdraw from the Contract and have the whole of their deposit refunded. If a request is made to make the Contract subject to the issue of the Certificate and, if you are not purchasing another property, then in those circumstances we would recommend that you accept the condition.
2.3 Approved/Unapproved Improvements
We will also be providing you with a Questionnaire form. That Questionnaire form will ask you about improvements to the property. If there are any improvements to the property that have not been approved by Council then, again, we would urge you to have them approved by Council at the earliest opportunity. If you do not propose to have them approved by Council then you will need to tell us about them in any event as they will need to be disclosed in the Contract. If you have any problems, questions or doubts in regard to these aspects of your sale, please speak to the solicitor handling your sale.
In summary, as we have indicated, it is our very strong recommendation that you obtain a Building Certificate for annexure to the Contract. If you do not and if there are matters which would require upgrading or demolition of a structure, then this may give rise to the ability of the Purchaser to withdraw from a Contract (rescind the Contract) or, in some cases, require you to attend to the demolition or upgrading at your own costs. There is also the possibility that if there is a breach of the warranty in any major way, then the Purchaser could take action in damages.
The Legislation also states that unless the vendor discloses something to the contrary in the Contract for Sale, the land being sold is not affected by Government regulations from numerous Government Departments. Our questionnaire form covers all of these aspects and unless you have received a Notice from a Government Department it is highly unlikely that the property is affected. If any Notices have however been received by you in relation to the property then you should forward the Notices to your Solicitor.
Exchange of Contracts and Cooling Off
There can be no binding Contract between a vendor and purchaser unless there has been effected an “exchange of Contracts". An exchange of Contracts is simply where your Solicitors hand over the Contract for Sale, signed by you, in exchange for the Contract for Sale signed by the Purchaser. This, of course, may be effected by the Estate Agent as set out elsewhere in this Information Pamphlet. It is at this time that the full agreed deposit is to be paid by the Purchasers.
1. Cooling Off Period
The present position is that the Conveyancing Act provides for a “cooling off" period of five (5) business days from the date of the exchange. If cooling off rights are to be surrendered or the period for cooling off to be shortened then it is necessary for the purchaser to give the vendor a Certificate signed by a Solicitor or a Barrister, which Certificate is prescribed by the Act. Where the Certificate is given then there is no cooling off period and the Contracts are binding at the time of exchange of Contracts. Where however no Certificate is given then it is important that you are aware that there is a cooling off period.
The purpose of the cooling off period is to allow purchasers to arrange their finance and quality reports such as Pest and Building Reports. Quite often however a period of five (5) days will not be sufficient time to obtain these reports and have finance approved. We would ask that you agree generally to an extension where necessary. Unless otherwise advised by you we will agree to an extension on your behalf of no more than five (5) days.
The exchange of Contracts may be effected by either: -
- The Estate Agent; or
- Your Solicitor.
2. The Exchange of Contracts
Where the exchange has been effected by the Estate Agent then in most cases the cooling off period will apply and the Certificate waiving it will not have been provided. It is therefore important that where you are purchasing another property, it is better that the exchange of Contracts be effected by your Solicitor and the Certificate waiving the cooling off rights be obtained on the exchange. You should instruct your Solicitor in that regard.
Where the agent has not exchanged and exchange is to be effected by the Solicitor, it is normal we endeavour to obtain a Certificate waiving the Cooling Off rights. The effect, therefore, is that the Purchaser is bound by the Contract for Sale immediately upon an exchange. You will be advised whether or not the Cooling Off rights have been waived.
The amendments to the legislation are quite new and have not yet had the opportunity of being fully tested. If you have any enquiry in relation to the amendments please do not hesitate to contact your Solicitor.
Are you Purchasing?
If it is your intention to purchase another property in the hope that you will move directly from your existing property to the new property, then you should advise the Solicitor handling your matter. That Solicitor will do all in his power to co-ordinate the sale and the purchase so that you can move from one property to the other.
In order to do this, it is necessary to co-ordinate the timing of both transactions and to get the agreement of your purchaser and your vendor to the time required by you. It is not always possible to co-ordinate the two transactions but if you give your Solicitor due warning of your intention to purchase, then the chances of co-ordinating both matters together are much greater.
A common question asked by a vendor is “How long will it take?". Because of the conveyancing system in New South Wales, it is not possible to answer this question definitely. However, we endeavour to give you a guideline as to the timing and to fix the time for exchange of Contracts and final settlement of your transaction as early as possible.
As a guide however we can provide the following information:-
- When a purchaser has been located by your agent, the agent will fill up the Contract for Sale and either forward same to the respective Solicitors or arrange for the exchange. If he arranges for the exchange then you could expect settlement to take place within four (4) to five (5) weeks after the expiration of the cooling off period.
- Where the exchange has not been arranged by the agent then you can expect a formal exchange to take place (probably without the cooling off period) within five (5) to ten (10) days of the actual sale.
Settlement could then be expected in about four (4) to five (5)weeks from the actual formal exchange.
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.
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.
We will keep your file open for a period of no longer than six (6) months. If the property has not been sold at that time we will close our file and render a final account. It will be possible, nevertheless, for the file to be reactivated if the property is subsequently sold and, for a limited period of time (up to about twelve (12) months, the documents can still be used in any Contract for Sale.
Payments on Settlement
When settlement is effected we, as a matter of course, attend to payment of any mortgagee or caveator that is registered on the title to your property. Our costs and disbursements will be deducted from the proceeds of sale and, if the agent is not holding the deposit, we would normally (subject to your instructions to the contrary) forward the agent's commission to him.
However, if there are other payments that you would like us to make from the proceeds of sale, then please advise us. These payments might include the payment of the balance of Deferred Stamp Duty (which, by law, must be paid on the sale of the property), the payment of any major debt or any series of debts. These payments will not be made, however, unless we are instructed by you to make the payments.
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 on (02) 4626 5077 or email him on email@example.com. 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 you can see the conveyancing transaction can be rather complex. Your Solicitor, however, is trained and experienced in those transactions and what appears to be extremely complex to you is handled with confidence by your Solicitor.
The Solicitors employed in the Commercial Property Department of Marsdens Law Group are highly trained and experienced to handle all conveyancing matters.
Should you wish to discuss your needs please contact Mr Peter Crittenden on 46 265077 or email firstname.lastname@example.org .