Buying and selling property can be very competitive, particularly in Sydney and the surrounding suburbs. Potential buyers need to be market ready so they can make informed decisions, and sellers must have watertight contracts that meet disclosure obligations to minimise delay and address the unique features of the property.
The key role of a lawyer in a purchase transaction is to carry out due diligence to ensure their clients receive clear title to the property and that they know exactly what they are buying. Due diligence involves investigating the property to make sure dwellings are compliant with laws and regulations, conducting searches to establish whether the land is adversely affected by government proposals, and ordering pest and building inspections to report on the condition of the property and to flag potential pest, maintenance and repair issues.
With some properties in our area still under Old System Title, this also requires tracing a bundle of complex documents to establish that the owner has good title which can be transferred to the purchaser.
Pre-approved finance is essential before entering the property market and allows purchasers to move quickly once a suitable property is found. A pre-approved loan is generally one that is conditional upon a satisfactory valuation of the property.
The contract for sale of land is the formal document that sets out the rights and responsibilities of the parties, the legal description of the property and includes prescribed disclosure documents – typically a plan of the land, the title search with details of registered interests such as mortgages, easements and covenants, a council planning certificate and drainage diagram.
Most contracts contain standard conditions as well as additional clauses included by vendors, usually to protect their interests, which should be carefully assessed. After a contract is reviewed and explained to the purchaser, additional conditions may be negotiated to suit the individual circumstances of the parties and the transaction.
Sellers otherwise known as Vendors
A residential property in New South Wales cannot be offered for sale without a written marketing contract. The contract must contain the prescribed disclosure documents and the vendor must give certain warranties regarding the property.
Disclosure documents include a title search with details of registered interests, a plan of the land, council zoning certificate, drainage diagram and where relevant, swimming pool compliance documentation. In some cases, a building certificate and home-owners’ warranty certificate may need to be included and, depending on the property and its location, an identification survey may be recommended. These matters are discussed when meeting with your lawyer.
Vendors must also warrant that there are no adverse affectations (government proposals and interests) concerning the property, the zoning is accurately stated, and the sewer is as indicated on the drainage plan. It is also implied that the property is not subject to any work or demolition orders and that relevant approvals have been obtained for any dwellings.
Each property is different – issues concerning non-compliant works or the condition of dwellings should be discussed with your lawyer. These may be dealt with through specific disclosure in the contract.
Disclosure enables a purchaser to make an informed decision regarding the property with the implied warranties providing a safety net against latent (unobvious) defects. Purchasers may have certain rights to rescind (cancel) a contract if the disclosure information is inaccurate or missing.
The repercussions of a lost sale, particularly when a seller has committed to purchase another property, can be devastating. In most cases, we can have a contract prepared and sent to your agent within five business days of receiving your instructions.
The conveyancing process explained
Conveyancing is the legal process of transferring property (real estate) from one party to another. The process moves quickly but involves several steps before completion takes place and typically takes the following course.
Pre-exchange and exchange
After a sale is negotiated the agent provides details to the vendor’s representative who completes a contract and forwards it to the buyer’s representative. During this time, buyers carry out any pre-purchase enquiries, obtain pest and building reports and the parties may negotiate further conditions to be included in the contract.
When all terms are settled and the buyer is happy with the results of reports and enquiries, contracts may be exchanged. This is the formal process of committing the parties to the agreement, subject to any statutory cooling off rights or pre-conditions. Identical contracts, each signed by the purchaser and vendor are exchanged (swapped) by the parties’ representatives. The deposit, which is usually 10% of the purchase price is paid to the seller’s agent and held in trust. The contracts become immediately binding unless the purchasers have retained their cooling-off rights in which case, they become binding five business days later.
Exchange of contracts triggers the count-down to the day for completion which is generally six weeks later.
The purchaser’s lawyers will investigate the property further by ordering government searches to identify if there are any interests in the property that would not ordinarily be disclosed in the contract.
The parties’ representatives liaise with any financial institutions involved. If the purchaser is borrowing, information is provided to the lender for preparation of the loan documents. If the seller has a mortgage, the lender is notified to start preparing for the release of security over the property and calculating the payout figure on the loan.
Settlement adjustment figures are provided by the purchaser’s representative and checked by the parties. This is a reconciliation of the transaction based on the purchase price, deposit paid and relevant adjustments as at the date of settlement (council, water and sewerage rates, estimated water usage, strata levies).
Unless other arrangements are in place, the seller must vacate the property by the settlement date and leave it clean and tidy with all items removed and substantially in the same condition as when it was inspected. The buyers will arrange a final inspection of the property with the selling agent just prior to settlement.
Traditionally, completion of a conveyancing transaction took place when the legal and financial representatives met to exchange bank cheques, title deeds and other documents for the property.
With the introduction of electronic conveyancing, most settlements now take place online through the property exchange known as PEXA. This removes the geographic and time barriers associated with physical settlements, tracks progress of each stage of the transaction, enables online lodgement of documents with land registries and authorities and faster access to proceeds of sale funds.
Getting market ready
Our property team has over 20 years’ experience across all aspects of conveyancing and property law having assisted hundreds of clients with their property transactions. We have additional expertise in old system title conveyancing and offer affordable flat fee property conveyancing rates.