We can help with Conveyancing
Do you have sufficient funds to buy?
It is not just the purchase price you need to take into consideration.
You also need to ensure that you will have sufficient funds to pay stamp duty (calculated on the purchase price – the higher the price, the higher the stamp duty), registration fees on the transfer of land (required to register your name on the title of the property), title insurance, legal fees and possibly building and pest inspections.
Where should you start?
If you find the property you are interested in, contact us and we will do all the due diligence on your behalf. We will contact the agent and request the vendor statement (a document providing a range of information about the property), review it and advise you on any issues you should be aware of. We will also review the proposed contract and recommend any changes required to put you in the best position possible.
The process of buying a property
You investigate the property and ensure that you are aware of any issues adversely affecting it (due diligence). This includes a physical inspection of the property, review of the vendor statement and making independent enquiries with the relevant authorities (such as the Council, water authority and owners corporation), for example, whether there are any restrictions or easement affecting the land, what ongoing costs you will need to pay in relation to the property.
You negotiate the terms of the purchase and sign a contract of sale. You will then be required (usually, but not always) to pay the deposit of 10% of the purchase price. The value of the deposit can be negotiated but it is unlikely to be less than 5% of the purchase price.
You “settle” the matter. This is usually 30 or 60 days after the signing of the contract. At settlement you will pay the balance of the purchase price in exchange for the documents allowing you to register your name on the title of the property.
You then register your name on the title. You will need to have the purchase assessed by the State Revenue Office and pay stamp duty (we assist you with that), after which you will be able to have your name registered on the title by the Titles Office and the property is yours.
Once you know the purchase price, we will be able to calculate stamp duty and registration fees for you.
You may wish to calculate stamp duty to help you plan your purchase. Click here to do this, it’s a good idea.
Let’s discuss legal costs in your purchase.
Selling a Property
Appoint a real estate agent
You may sell a property yourself or decide to appoint a real estate agent to handle the sale. If you appoint an agent, you would sign an exclusive sale authority with them.
You should know two basic things about the authority:
By signing it you give the agent the exclusive right to market and sell the property for a specified period – usually 90 days.
If you seek to sell the property with another agent within the period of the authority, you may be liable to pay commission to both agents.
The agent’s obligation extends to finding a purchaser who signs an unconditional contract. The agent is entitled to a commission if this is achieved, even if settlement does not take place. This is something to bear in mind in the very unlikely event that the purchaser is unable to fulfil their obligations under the contract of sale.
Vendor disclosure statement (Section 32)
All vendors must provide certain details relating to the property to prospective purchasers. This document is known as a vendor statement or Section 32. Your solicitor or conveyancer will prepare this document for you. Agents are always very anxious to receive it as they cannot sell the property without it. Your solicitor or conveyancer will make enquiries and obtain all the certificates that are necessary to ensure the statement is correct and valid.
What property certificates are required?
Your solicitor or conveyancer will discuss with you what certificates are necessary to ensure the vendor statement is correct and they may include:
- Land information certificate
- Planning certificate
- Water information statement
- Building approval certificate
- Owners corporation certificate
- Heritage Victoria certificate
If the statement is not valid, the purchaser may withdraw at any time up to final settlement. If that happens, the purchaser will recover the deposit and you will probably be liable for the agent’s commission on the first sale as well as on any resale. You may also be faced with additional legal costs.
The contract of sale
The contract of sale is the most important document in the conveyancing process as it records the terms of your agreement with the purchaser regarding the purchase of the property.
The contract can be prepared by your agent, however, we recommend that this is done by a solicitor/conveyancer.
The standard contract provides that the property remains ‘at the risk of the vendor’. This means that the vendor is responsible for any damage to or destruction of the property and should therefore retain insurance over the property until settlement.
Goods and services tax - GST
When you are selling a property, there may be tax implications for you. You should always discuss those with your accountant before you put the property on the market because you may then take some steps to reduce your tax liability.
If you are selling an existing residential property, you will not be required to pay GST on the sale price even if you are registered for GST. However, if the property is a “new” residential property, commercial property or vacant block of land, even if you are not registered for GST, you may be “required to be registered for GST”.
Your account would be best equipped to advise on this issue.
Capital Gains Tax
Another tax liability you need to be aware of is Capital Gains Tax (CGT).
If you are selling a property that you bought on or after 20 September 1985, you may be liable for CGT. The sale is when you signed a contract not when you settled it.
Your solicitor will not be allowed to give you tax advice. Speak with your accountant to discuss it before you put the property on the market so that you know exactly what tax you would need to pay, if any, and when. You may also be able to claim some exemptions so that you don’t pay any CGT.
Release of deposit
Purchasers usually pay a 10% deposit at the time the contract is signed and this amount must be held by a stakeholder, agent or solicitor, until settlement.
It is possible for the deposit to be released prior to settlement, but the purchaser is entitled to have full details of any amounts owed in relation to the property. This means that we must obtain information from your lender, if applicable.
If you do not owe any money on the property, your solicitor or conveyancer will arrange for the deposit to be released to you 28 days after the date of the contract.
The agent is entitled to take commission from the deposit once it is released. This helps to explain why agents are so keen for the deposit to be released.
Paying out your loan and discharging your mortgage
If there is a mortgage over your property it is necessary for your solicitor or conveyancer to arrange for that mortgage to be discharged and for the lender to bring the certificate of title to the property to the settlement.
You will need to provide your lender with a completed and signed discharge authority as soon as possible so they can arrange for the mortgage to be discharged in a timely manner.
Transfer of land
This is the document (these days, mostly prepared electronically) that officially transfers ownership of the property from the vendor to the purchaser.
If there are multiple purchasers, they can be registered on the title to the property as joint tenants (which means that the survivor becomes the sole owner) or as tenants-in-common (which means that upon the unfortunate death of one owner, the share of the owner who dies forms part of their estate).
The purchaser is entitled to conduct a final inspection of the property in the week before settlement. The agent will arrange this. The purpose of the inspection is to establish that the property is in the same condition it was on the day of sale – fair wear and tear excepted.
A purchaser must accept minor deterioration, such as an overgrown garden, but may be entitled to complain in relation to more serious deterioration in the property, such as a tree falling on the house. This is another reason to continue insurance cover.
Your solicitor or conveyancer will appoint a settlement agent to attend settlement on your behalf. It is not necessary for you to attend.
Settlement takes place electronically. This process normally takes approx. 30 minutes, depending on the complexity of the transaction.
Proceeds of sale are usually available to the vendor within a couple of hours after settlement.
Whether you are buying or selling a real property, your solicitor will surely bring up the issue of “adjustments” before settlement.
Adjustments is the apportioning of outgoings regarding the property between the purchaser and the vendor in accordance with the terms of the contract on the settlement date.
Outgoings commonly adjusted are:
(a) Council rates;
(b) Water and sewerage rates;
(c) Owners corporation fees; and
(d) Land tax.
Your solicitor will obtain certificates from the relevant authorities (local council, water authority, owners corporation, State Revenue Office) detailing the outgoings affecting the property and then calculate an apportionment between you and the other side for the time that each party has occupation of the property.
Keys are usually collected by the purchaser from the agent after settlement. The agent should only hand over keys upon receipt of written authorisation from your solicitor or agent.
Other keys will normally be left in the property, along with instruction books and household information.
Your solicitor or conveyancer will provide you with full financial details relating to the settlement and will also advise the local council and water authority of your purchase.
It will be your responsibility to arrange for final readings of electricity, gas and telephone services and the forwarding of those accounts to your future address.
If you have repaid a mortgage at settlement, your financier will also report to you after settlement.
Contact us to find out how we can assist you.
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