The highs and the lows...
Conveyancing is the buying and selling of property - commercial buildings,
houses, farms, vacant land.
For most people, buying and selling a house is a major decision and
often an emotional one. Understanding the legal processes necessary
for you to sell your existing property (if you have one) and purchase
a new property (including dealings with a Bank, Building Society or
other lender, as Mortgagee) helps matters proceed smoothly.
A number of things can cause delays and difficulties in settling
the sale or purchase of a property on time. There are also matters
which should be considered when buying and selling a property.
Things to consider in buying and selling a property include:
1. Title Search
Obtaining an up to date Title search (including a plan of the land
and copies of all relevant easements and covenants). A Title search
must be included in the Section 32 Statement ('Vendor's Statement')
attached to the Contract of Sale. The search shows who owns the property
and all current dealings affecting the Title to the property.
Possible dealings that may affect a property include existing Mortgages,
Easements, Land Tax Charges, Caveats, adverse possession claims etc.
|You should check that:
||The Title particulars are correct.
||The measurements of the land accord with those shown
on the plan attached to the Title search to ensure that the boundary
fences are on the Title boundaries.
||The location of the property is in accordance with
the Title by checking the distance to the nearest connecting street
||There has been no failure to comply with the terms
of any easements and/or covenants affecting the land.
||The Mortgages, Caveats and other encumbrances registered
against the Title to the property are (if necessary) discharged,
withdrawn or otherwise removed at or prior to settlement.
|| If Covenants affect the Title, then you should
check what the Covenants require and that you can abide by them.
A Covenant may restrict what sort of house can be built on the
property and/or what the property is used for.
|| Easements - nothing is built on or over them in
case the area has to be dug up to clear drains etc.
|You should check that:
|| Inaccuracies in a Vendor's Statement may allow
you as Purchaser to avoid the sale and recover all monies paid
to the Vendor.
||All relevant searches and certificates should be
included in the Vendor's Statement. The information contained
in these searches and certificates must be checked carefully.
||Details of all notices, orders or requirements affecting
the property should also be included in the Vendor's Statement
(This could be a fencing notice by a neighbour requiring contribution
towards the cost of a new fence, a demolition order on the house,
Contract of Sale
|Ensure that the Contract of
|| The Vendor
||The Property Details
||The Settlement Date
||Special Conditions - anything which affects your
decision to buy the property (eg, subject to finance, subject
to the sale of your property, subject to obtaining a building
||Any items which you expect to acquire
with the property. Some examples are:
- rotary clothes line, television, antenna
- potted plants, barbecue
- garden shed, pool equipment
- window furnishings (drapes, blinds, curtains, awnings and fly
If you are a Vendor, it is also prudent to specifically detail in
the Contract any items which you intend to take with you when you
Confusion in this area arises where the parties are unclear as to
what items are chattels (which should be set out in the Contract)
and fixtures (which automatically pass with the sale of the property
and technically do not need to be detailed in the Contract).
Settlements can be threatened by an argument over a minor matter
like potted plants or missing doorknobs or changed curtains. This
can happen when the Vendor and the Purchaser have not considered and
agreed on what happens to these items at settlement.
The property should be adequately insured at all times up to settlement
and, in the case of a purchase, thereafter. It is the Vendor's responsibility
to insure the property until settlement. It is prudent for a Purchaser
to take out insurance once the Contract is signed - so you know the
property is adequately insured.
Strata or Stratum Title Units - the body corporate or service company
must ensure a strata or stratum titled building is properly insured.
This should be for its full replacement value.
In the case of a house purchase, you should contact your solicitor
before or immediately after you sign the Contract because you may
be able to exercise the right to 'cool off' if you change your mind
about the purchase or if there is a problem with the property. A Purchaser
does not have the right to cool off if they have bought the house
property at or within 3 clear business days of an auction, received
legal advice before signing the Contract of Sale or the purchase price
exceeds $250,000.00. The cooling off period is 3 clear business days
after signing the Contract of Sale.
Other than the cooling off period, there are other time limits that
run from the date you sign the Contract of Sale.
Requisitions on Title
These are enquiries of the Vendor about the property. They must be
sent within 21 days of the day of sale (the date of signing the Contract).
If settlement is to take place within 60 days (or less) there is not
a lot of time to properly organise everything (legally, financially,
notifying relevant authorities, moving household effects, etc) so
that settlement takes place on time. A 30 day settlement is possible
but very difficult to achieve, especially if there is a financier
These are obtained from the relevant authorities (eg Council, Water
Board, Land Tax, Planning) and provide important information about
Some of this information (location of sewerage and water easements;
building permits, etc) is not recorded on the Title search.
If it is a strata or stratum titled unit, a certificate should also
be obtained from the body corporate or service company detailing levies,
fees, insurance, etc.
Lenders usually require copies of the Contract, Statutory Certificates
and Transfer of Land. They may have other requirements depending on
the property. Prior to settlement, they also require the Notice of
Acquisition, a copy of the Statement of Adjustments, payout figures
and details of settlement. Give your Lender plenty of time to prepare
documentation, get it to you to execute, have your solicitor consider
and advise you on it (if you want to do this and/or the Lender requires
A Mortgage may be for a set amount (eg, $100,000.00) principal or
'all monies' (for all monies owed by you to the Lender from time to
time). It gives the Lender the right to sell the property if you default
under the mortgage. A mortgage is also a guarantee so, if the value
of the property is not enough to pay out the mortgage, the Lender
can sue you for the balance. Some lenders may want mortgage guarantee
insurance. This is to ensure that they receive all principal interest
and other monies owed to them under the mortgage in the event of your
default. This is usually required where the value of the property
is less than Lender's usual Loan to Value Ratio (LVR). This is generally
75% for house properties. With mortgage guarantee insurance, the mortgage
guarantee insurer can pursue you for any monies which it pays out
to the Lender under that insurance policy and which it does not recover
if it sells the property.
Statement of Adjustments
Adjustment of rates, land tax, body corporate fees, rent and other
outgoings must be worked out prior to settlement and are adjusted
between the Vendor and the Purchaser at settlement.
Purchasers are entitled to inspect the property prior to settlement.
It is wise to do so one or two days before settlement. At that time
you can discuss with the Vendor any practical details concerning moving,
telephone, electricity, gas, rates, etc. You will also see if the
property looks to be in the same state as when you bought it.
Notice of Acquisition or Disposition
These notices are sent to relevant statutory authorities (Council,
Water Board, etc.) to advise of the sale and purchase of the property.
Body Corporate / Service Company
When you buy a flat or unit which is part of a building, there will
be a body corporate or service company whose members are the owners
of all the units at the whole property and which looks after the building
and the common areas of the property. The cost of this is shared by
all the owners in accordance with their liability (unit entitlement)
under the strata plan.
Stamp Duty and Registration Fees
The Government charges stamp duty and registration fees on transfers
of land and mortgages. Do not forget to factor these costs in to your
GST may apply to your purchase. You should check this before signing
The above is only a brief summary of some matters involved in a conveyance
for the purchase or sale of a Property.
Solicitors can assist you with the items mentioned above and by:
|You should check that:
liaising with your Bank with respect to:
||if you are purchasing - the preparation and execution
of the Bank's security documentation. If necessary, or it is required
by the Bank, the solicitor can peruse the Bank's Mortgage documents
to ensure everything is in order and advise you about them;
||if you are selling - arrangements for the discharge
of the Mortgage(s) registered against the Title to your property;
||if the Vendor is a Company - checking
if it has any charge over its assets and getting a release of
it in respect to the property it is selling.
|| release of deposit monies - where you are selling
a property, assisting you and your Selling Agent in attempting
to obtain an early release of the deposit monies so that these
funds may be utilised by you prior to settlement or put towards
the purchase of another property.
There are many other matters which must be carefully considered if
you are contemplating buying or selling a property or are actually
We are happy to work with you, your lender and other professional
advisers (accountant and financial planner) to have the transaction
proceed as smoothly as possible.
This article is general in nature
and for information only. It should not be acted upon without obtaining
specific legal advice.
©Anne Hodgson & Co Lawyers,
Tel: 03 9578 7444 Fax: 03 8677 2962 Email: email@example.com