How to choose the right conveyancer for a private sale?Conveyancing is the somewhat legally intricate process in which title to a property is transferred from one party to another. It involves an ‘exchange of contracts’; a process of giving legal title to a property that has obligations on both the seller and buyer. Because of its intricacy, it is not really recommended that the buyer or seller totally ‘do it yourself’ conveyance the sale. If you are feeling adventurous and wish to save money, then at the least shop around for a good ‘conveyancing kit’ that will guide you through the process. Make sure the kit is up to date and deals with your local state law, as this is a constantly changing legal area. In any case, when you are buying or selling a property you need to safeguard certain major things with the conveyancing process. It is prudent to check that these things are being done even if you are selling/buying a property through a conveyancing officer or a solicitor. Seller – Remember that the main thing you are trying to achieve through the conveyancing process when selling, is that you will be paid the full amount of what was negotiated for your property. Next, in importance to this, you will need to ensure that you have all documents that are legally required and that they are filled out correctly and signed. For some, this will mean that mortgage documents are prepared and thus that the relevant mortgages are ‘released’. An important consideration for many, given the number of important deadlines usually accompanying a real estate transaction, is that the contract settles by a certain date. In short, you need to ensure that you meet all your obligations under the contract and so protect yourself from further legal action by the buyer should you default. The simplest way to achieve this goal of meeting all your obligations is to be completely honest and thorough in filling out your relevant documentation. This is because the ‘contract of sale‘ might be able to be made void by the buyer if the information provided by you is false or absent. The type of information that you might be expected to provide will differ from state to state. Some things you could be expected to answer are:-
- has building approval been granted;
- is there an easement or restriction on the property;
- is the building over a certain age;
- was the building built by ‘owner builder’; and
- have you received an order or recommendation by any authority over the land or dwelling?
The person you choose to take care of the conveyancing process should be thoroughly investigated, as a bad choice can be at best costly and at worst lose you the sale. Are they upfront about their charges and do they inform you clearly of all the government charges? Ask them how you will get the money: will it be a bank cheque to your account or to their office? Let them have their say – ask them to go through the details – so that you can sound out their professionalism. Do they adequately warn you about the importance of having a title search done, as this is the only sure way of finding out about easements and covenants? The average charge by the government for a title search is twenty dollars, so they should not be charging too much more for this component.
Some things are also up to you to make sure the process goes smoothly. An important one is to find out beforehand where your title is held. If your home is mortgaged, it will be held by your bank. Contact the bank and ensure that all relevant release documents will be available at settlement. If you cannot find it close to settlement then you may lose the sale. Find out details such as how long your bank will take to clear your (much anticipated) cheque. If you are buying and selling a home at the same time then this could be a major issue. Also, it is your responsibility to carry the risk of loss or damage to the property right up to settlement, so make sure the property is still insured.
In many states of Australia, Private Treaty Sales, which are sales through an agent by private negotiation and contract, have a cooling-off period. Here a buyer can change their mind and cancel. This is not the case however for auctions or contacts exchanged on the day of an auction even if the property passed in. Further, those who sign a Section 66W certificate – that should only be signed under legal advice – will cancel their rights to have a cooling-off period. In Victoria, the cooling-off period is three days, in New South Wales five days, and South Australia only two. There is no cooling-off period in Tasmania.
As a seller you should also become familiar with what are a buyer’s legal concerns during the closing process so that you are aware of what can go wrong.
Things change from state to state and even sometimes from month to month with conveyancing law. So the situation we will describe as an example of what to expect is for the state of Queensland as of January 2000. For instance, in Queensland at least, the property is at your risk from 5 pm on the first Business Day after the Contract Date, so ensure that you have a Cover Note in place.
As it is most likely that you will be obtaining finance, you should ensure that the contract has a clause for it to be subject to finance approval by a certain date. Even if you have verbal approval, there are occasional problems, and should the contract not have this clause completed and finance is refused, the contract will be unconditional and you must proceed. This clause is one reason the seller will look favourably on negotiations with a buyer who has a pre-approved finance.
The main consideration is to allow sufficient time in the contract for the loan to be approved. In Queensland for instance, the buyer must notify of finance approval by 5pm on the date specified on the contract. If the seller does not receive notification of finance approval by 5pm, the seller may terminate the contract. If instead finance has been refused, you must still give notification by 5pm on the date specified.
In most states you have about twenty-eight days from the date of signing the contract to satisfy yourself that the property is in order and to check that the measurements accord with the title. You may also wish to check that things such as hot water systems and attendant electrical appliances work. To prevent problems, you may wish to have a clause in the contract that all electrical appliances and the like will be working at settlement. You are allowed to make arrangements to inspect the property on the day of settlement to satisfy yourself that the property is in the same condition as it was when inspected. Importantly, you should make the contract subject to a satisfactory structural and pest report. If instead, it is vacant land that is being purchased, you may wish to have the soil tested for unstable ground or toxicity.
Legals of conveyancing for fsboBoth buyer and seller should become familiar with some of the terms used in the conveyancing process so they can clearly understand what is going on and what will apply to them:
- Disbursements: Are costs to the seller for such things as the title search and stamp duty, which is usually added to the conveyancing fee
- Vendor: Is the seller who deals with the Purchaser, the buyer.
- Strata title: You own the airspace above the ground, but not the land! For flats and units.
- Company title: Where apartment owners own shares in a public company, which is different from strata title.
- Community title: Torrens title that exists for a section of land that you own in conjunction with shared ownership of communal facilities, such as a swimming pool. The common land is included with subdivision.
- Torrens title: Under Torrens title, each time that a property changes hands the new owner is registered, as there is a guarantee from the state of ownership. Any tenant or mortgage interests are also recorded by this method. Torrens title was introduced in 1858 by Robert Torrens, who got it through the South Australian parliament and is a system which replaced the old-fashioned and slow Common Law Title. Common-Law Title, where it still exists, shows the whole series of past owners.
- Land Tax: Claimed by a state government on investors and is based on the value of their property.
auction contracts, rate certificates, planning certificates, and vendor’s statements are documents that need to be on hand if you are selling your property at auction.
One issue for some buyers will be what legal arrangements are made with other shared owners of a property, which could be shared ownership in a business or in a relationship. You can go in as a Tenant in Common, or as a Joint Tenancy. The whole property goes to the survivor of a Joint Tenancy, which will override a will. In a Tenancy in Common, a will can be made to inherit a share to someone else such as your child, so this is often the preferred and the more flexible arrangement, and the only sensible one for a business partnership.
Of course, this attempt at demystifying the conveyancing process does not constitute legal advice. It is imperative that you seek some sort of legal advice for this process, particularly as if you don’t, then the mistakes you make will be at your own liability. For both buyer and seller, this whole process of conveyancing might seem daunting. However, it should be kept in mind that almost always both parties are keen to see a successful exchange of contracts. So long as all parties are open and honest with each other, there should be few problems.