Conveyancing is the process of transferring ownership of land from one person to another, under the terms of a contract for the sale of that land.
How does conveyancing work?
Every Australian State has different laws, forms, regulations, fees, time requirements, protections, jargon and government departments as part of the conveyancing process. Basically, each State follows the same steps – it’s just the details that differ.
Whether you are buying or selling, there is a contract that sets out the terms of the sale. The Buyer and Seller have obligations and rights under the contract. The conveyancer’s job is to make sure you do what you are supposed to do, when you are supposed to do it.
Step one: making an offer
When you are ready to make an offer, the Real Estate Agent will give you the Contract of Sale. You will sign the contract with the price on it and the Seller will either counter sign the contract and therefore accept the price, or possibly make a counter-offer.
Step two: the cooling off period
There is a cooling-off period of five business days. This lets you pull out of the contract without a reason at any time in the five business days from you receiving the contract. There is no cooling-off if you buy at an auction.
Step three: the deposit
The amount of the deposit is negotiated. The higher the deposit the more attractive the offer is to the Seller – especially if there is more than one Buyer making an offer. The deposit is paid into the Real Estate Agent’s trust account.
Step four: the conveyancing starts
1. Insurance
If you are buying a house you should insure it no later than 24 hours after the contract is dated. If the house is destroyed before you become the owner, you are still bound to buy the land and pay the full price. If you are buying a unit, there is no need to insure the property because the building is owned by the Body Corporate.
2. Searching
After the contract becomes unconditional your conveyancer will now make enquires to test the guarantees the Seller has put into the contract.
These guarantees can include things such as land tax, heritage, neighbourhood disputes, local council (rates and water) or Body Corporate issues which would unreasonably affect you.
3. Satisfying Your Lender’s Conditions
The Lender will want to know that when they hand over the money that they are getting what they need to register the mortgage. Your conveyancer will meet the bank’s conveyancing requirements.
4. Paying Transfer Duty on the Contract (also known as Stamp Duty)
The contract is the written evidence of the terms under which you are buying. If you are a first home buyer you could get a First Home Owner’s Grant and a Stamp Duty concession.
5. The Transfer
The Transfer is a legal document which is lodged at the Department of Natural Resources & Mines. The effect of the Transfer is to register you as the owner of the home.
6. Notice of Sale
Your conveyancer also needs to prepare the Notice of Sale. This notifies the council, water board and other government departments of the sale and gives them your details so they know where to send your notices.
7. Settlement Figures
Handing over the money to pay for the home and getting the legal documents so you have ownership of the house can be transferred to you (the Buyer), is called “Settlement”.
To work out how much to hand over at Settlement, all council rates, water usage, body corporate levies (in the case of a unit) and taxes on the home will be divided fairly between the Buyer and the Seller based on the number of days that each own the home. These amounts are called “the adjustments”. The Buyer’s Conveyancer puts these figures together from the information they extract from the searches and sends the figures to the Seller’s Conveyancer.
The Seller’s Conveyancer then agrees to the figures (or not – in which case they are negotiated) and tells the Buyer’s Conveyancer how to make out the cheques for Settlement. The Seller and Buyer’s Conveyancers then set a time and place for Settlement. Settlement usually happens at the office of the person/entity who holds title to the property e.g. the Seller’s bank.
It’s a lot to take in, but property conveyancing doesn’t need to be a daunting topic to understand! If you have any questions about conveyancing or how we might be able to help you, get in touch with our team of experts on (07) 4194 5422 or contact us online here.