Most people know that transferring of property ownership from one person to another is not a simple task but only a few appreciate how complicated the process of transferring the ownership title from the seller to the purchaser is.
Conveyancing is the legal process of transferring the property from the seller to the purchaser. This process will be done either by a legally licensed conveyancing lawyer or by a solicitor. The process of buying and selling the property does not end with paying the seller and executing a document showing your interest to buy the property. What is important to remember is that once an expression of interest has been executed, the next step is to secure the document required to effect the purchase. In addition, you must also consider the deadlines of settlement, place of settlement and other details in relation to such transfer.
Whilst the precise of details vary on any situation, normally there are 3 stages of a conveyancing transaction which are outlined as follows:
Stage 1: Pre- Contract
The process begins when you express interest to purchase a property. Before you give the seller an offer to purchase their property, you should be in talks with your conveyancer about your plans and goals for the purchase.
As a purchaser, you will generally pay a deposit when you place an offer on a property. However, this does not mean that there is a binding contract in place or that the property will be removed from the market. It just means that you are serious about your offer.
As a seller, accepting an offer verbally does not mean you are legally bound to any agreement. The transaction only becomes official once both parties have signed the contract with mutually agreeable terms. Ideally, you want your conveyancer involved in the process of creating and/or reviewing the contract of sale, as it spells out the conditions of the transaction.
Stage 2: Contract to Settlement
The next step will be the cooling-off period. During this period, the purchaser will be given 5 business days to determine whether or not to rescind the contract. If the purchaser decides to terminate under this provision then penalty costs of 0.25% of the purchase price will be payable to the seller.
This is also the time to prepare for a smooth settlement by:
- arranging payment of transfer duty;
- preparing and examining any mortgage agreements;
- checking any planned developments that could affect the property; and
- undertaking a final inspection of the property to ensure it is in the same condition it was when you signed the contract.
Meanwhile, your conveyancer will calculate settlement adjustments for council and water rates and, if applicable, land tax, rent and body corporate contributions. Your conveyancer will also be in contact with the seller’s solicitor to confirm the settlement adjustments and determine the location and place for settlement. Settlement will then be booked by your conveyancer with your financier (if applicable) and they will determine the funds your financier has available for settlement. If there is any shortfall in settlement funds your conveyancer will arrange for you to transfer it to either their trust account or your nominated shortfall authority account.
When the settlement date arrives, your conveyancer or their appointed agent will attend settlement on your behalf to meet the seller’s representative and both parties’ respective financial representatives, to exchange transfer documents and any other legal documents. At this time, your conveyancer will pay the sum owing to the seller’s conveyancer including the balance of the purchase price, adjustments and legal fees.
Stage 3: Settlement
The final step is the settlement. At this stage, the purchaser takes possession of the property and the seller receives the final and full payment for the property. Settlement involves the presentation of all documentation required to transfer the property from the seller to the purchaser.
Arguably, the transfer of property is understandably a cumbersome process. Apart from the significant sums exchanged during a sale, there is also a myriad of paperwork and fees that need to be completed and paid for. That is why it would be prudent to use a conveyancing professional in order to avoid missing out any important details. A house is likely to be the most expensive thing you will buy or sell and therefore it is not worth trying to save money and undertake the legal work yourself.
Kayleigh Whittaker, Associate
About the author
Kayleigh Whittaker is an associate on our Commercial and Property team. With a high level of experience in commercial and retail leasing, voluntary and involuntary purchase and sale acquisitions and property development, Kayleigh provides practical advice to ensure smooth transactions.