Buying or selling a property is a significant milestone in anyone's life. Whether you're purchasing your dream home or selling an investment property, the conveyancing process is a crucial aspect of real estate transactions that ensures the legal transfer of property ownership. Understanding the conveyancing process can help both buyers and sellers navigate through the complexities involved and ensure a smooth and successful transaction.
Conveyancing is the legal process of transferring the ownership of real estate from one party to another. It involves various legal and administrative steps to ensure that the transfer is valid, legal, and binding. We have broken down the process into five steps to assist your understanding.
Drafting the Contract of Sale and Vendor Statement
The conveyancing process begins before the contract is entered. Generally, when the property is ready for sale, the seller should have the draft Contract of Sale and Section 32 Vendor Statement prepared by a legal practitioner or conveyancer.
It is important to choose a qualified legal practitioner or conveyancer who will be able to prepare the documents and act on your behalf in your best interest. You should obtain written quotes and make inquiries about the scope of work included before deciding to use their service.
A Section 32 Statement is a document that contains information set out in Section 32 of the Sale of Land Act 1962. The information required includes but is not limited to:
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- Mortgages
- Covenants
- Easements
- Zoning
- Outgoings (for example, rates)
- Declaration if located in a bushfire-prone area
- Owners corporation certificate if applicable
A Contract of Sale is the document prospective buyers will sign to make a formal offer on your property. It contains:
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- Details of the property
- Your name and the buyer's name(s)
- The name of your estate agent (if you are using one)
- Details of legal practitioners or conveyancers that you and the buyer have engaged
- The purchase price (including or excluding the GST)
- The deposit paid
- The balance owing at settlement
- Any special conditions, such as a ‘subject to finance’ clause
To ensure the documents are legally valid and prevent the buyer from withdrawing from the sale, the seller must disclose all the relevant information to their legal representatives.
Due Diligence
Prior to auction, or sometimes as a condition of their offer, the buyer conducts further due diligence, which may include property inspections, obtaining finance pre approval or final approval, and pest and building reports.
The Section 32 Statement must be provided to prospective buyers before a property is sold so they can have their legal practitioner or conveyancer check the statement. Part of a buyer due diligence should include having the Contract and Section 32 checked and approved by their legal representative prior to making an offer.
Offer and Acceptance
Once a buyer is satisfied with their due diligence, they will make a formal offer by signing the Section 32 and Contract of Sale. The seller can accept, reject, or make a counteroffer. Often, a small holding deposit is requested by the Vendor or their agent, to show the buyer is genuine in their offer.
Once both parties agree on the terms, including the settlement date, the Vendor will sign the Contract of sale. At this point, the transaction becomes legally binding, and the buyer usually pays a deposit, typically 5-10% of the purchase price upon signing or within several days of signing.
Settlement Date
Both the legal practitioners or conveyancers acting for the buyer and the seller need to make sure all finances are in order before the settlement date. If there is a home loan in place for the property, the seller needs to complete a mortgage discharge with their bank.
In most cases, the practitioners use PEXA to prepare the required documents, confirm the final amount, and enable the funds to be paid automatically.
A property inspection by the buyer prior to the settlement date ensures nothing has changed since the Contract of Sale was signed and any specific requests have been fulfilled.
On the settlement date, if all the required documents are ready, they will be lodged with the Land Titles Office, and funds will be transferred for the sale of the property. The property ownership is officially transferred to the buyer.
Post-Settlement Documentation
Following settlement, the legal practitioner or conveyancer will lodge the necessary documents with the relevant authorities, such as the Notice of Acquisition to the relevant council, water authority, and owners corporation, to update the property title and ensure that the transfer of ownership is recorded legally.
To ensure a smooth and hassle-free property transaction, please contact our property team.
How can I learn more?
Serena Ding.
Principal.
- Property, Business & Public Notary
- 03 9890 3321
- Email Address: s.ding@robinsongill.com.au
Kelly Brown.
Associate.
- Property and Wills & Estates
- 03 9890 3321
- Email Address: k.brown@robinsongill.com.au
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