Q: What is Conveyancing?
A: Conveyancing is the process of formally transferring the ownership or control of property from a seller (vendor) to a buyer (purchaser).
Q: What do I have to do to sell my property?
A: In New South Wales a real estate agent cannot advertise or show a prospective buyer the property unless and until the Real Estate Agent has a Contract for Sale of Land available to provide to that prospective buyer at the time of advertising or showing the residence to the buyer. You will, therefore, need to engage a lawyer to prepare a Contract for Sale of Land.
Q: What are inclusions and exclusions?
A: Exclusions and inclusions are the technical terms for those fittings and fixtures that will or will not be sold with the property. The status of fixtures and fittings in a property that is for sale is determined through negotiation between buyer and seller before contracts are exchanged.
Q: What is a Verification of Identity test and why do I need this?
A: A Verification of Identity (VOI) Test is a new requirement where your solicitor must take reasonable steps to verify your identity to reduce the likelihood of fraudulent property transactions in NSW.
Q: What happens next?
A: If a real estate agent is involved in the sale of the property, the agent promotes the property and negotiates with you when he/she finds a willing and able buyer. Once a sale price is agreed between the buyer and seller the agent will prepare a sales advice to be sent to the parties including the lawyers for the buyer and seller. The lawyer for the seller (vendor) will update the contract to include the purchaser’s details, the purchase price and any other agreement reached between the parties. The solicitor for the seller will then send to the buyer’s solicitor the contract. The purchaser may/may not seek to negotiate amendments to the contract.
Q: We have not exchanged contracts, what happens if I back out?
A: Until you exchange contracts, you are free to back out without any penalty. The purchaser will have to wear any conveyancing legal costs and the cost of any survey, building or strata inspections, etc, that they have obtained for the property. The seller will also have legal costs.
Q: What is the exchange of contracts?
A: When both parties have agreed to the terms of the Contract for the Sale of Land, they both sign their respective copies of the contract, the buyer pays a deposit to the seller (generally 10%), the solicitor for the seller ensures that the two executed contracts are identical and physically exchanges one copy of the contract for the other (i.e the seller ends up with the purchaser’s signed contract and the purchaser ends up with the seller’s signed contract). From this point, you are committed to selling and the buyers are committed to buying the property. There are substantial legal ramifications if either one of you withdraws from the contract without the consent of the other. Therefore, you must be certain that you wish to sell the property under the Terms and Conditions of the contract before instructing your lawyer to exchange that contract.
Q: What is a cooling off period?
A: Sometimes the real estate agent asks the parties to sign the contract with a cooling off period to allow the buyer to, for example, arrange finance and/or building, pest or strata records inspections. If this occurs, the buyer has a 5 business day period (this can sometimes be extended by agreement between the parties) from the date of exchange of contracts known as “the cooling off period”, for such buyer to change their mind/pull out of the contract. If the buyer does decide to pull out of the contract, the buyer will forfeit a deposit of 0.25% of the purchase price (this is retained by the seller).
Q: What is a Section 66W Certificate?
A: This is a certificate signed by the buyer’s solicitor acknowledging that the buyer does not wish to have a cooling off period (i.e. the cooling off period is waived and the contracts become unconditional upon exchange). A Section 66W Certificate is commonly used for sales by auction.
Q: What if I need funds to purchase another property?
A: If you are buying another property and using funds or part of the funds from the sale of your present property, you must advise your lawyer of this immediately so that your lawyer can make arrangements in the Contract for Sale of your property for the deposit to be endeavoured to be released so that you can use that for the deposit on the purchase of your new property and pay the stamp duty on the purchase. Alternatively, if the deposit cannot be released, you will need to look at using a deposit bond instead of a cash deposit for the property you are buying.
Q: What happens after the exchange of contracts?
A: Where you have a mortgage (a loan secured by the property registered over the title of the property you are selling), we will arrange for that mortgage to be discharged upon completion by using part (or all) monies paid to us by the buyers to do so. However, you need to tell us as soon as we have exchanged contracts as to the particulars of the lender (bank or financial institution) including a name, address, person to contact, telephone, fax and email address. We will direct this lender to arrange for the preparation of documents to allow for completion to take place. You must contact your present mortgagee (the lender/bank/financial institution that has used the property as security to lend you money) to direct the mortgagee to provide a written direction to discharge the mortgage (a telephone call to the bank or financial institution will not suffice). Failure to promptly contact the mortgagee after the exchange of contracts will delay the completion of your sale.
Q: What is completion?
A: Completion, also known as settlement, is the day upon which the sale is made final. That is, the process of conveyancing is completed, and the buyer is able to take possession of the property. We attend the settlement location with the bank or financial institution that has your present mortgage and meet with the solicitor for the buyers and hand over the documents of title (Certificate of Title and Discharge of Mortgage) in exchange for bank cheques representing the purchase price less deposit already paid (unless a deposit bond is used) and adjustments for rates and levies etc.
Q: When I am required to vacate the property?
A: You are required to give vacant possession of the property immediately before the time for completion (unless the property is sold subject to tenancy). Accordingly, you must monitor the progress of the sale to make certain that you coordinate your move with our arrangements to complete the sale. Most mortgagees will not allow for completion to occur before 2.00pm however some mortgagees will allow settlement from 12.00 pm onwards. Settlements do not occur after 3.30pm (if a mortgagee/bank or financial institution is involved for either the buyer or seller).
Q: What do I need to do between the exchange of contracts and completion?
A: You need to deal with insurance of the property, telephone, gas, electricity (except for council rates, water rates, strata levies and land tax). On completion we hand to the mortgagee (if you have a mortgage) a Notice of Sale (or if there is no mortgagee a Notice of Sale is lodged with the Transfer and Title Deeds at the Department of Lands) which notifies the local council, Sydney Water and other government bodies that you have sold the property and the buyers will then receive the accounts for such services. If you are selling a unit/strata title property, we will also hand to the buyer a Section 118 Notice (now referred to as a Section 22 Notice) which the buyer’s solicitor then sends to the Strata Manager to advise them that you have sold the property and the buyers will subsequently receive notices including levy notices.
Q: What if the property being sold is tenanted/Leased?
A: If the property being sold is leased/tenanted and you intend to sell the property with the tenant still living or working there then we need to have a copy of the lease, condition report and any correspondence between you/your managing agent with the tenants so that it may be attached to the contract and disclosed to the buyer.
Need more help? Read the Law Society Guide to Selling a Home
If you want to speak with one of our experienced property lawyers to discuss the sale of your home, contact Rockliffs today!