Buying and Selling Property
The material provided is for general information purposes only and does not constitute as legal or professional advice by Lynch Meyer Lawyers.
If you are buying or selling property, you may have a lot of questions. Please see below some common questions and answers that may assist you. If you have a specific question not answered below, please feel free to contact us.
- What is conveyancing
- Buying your first property
- Stamp Duty Relief for Eligible First Home Buyers
- The cooling off period
- Auctions
- Private Contracts
- Form 1s
- Insurance Matters
- Steps to settlement
What is conveyancing?
Conveyancing is the legal process of transferring ownership of real estate. It is a complicated transaction essentially involving the transfer of “good title” or ownership from one party to another.
Undertaking a conveyance may seem a simple process that takes little time, but this is not correct. Conveyancing is a complex series of tasks that require extensive conveyancing knowledge and experience, which is why we recommend that you employ a property conveyancing specialist at Lynch Meyer Lawyers to carry out your conveyancing work.
Buying your first property
Buying your first property is a big step and can be a daunting experience without the assistance of an experienced property conveyancing specialist. At Lynch Meyer Lawyers, we will handle your property transaction in a professional and timely manner, keeping you fully informed and competently looking after every step of your property purchase.
We recommend that you contact us as soon as you have found your dream home or investment property. As part of our conveyancing service, we will look after your matter, including coordinating settlement with your bank if you are borrowing money, preparing the necessary Transfer documentation and Settlement Statements, right up to attending at the settlement and advising the rating authorities that you are the new owner.
If you require the contract to be reviewed prior to signing, or
advice on any other matter, our Lawyers can undertake this work, separate to
the conveyancing service.
Stamp Duty Relief for Eligible First Home Buyers
If you are a first home buyer, you may be eligible to apply for stamp duty relief and a First Home Owner’s Grant.
To check if you are eligible for any of the above, and for further information, refer to the following website:
http://www.revenuesa.sa.gov.au/grants-and-concessions/first-home-owners
The cooling off period
In many situations, a buyer of real estate has the legal right to terminate a contract they have signed to buy the property. This is known as “cooling-off.” The right can be exercised for any reason, for example a change of mind.
This right must be exercised within the later of two clear business days of making the contract or within two clear business days after the Form 1 Vendor’s Disclosure Statement is given to the buyer. There is also a right to cool off if the Form 1 given to the buyer is defective.
The Form 1 Vendor’s Disclosure Statement is a very important document. It’s the primary source of disclosure of a wide range of matters that can affect the use, enjoyment and value of a property. It must be provided by all sellers and their agents.
We strongly recommend that no one signs a contract to buy a property until the Form 1 has been provided and examined. In addition to the Form 1, we also strongly recommend that buyers obtain other vital information about a property, such as building inspections and reports, planning issues and possibly boundary surveys.
There is no right to cool off where the buyer is a company or other incorporated body, except where the land being purchased is residential land. There are also other situations where the right does not exist, such as buying under an option or a tender. The right to cool off can be signed away by obtaining advice and a certificate from a lawyer. A person putting an offer on a property about to be auctioned is usually asked to sign away this right. There is no cooling off right if the property is bought at auction or if bought later on the same day of an auction where the buyer has bid at the auction. It is therefore even more important for a buyer at auction to thoroughly investigate and research the property before buying and to have finance in place. A buyer who is unhappy about a contract and who may wish to cool off should obtain our advice immediately.
We can also assist sellers to ensure they provide a proper Form 1 and as to their rights and obligations relating to cooling off.
If a buyer cools off, they are entitled to return of all of their deposit (where the deposit is greater than $100).
Auctions
In the case of an auction, the Form 1 must be available for examination by members of the public at the office of the auctioneer or agent for the seller for at least 3 consecutive business days before the auction and for at least 30 minutes before the auction commences at the place of the auction. The place and time where the Form 1 can be inspected must be advertised.
If the seller’s reserve price is reached at auction, the property will be “knocked down” to the highest bidder, who will be bound to buy the property without any conditions such as subject to finance or subject to sale of another property. Unless prior arrangements have been made with the seller, a deposit of 10% will be payable immediately.
Recent changes to the rules applying to auctions require the auctioneers to tell bidders during the auction if a bid is made by or on behalf of the seller. Usually the agent will say it is a “Vendor’s Bid.” Buyers need to be very alert for this so that they know that the bid is not a genuine bid from another buyer. A vendor’s bid is not allowed to be made at or above the seller’s reserve price.
A person wishing to bid can appoint another person to bid for them at the auction. It is highly recommended that a written authority be given to the person who will be bidding.
Buyers interested in bidding at an auction must register their interest with the agent or auctioneer prior to the auction.
Private Contracts
Sellers usually appoint real estate agents to help them market their property, find buyers and to negotiate the sale. However, an owner is quite free to advertise and market their own property and to sell it privately. Sometimes an owner already has a willing buyer for their property such as a neighbour. In these situations the owner need not appoint a real estate agent. The sale contract, the Form 1 and other documentation can all be prepared by a lawyer or conveyancer, usually at a fraction of the cost of the commission payable to an agent. Lynch Meyer Lawyers can advise on private sales and prepare all necessary documents to complete a sale and purchase.
Form 1s
As already mentioned, Form 1's are very important as they are the primary source of disclosure to buyers of a wide range of matters that can affect the use, enjoyment and value of a property.
The Form 1 must be prepared by the seller or their agent from information obtained from searches of government departments, council searches and from the seller’s knowledge of the property.
The Form 1 must be accurate at the time it is given to a buyer and at the time of the signing of the contract by the buyer.
It must be given to a buyer at least 10 days before settlement, but a buyer should really have it before signing any contract. The Form 1 also informs buyers of their cooling off rights.
The Form 1 must be signed by the seller and by the real estate agent, if there is one.
Offences can be committed by sellers and their agents for breaches of these requirements.
Where a Form 1 is defective or not provided, remedies that may be available to buyers include cooling off before settlement, cancellation of the transaction by a court and/or an award of damages by a court after settlement.
Insurance Matters
When a buyer signs a contract to buy real estate, risk in damage to the property passes to the buyer immediately. Therefore, it is strongly recommended that suitable insurance is arranged by the buyer immediately. At the same time the seller should keep their insurance current until settlement, in the event of a dispute as to liability.
It is also a requirement of banks and lending institutions that a copy of the insurance policy be provided to their office with their name noted on the policy, before settlement can be arranged.
Strata Title units are covered by Body Corporate Insurance which covers the entire building, and each owner contributes a share of the insurance premium based on one’s unit entitlement. However with Community Title lots, buyers usually have to take out their own separate building insurance cover, as the Body Corporate is only obliged to effect insurance on the common property.
In some cases, the Body Corporate of a Community Scheme does insure the buildings themselves instead of owners insuring individually. Units in Community Strata Schemes should be insured by the Body Corporate.
It is important to check that the Body Corporate has insurance in place, which is normally done as part of a conveyance. However, an owner of a strata or community unit should always obtain insurance for their fixtures, fittings and contents.
Steps to settlement
Once a contract is received from a Real Estate Agent, the contract and Form 1 need to be checked. To do this, we strongly recommend that we obtain full statutory searches to check that the contract and Form 1 are accurate, and that a buyer obtains good title in accordance with the contract.
Upon receiving a buyer’s instructions as to the correct name to be shown on the Title, a workspace in PEXA (electronic settlement platform) is prepared, to transfer from the existing owner to the new owner for the purchase price. The conveyancer acting for the buyer and seller will certify the Transfer on the day of settlement.
Prior to signing the Transfer, the buyer must sign a Client Authorisation form authorising their conveyancer to certify the Transfer on their behalf. The seller’s conveyancer will do the same with their client.
The seller’s conveyancer is required to provide a buyer with an adjustment statement, which sets out the adjustment of rates and taxes. From this, the buyer’s conveyancer is able to prepare a settlement statement to the buyer, which includes those adjustments, as well as the government stamp duty and registration fees payable, and their conveyancing fees and disbursements. If the buyer is obtaining finance, the statement shows the loan amount available at settlement, and the final balance due by the buyer to complete settlement. Unless the lender provides the full amount at settlement, the buyer is required to pay any balance to their conveyancer prior to settlement.
A buyer should ensure that they meet their bank’s requirements and sign all mortgage documents with their bank promptly, so that settlement can be arranged without delay.
When acting for a seller, we contact your mortgagee to arrange for the mortgage to be discharged, and obtain a payout figure to settlement date. We also adjust the rates and taxes to settlement, and pay any outstanding rates and accounts associated with the sale of property.
As part of the conveyancing process, the seller is required to provide their conveyancer with rates notices and utility invoices to comply with the requirements of the Verification of Authority (or right to deal). These notices may include a Council rates invoice, SA Water invoice, RevenueSA invoice for land tax or emergency service levy, electricity or gas invoices.
The seller’s conveyancer provides a settlement statement to the seller, which sets out the adjustment of rates and taxes, agent’s commission and advertising expenses, payout figure required by their bank to discharge any mortgage, and their conveyancing fees and disbursements. The statement will also indicate an amount of funds that are being held back pending receipt of a special meter reading from SA Water, or perhaps for the resolution of any matters in dispute. Upon deduction of all expenses associated with the sale, the final balance due to the vendor is derived.
Settlement
Settlements are completed electronically through PEXA. The seller’s conveyancer, their lender (if a mortgage is registered), the buyer’s conveyancer, the buyer’s lender (if required) and any third party required, are all represented in the one PEXA workspace.
Each party provides details of the financials required (outgoings, payment of rates/taxes, loan payout, incoming loan funds). When all parties have agreed on the figures and the workspace is balanced, all parties sign electronically, and settlement can commence.
Settlements normally take place between 11.00am and 4.30pm. Most settlements commence in the morning. Some lenders will only do settlements in the afternoon.
Please note that settlement normally takes about 45 minutes to complete, however at a busy time, this can push out to up to two hours to complete.
Once settlement has been completed, you will need to arrange your own disconnection or reconnection of utilities, connected to the property.