Conveyancing Frequently Asked Questions
1. What is conveyancing?
It is the legal process by which a house, unit, or land is bought and sold. Conveyancing is simply the method by which ownership of the property (also referred to as the title) is transferred from one person or company to another person or company. Anyone buying or selling property must do so through the conveyancing process.
2. What is a Contract for Sale of Land?
This is the written legal document which is used to record all the terms about the sale of the property between the Seller and the Buyer. This may be supplemented by Special Conditions which are agreed between the Seller and the Buyer that also form part of the contract.
3. What does a “cooling off period” mean?
Once a Buyer pays his/her deposit and the contracts are exchanged between the parties, there is a binding Contract.
Upon exchange of contracts, there is, in certain circumstances, a “cooling off period” which expires at 5.00pm on the 5th business day after the day that the Contract was made.
During the cooling off period, the Buyer usually conducts all necessary searches to find out more about the Property. If the Buyer decides not to go ahead with the purchase of the property during the cooling off period and therefore rescinds the contract, the Buyer loses 0.25% of the purchase price.
A Seller cannot withdraw from the Contract at this stage. It is possible for a cooling off period to be shortened or excluded. If a Buyer decides to do this, they must get legal advice and sign a special certificate (known as a Section 66W Certificate) waiving their rights to a cooling off period.
4. What does it mean when agents say a property is “under offer”
This simply means that an interested party is in discussions with the Seller. The property remains on the market. Usually, the property will only be taken off the marked once contracts have been exchanged and a deposit has been paid.
5. What does “exchange” mean?
Exchange means that a binding contract has been formed between the Seller and the Buyer. On exchange, the Seller is usually required to pay a 10% deposit of the purchase price. Unless the Buyer has waived his/her rights to a cooling off period (where such period applies), a 5 day cooling off period commences following exchange.
6. I’m buying a property and just found out that I can’t get finance but I have the deposit. What happens next?
If you have exchanged contracts and paid the deposit but find out during the cooling off period that you are unable to obtain finance, you will need to rescind the contract during the cooling off period. This means that you will forfeit 0.25% of the purchase price.
7. What is the difference between buying a house or a unit at auction or a house that is “for sale by private treaty?
If you buy a house or unit at auction you are required to exchange contracts and pay the deposit immediately following completion of the auction and there is no cooling off period.
Therefore, if you plan on buying a property at auction you will need to have obtained a copy of the contract prior to the auction and have your lawyer review and advise you on the contract. Most people who are really interested in buying a property at auction will also have carried out searches on the property in advance of the auction, for example pest inspection reports and building inspection reports.
8. What is the difference between “tenants in common” and “joint tenants”?
When people talk about “tenants in common” and “joint tenants” they are referring to the way in which the legal title in the property is held.
If two or more people buy a property together and decide to be “tenants in common” this means that each party holds a particular percentage in the property which is separate and distinct from the other(s) tenant in common. A tenant in common can deal with their portion of the property without the consent of any other tenant in common. On the death of a tenant in common, the deceased share of the property will be transferred in accordance with the terms of a valid will.
If a property is owned by “joint tenants” their interest is not separate and distinct from the other joint tenant. They each own the whole of the property and cannot deal with it unless the other joint tenant consents. On the death of a joint tenant, the remaining joint tenant(s) receive the property.
9. I’m buying a unit in a Strata Plan, is there anything important I should know?
Different concepts apply when buying into a Strata Plan. A buyer must conduct additional searches which are relevant to strata plans and receive advice as to what exactly you own if you buy a unit in a strata scheme.
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