Whether you are buying your first home, subsequent home or even an investment property, the conveyancing process can be quite complex and stressful. There are a number of pitfalls that buyers can fall into. It is important to obtain sound legal advice prior to signing a contract. What can seem as a “simple” transaction can quickly complicate itself should the Contract not be drafted correctly or properly in order to protect your interests. Some of the basic steps in the conveyancing process are:
Step 1
The first step for most buyers is to contact their financier to ascertain the level of finance they could afford to obtain. Be prepared to deal with the banks or perhaps secure the services of a good finance broker. You will be responsible to ensure that you find the loan that’s right for you and it is recommended that you read through your loan agreement thoroughly. You will need to be aware of your repayments, any applicable fees and charges.
When considering the amount of finance you need, you should also consider the other costs involved in purchasing, such as Stamp Duty, legal fees, search fees, Titles Registry Lodgement Fees, etc. Depending on the value of the property you are purchasing, Stamp Duty can be significant. In most cases, you will be required to pay the Stamp Duty on or before the day of settlement.
You can calculate the amount of duty you may be liable for by following this link to the Office of State Revenue’s duty calculator webpage.
Step 2
The next step is to find the property you wish to purchase and the sales agent will most likely draft a Contract for you to sign. Don’t feel pressured to sign anything on the spot. It’s always recommended that you have your solicitor look over the Contract before you sign it as it may need amendments to suit your circumstances. For instance, you may be selling and buying at the same time and might want to include a “subject to sale” clause to protect you if your sale falls through. Or perhaps you are concerned about potential flooding or other matters your searches may reveal. Some searches may provide an undesirable result but this does not automatically mean you can get out of the contract so you may wish to include a “Due Diligence” clause to provide you with a little more protection. It is recommended that you take the time to ensure that the Contract is properly drafted to avoid ambiguity which can cause disputes down the track. Your solicitor should be well equipped to assist you in this regard.
Pay careful attention to the clauses dealing with deposits. Many contracts require a deposit on signing with a balance amount to be paid at a later date. The deposit, both initial and balance, must be paid on time. Failure to pay the deposit on time can amount to a breach of an essential term which could lead to severe consequences.
Step 3
Once the contract is signed by all parties and becomes binding, you should immediately contact your bank or broker if you are obtaining finance. Remember in most cases the bank will send a valuer to value the property. If the valuer’s report is satisfactory, your financier may give you formal approval. This process can take time. It is only after you are formally approved that the Loan Agreement and Mortgage will be sent to you for you to sign. After you return those documents to your financier, they can take up to a week before they are ready to accept a booking for settlement from your solicitor. Therefore it is important to attend to finance early so that your financier is ready to settle on the settlement date. Should you fail to settle on time, you could lose the purchase, your deposit and also be liable for a claim in damages.
Also if the contract is subject to building and pest, don’t delay in hiring a qualified building and pest inspector to provide you with a written report. If you obtain a report that you are not satisfied with but wish to negotiate a mutually beneficial outcome with the seller, its always easier to do so if you have obtained the report early on in the piece rather than at the last minute. You usually have until 5:00 pm on the Building and Pest Inspection Date to advise if you are happy with your report or if you wish to terminate. If you fail to advise in writing whether you are satisfied on time, then the Seller can terminate the contract and you will lose your right to purchase the Property. Your solicitor would generally follow up on the due dates and send the appropriate notices to the seller’s solicitors in accordance with your instructions.
The rest is generally up to your solicitor
At the commencement of the matter, most solicitors provide you with a list of searches which you would fill out. The search list should explain the approximate cost of each search and what each search could show. You would then choose which searches which apply to the matters you may be concerned about or which you think are required. Most solicitors would make some searches mandatory – these are usually those that are required in order to complete the transaction such as title searches or rates enquiries.
Your solicitor would usually attend to drafting any documents as may be required, such as the Transfer Forms and Settlement Notices which would be lodged with the Titles Office. There are lodgement fees that apply when lodging documents with the Titles Registry – click here for more information regarding lodgement fees.
Your solicitor would usually liaise with your financier to book a time for settlement, make the appropriate adjustments to the purchase price in accordance with the terms of the Contract and inform your financier as to the cheques required at settlement.
Your solicitor would usually arrange for the Transfer Forms and Contract to be “stamped” and arrange for the stamp duty payment to be sent to the Office of State Revenue. The solicitor would also help you complete any necessary duties declarations that may be required.
Lastly, your solicitor would usually arrange for settlement to be effected and send out any post settlement correspondence as may be required (eg. cheques to authorities received at settlement, Information for Body Corporate Roll etc.)
Should you require any assistance in relation to conveyancing, please do not hesitate to contact us.
Disclaimer: Please note that this is general information only and should not be relied upon as legal advice. Individual circumstances may differ.