Buying and selling property in NSW
deal with the purchase and sale of all residential property, strata, small commercial property and vacant residential blocks of land. We offer a fixed fee service for almost all transactions and provide all clients a fee estimate after the first consultation.
Buying PropertyThe legal process in briefOffer and acceptance of the offer
Once you have made an offer to purchase that has been accepted in principle by the Vendor, it is important that you obtain legal advice as soon as possible. You solicitor will review the contract and point out areas of risk and advise you what you can do to mitigate the risks.
FAQS: Q:When my offer is accepted, should I pay a holding deposit? A: You can, but understand it is merely a gesture of goodwill and therefore the contract cannot be enforced against the Vendor where only a holding deposit has been paid. Q: What is the usual time-frame between the acceptance of an offer and contracts exchanging? A: Where you require a mortgage to purchase the property, and the purchase is not off-plan, you are looking at a usual time-frame of 2 weeks. Where you purchase cash, the usual time-frame is 1-2 weeks. Remember, you should not exchange contracts until you've seen your solicitor about the contract and obtained a pest and building report. With off-the-plan properties purchasers should be aware that a time frame of many months is usual it is not unusual for the time-frame to be extended further after contracts have exchanged. Purchasers should have a Plan B in mind in case the settlement takes a lot longer than initially anticipated. What does it mean to have a cooling off period? This is a protection period offered to the Purchaser under law. It means even after exchange of contracts, the Purchaser has a few days (in NSW, it is 5-10 business days) in order to change his or her mind without incurring great financial loss. This assumes of course, that the you have not waived your cooling-off rights at exchanged. If you waive your cooling off rights then your solicitor will make sure you understand what you are agreeing to. Looking at the contract and other matters
If there is any time you should be negotiating the terms of the contract, it is before exchange takes place. This is where legal expertise is really useful. After exchange of contracts there is often far less room for Purchasers to negotiate with the Vendor. Your solicitor will attend to any negotiations for you and offer you advice about what it is you want to negotiate and how to best negotiate the terms of the contract prior to exchange. Once you have received legal advice, negotiated the terms and done any necessary or recommended checks on the property, and if you still wish to purchase the property, you will then sign the contract and pay the purchase deposit to the agent or Vendor's solicitor to be held in trust. Soon after that, the Purchaser's signed contract is exchanged for the Vendor's signed contract and the agreement to buy becomes legally binding. This means that if you at any point after exchange you change your mind about buying the property, or for any reason are not able to proceed with the purchase, you will forfeit 10% of the purchase price (regardless of what you actually paid as a deposit). This is why it is so very important to be very sure about the condition of the property you are purchasing and any encumbrances that might affect it - for example, easements, covenants, caveats on the title and so on. FAQS: Q: Can I pay a 5% deposit instead of 10% deposit? A: Yes, but only with the prior consent of the Vendor. Note that if you exchange contracts and then pull out of the contract, you are generally still liable to the Vendor for the full 10% purchase deposit. This means a Vendor can pursue you for the balance of the deposit by means of court proceedings if you fail to pay the balance after cancelling the contract. A problem with 5% deposits is that the lender will want you to take out mortgage insurance, which costs tens of thousands of dollars, however, a limited number of first home buyers in NSW have the option of accessing the governments First Home Loan Deposit Scheme through their lenders. Q: What can I do if I do not have a 10% cash deposit? A: You can ask the Vendor to accept either a lesser deposit (usually 5%) or secure the deposit by way of a so-called Deposit Bond. Note the Vendor is not obliged to accept your request. Deposit Bond providers will charge a fee for issuing a deposit bond, but you can request a quote upfront. Q: Who do I pay the deposit to when buying a property? A. Usually the estate agent, or where the sale is not through an estate agent, then to the trust account of the Vendor's solicitor. The money is just held by the agent in escrow. The agent is not allowed to touch it except in certain circumstances and where you have consented to this. Pre-settlement processOnce contracts exchange, settlement will generally occur 4-6 weeks later, but the wait can be shorter or longer depending on what is agreed by the contracting parties prior to the exchange of contracts. (see also discussion of off-plan purchases - above)
In that time, your solicitor will attend to getting everything ready for settlement. Certain matters must be attended to in all property purchases in NSW prior to settlement: 1. Requisitions on title Your solicitor will attend to putting requisitions on title to the Vendor. Essentially it is a process of Purchaser asking the Vendor certain questions about the property sold, and being satisfied with the answers provided. 2. Preparation of the Transfer and other documents Your solicitor will draw up the documents needed to be handed over on settlement and which are lodged and registered with the NSW Land Registry Services after settlement. 3. Payment of stamp duty (not first home buyers) All first home buyers of an existing property worth $650,000.00 or less, or residential build worth $750,000.00 or less, are exempt from paying stamp duty. All other purchasers must pay stamp duty. Q: What is Stamp Duty and how is it calculated? A: It is a state tax and is calculated according to the market price of the property. It is important to note that where parties to a purchase and sale are related in some way, and/or the price on the contract does not reflect a true market value, the purchaser must still pay stamp duty based on a value determined by an independent valuer not on the actual price paid. Find a stamp duty calculator here 4. Co-ordinating the purchase settlement with your mortgagee Your solicitor will find out exactly what mortgage sum will be available at settlement to purchase the property once bank fees and charges have been deducted from the amount lent to you for the purchase of the property. Since 1 July 2017, first home buyers no longer have to factor in mortgage insurance in this calculation. 5. Determining what the final purchase price will be. The final purchase price is calculated by adjusting rates, water rates, levies and so on to take into account what proportion of these costs is payable by the Vendor, and what proportion is payable by the Purchaser based on the time each party is in occupation of the property over the relevant billing period. 6. Arranging the details of the settlement Your solicitor will calculate the adjusted purchase price and arrange for the necessary payments from your mortgage advance and/or your savings funds. HANDY TIP: Ideally, you will take out a mortgage with the same bank you have your savings account and have the savings account linked to the mortgage account to allow hassle-free flow of purchase funds to the Vendor at settlement. You must make sure any part of the purchase price that is to be paid in cash (from savings) is available at settlement. It means you have to ensure your bank has very specific, written instructions to release and pay over this cash sum at settlement. Failure to ensure this is done could lead to a delayed settlement, which could cause great inconvenience and financial losses both to you and the Vendor and even others relying on the sale proceeding on time. The date, time and location of settlement need to be negotiated and finalised. Furthermore, the Vendor will require the purchase price to be paid over as directed in the Vendor's cheque directions. Your solicitor will attend to arranging all these things. 6. Registration of the title Your lawyer will ensure your ownership is registered on the title of the property - in other words, you become the registered owner. Registration of ownership protects your title and is perhaps the most important part of the conveyancing process. |
Selling PropertyThe legal process in briefDrawing up a marketing contract
In NSW it is the law that before you or your Estate Agent can market your property for sale, a Contract for the Sale of Land needs to be available to any prospective purchaser. Certain documents must be attached to the standard contract. Your solicitor will know what additional information needs to be included in the contract depending on the property you are selling and what is included in the sale. If selling a property with a swimming pool, for example, a registration certificate and compliance certificate should be included in the contract of sale.
FAQ: Q: Where do I start? A:You need to approach your agent or solicitor first and they will tell you what to do. Q: How long does it take between the time of instructing my agent or solicitor and the time marketing of my property can commence? A: To market your property, your agent must possess a complete contract of sale. Often it only takes 3-4 days to finalize a contract, but it depends on several factors including the speed with which your solicitor can be supplied with documents from various providers including the local Council and how quickly your solicitor can see you. Q: How soon after making an offer will the contracts exchange? A: Usually, 2-3 weeks, but contacts can exchange in as little as a couple of days where there is a cash-buyer. Exchange may take longer, for example, because there are issues with the property that the Purchaser needs to investigate or the Purchaser's financial arrangements are a bit more complex than is usual and it is taking the Purchaser time to arrange payment of the purchase price. It is largely the Purchaser who controls the speed with which matters proceed at this point. 
After the offerOnce you have an offer on the table, and assuming you accept it, the prospective Purchaser will usually require a building and pest inspector to have access to your property for the purpose of putting together a property report. Buyers of Strata will probably also order a Strata report to determine whether there are any issues with the complex as a whole - for example, owners that don't pay their levies, insufficient insurance cover, issues with neighbours, pets and pest infestations.
Negotiations about the property may follow on the receipt of the Purchaser of these reports as well as receipt of legal advice - for example, the Purchasers may request further documents or reports relating to the property, or may request to pay the deposit by way of Deposit Bond, or that the settlement period be reduced. Issues about the condition of the property might also come to light and the price be re-negotiated. Once the Purchaser receives the inspection reports and assuming any subsequent negotiations have been finalised, and the Purchaser still wants to proceed with the purchase, the Purchaser will put down the purchase deposit (or where agreed, provide a Deposit Bond Certificate) with your Estate Agent or your Solicitor (where you have not used an Estate Agent). You will sign the contract. Soon thereafter, your Solicitor may exchange the counterpart Purchaser and Vendor contracts, which then become binding on both Vendor and Purchaser. The purchase deposit is always 10% of the purchase price unless you agree otherwise. If you agree to accept a lesser deposit on exchange, you take the risk that if the sale does not proceed once contracts exchange, you might not recover the full 10% deposit owed to you by the Purchaser. Pre-settlement process
Once contracts exchange, settlement will generally occur 4-6 weeks later, but the wait can be shorter or longer depending on what is agreed by the parties prior to the exchange or even, at times, after exchange. In that time, your solicitor will attend to getting everything ready for settlement. Certain matters must be attended to in all property purchases in NSW prior to settlement: 1. Replying to the purchaser's requisitions Your solicitor will draft answers to these for you and check with you that they are correct. The most important task you have as Vendor is to be upfront and honest about any issues with the property you are selling. For the purposes of conveyancing in NSW the law assumes that you have made certain warranties (i.e. legally enforceable promises) under the contract of sale - for example, that there are no demolition orders made with regard to the property. 2. Checking documents in anticipation of settlement For example, the Transfer needs to be checked to ensure it is correctly drafted and tax certificates must be clear. 3. Co-ordinating settlement with your outgoing mortgagee (if any) Your solicitor will need to find out how much money is owing on your mortgage on the day of settlement and must be paid to discharge the mortgage. As interest is compounded daily on mortgage accounts, usually this figure is only known 24 hours prior to settlement. 4. Verifying what the final purchase price will be While the purchaser's solicitors does an adjusted settlement figure calculation, it needs to be checked and verified by your solicitor. 5. Preparation of payment directions This is normally only able to be done 24-48 hours before settlement and once parties agree on the final purchase price. Here your solicitor directs the purchaser how the purchase sum is to be paid - the direction tells the purchaser who needs to be paid, what amount needs to be paid to each person or institution that needs to be paid, and how. 6. Finalising settlement arrangements The time, date and location of settlement all need to be arranged with the legal representatives for the purchaser and all lending institutions. (See settlement - scroll down to bottom) |
Settlement - purchases and sales of property
Most settlements will take place online through an Electronic Lodgement Network Operator (ELNO) of which the most well known and often used in NSW is PEXA. It means that by a specific date and time (called the settlement date and time), all parties to the transaction will have done everything they need to do to transfer title in the property from the vendor to the purchaser and that they have put all the relevant data needed to proceed with the transaction into the ELNO. The funds for the transfer are verified and paid to the vendor and other payees also through the ELNO linking to the relevant bank accounts. Immediately after that, title is registered in the purchaser's name by the ELNO lodging documents through the land titles office. At registration, the purchaser becomes the owner of the property. Simultaneously, the vendor's name is removed from the title.