Conveyancing is the transfer of real estate (property) between two different parties usually sellers and buyers.
Although it seems quite straightforward, the law that governs property transfer can be quite complex and conveyancing has to consider issues such as contract terms and conditions, mortgages, covenants, easements, caveats, the type of property title, the type of tenancy, local council regulations and zoning to name just a few.
Before the conveyancing process can begin there has to be an agreement between two parties to transfer a property, normally this is the sale process. In Victoria this process begins with the preparation of a Section 32 or Vendor’s statement and includes items such as:
- Vendor’s details;
- Copy of the land title for the property including mortgages, covenants, easements;
- Details of building permits, building works and associated insurance in the last 7 years;
- Planning and zoning information especially if it restricts land use;
- Information regarding rates payable by the owner of the property
- Copy of any notices or orders issued by authorities, for example from Vic Roads for road-widening; and
- List the services connected to the property, for example sewerage, electricity.
At the same time the Seller or Vendor will organise a Contract of Sale, and in Victoria there is a standard form for a Real Estate Contract of Sale which includes items such as:
- The street address and legal property title details;
- The length of time between signing and completion of the contract;
- What is included or specifically excluded from the sale;
- Penalty interest terms; and
- Special conditions specific to this particular property.
After the property has been offered for sale, the vendor may receive an offer from a potential purchaser. If the terms of the offer and any counter offer are acceptable to both parties then the parties will have an agreement on the transfer of the property from one party to another.
However, before a purchaser makes an offer, they should get legal advice, review the contract, arrange inspections and start making loan arrangements before anything is signed.
Following agreement – the contract is signed by both parties, and the purchaser commits a deposit usually 10% of the purchase price. The contract may be immediately binding, depending on the circumstances of the sale. There may however, be a cooling off period available, or the purchaser can withdraw from the contract under certain conditions, so it’s important that you know the exact terms and conditions written into the contract.
After the contract becomes binding is when conveyancing begins. The contract will specify a set length of time until the contract is settled or completed – the date at which the property transfers from the vendor to the purchaser. In this period of time the purchaser and seller have a lot to do including: the purchaser paying stamp duty, organising insurance and getting any loan arrangements in order; and the seller of the property should be making arrangements with their bank to have any mortgage discharged as well as making plans to move.
Before settlement, adjustments to the purchase price are agreed upon between the parties to cover council and water rates as well as other costs which may be allowed for in the contract.
On the day of settlement everything has to be in place. The purchaser, most likely an incoming mortgagee, has to show up with the necessary funds, and the seller, maybe an outgoing mortgagee, has to turn up with the property title and the document/s needed to release the mortgage. At the time of settlement everything is handed over including the keys and the property is considered settled (the completion of the sale process but not the conveyance).
After settlement the new owner needs to be registered as the owner on the title, and various government bodies need to be informed of the change in ownership. Once all these actions have taken place then the conveyance is completed.
As buying or selling property is one of the biggest financial decisions you may make it is important that you get expert advice. Legal expertise and diligence ensures is well worth the cost.
Contact us to make an appointment with your experienced Elwood Property Lawyer.