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Conveyancing Overview
WHAT IS CONVEYANCING?
Conveyancing is the legal process required to transfer the ownership of land.
EXCHANGE OF CONTRACTS
This is the making of the Contract between the parties. There are two identical Contracts, one signed by each party. The Contracts are “exchanged” so that each party holds the Contract signed by the other party, the deposit is paid at this time and the Contracts are dated. It is at this time the parties are bound to the agreement.
COOLING OFF PERIOD
Purchasers have five (5) business days after the exchange in which to “cool off”, meaning the Contract may be rescinded for any reason, however, if a rescission is made within the cooling off period they will forfeit to the Vendor 0.25% of the sale price.
A cooling off period may be waived if finance approval is in order, pest and building inspections have been carried out and are satisfactory. This is by way of a Section 66W Certificate which is completed by your legal representative.
DEPOSIT
A deposit is normally paid by the Purchaser at the time of exchange of Contracts; normally 10% of the sale price, any amount paid initially as part of the deposit or holding deposit will form part of the 10% deposit. A lesser amount can be paid if agreed by the Vendor.
DEPOSIT BOND
A deposit bond is a guarantee of payment of the deposit to the Vendor if the Purchaser defaults. A bond is used in lieu of a cash deposit when the Purchaser does not have the cash to pay as a deposit or for any reason that the purchaser does not want to pay cash deposit. It is usually used when a purchase is selling a property and all their assets are tied up in that property and they do not have the cash to put down on a property purchaser. It is cost effective and while it can only be used if the Vendor will accept the bond it is becoming more common practice as time goes by.
STAMP DUTY
The amount of stamp duty payable on the Contract is determined by the sale price of the property, the higher the price the higher the duty. Stamp duty is paid after Contracts are entered into and usually before settlement of the transaction. A link is available on our website www.skinner.com.au to relevant stamp duty calculators
FINANCE
This must be organised before you commit yourself to the Contract to purchase. The Contract is not normally conditional on finance approval, however this can be part of negotiations. Once you are committed to buy you must complete the Contract regardless of whether you have finance to do so or not. If you are unable to complete the purchase you stand to lose the deposit paid and also to be sued for any loss that the seller may incur.
JOINT OWNERSHIP
Title to property is held on one of two ways:
Joint Tenants: means that each person owns the property jointly and on the death of one of them the property automatically passes to the remaining joint tenant or tenants.
Tenants in Common: means that each person owns a share in the property and on the death of one party that share passes to whoever inherits their estate.
INSURANCE
Insurance risk passes on settlement day. All building insurance should be put in place before the purchase is settled. Your lender will want a copy of the policy before they agree to settle so this will need to be done a couple of weeks before settlement.
SETTLEMENT
This is the day on which all monies are handed over in exchange for the title deeds and the day on which possession ins normally given to the purchaser.
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