Frequently Asked Questions
*These FAQs have been prepared to give general information only. You should always seek specific legal advice in relation to your specific questions.
What is Conveyancing?
Conveyancing is the transfer of legal ownership of a property from one person to another. We will make the legal side of the conveyancing process as efficient and hassle-free as possible.
If you are selling, conveyancing will start from the preparation of the Section 32 Vendors’ Statement and will follow through to settlement and notifying the rating authorities of the change of ownership.
If you are buying, conveyancing can start with a quick check of the Contract before you commit yourself to buy and will follow through to settlement and notifying the rating authorities of the change of ownership.
What are the legal terms for a buyer and a seller?
A buyer is commonly called a purchaser and a seller is commonly called a vendor.
Why should I use a professional to do my conveyancing?
Buying or selling property is one of the biggest financial transactions that you complete in your life. The consequences of making a financial or legal mistake during this process can be both costly and heartbreaking.
By using a professional such as First Class Legal to do your conveyancing and take care of your settlement, you can rest easy, knowing that your sale or purchase will be handled efficiently.
What is the difference between a Conveyancer and a Solicitor?
Both a conveyancer and a solicitor can help you with a straightforward property purchase or sale.
Only a solicitor can help you with more complex legal issues that sometimes arise during the process.
What does a Conveyancer do?
Conveyancers take much of the work and worry of buying or selling a home off your shoulders. In addition to managing the complex process of transferring ownership and ensuring that your interests are fully protected, your conveyancer will advise you of your responsibilities and rights and deal with any legal issues that may arise from the transaction.
A conveyancer working for a licensed conveyancing business can deal with a standard sale or purchase but will need to refer off any legal work outside the standard conveyancing.
A legal firm like First Class Legal, however, can handle any legal issues which may arise.
What is “Fixed Fee” Conveyancing?
We charge a fixed fee for conveyancing. This means that we will quote you a fixed, professional fee including GST. This will be quoted to you in writing at the outset together with the estimated cost of disbursements.
What does Disbursements mean?
Any costs that we incur on your behalf in paying a third party for goods or services used to help you are called disbursements.
In a conveyancing transaction, the costs of conducting searches for information about the property are the most common disbursements. These include: a Title search, certificates showing things affecting the property such as proposals for roads and recent building permits and agent’s fees to attend settlement.
If the property is affected by an Owners’ Corporation, a certificate from the Owners’ Corporation (formerly called a Body Corporate) is usually required and costs in the order of $150.
What does Title Search mean and why do I need to have one?
A title search is a search of the database of property ownership maintained by state governments that reveals details of the registered owner of the property at the time of the search. A title search can also show other important information about the property such as: rights or interests held over the property by the owner or others.
If you are purchasing, you (or your bank) will do a final search before settlement to make sure that nothing has changed with the Title which will affect you eg someone may have lodged a Caveat.
What are “Searches” in a conveyancing process?
Searches are performed to help a buyer evaluate their purchase and to identify legal, ownership or property issues. The results also provide peace of mind that the property is not subject to any current or known future plans or licenses issued by government nor affected by inclusion on the registers such as: heritage listing or environmental management.
Searches also determine whether there are any encumbrances over the title of the property that need to be addressed prior to settlement such as: mortgages, easements, covenants, caveats and any other agreements. If any of these are recorded against the title of a property you plan to buy or sell, we will inform you of your rights and obligations.
What is a Section 32 Vendors’ Statement (commonly called a Section 32)?
A Contract of Sale of Real Estate cannot be signed until the Section 32 has been prepared and signed by the Vendor.
The Section 32 discloses certain information about the property including but not limited to:
- the Vendor’s details;
- the Title details;
- information regarding building works done in the past 7 years;
- particulars of any mortgages over the land;
- information regarding covenants, easements and any other restrictions on title;
- planning information;
- details of the amount of rates payable;
- disclosure of any notices or orders issued by the authorities regarding fencing, road widening and sewerage;
- access to the property by road; and
- information on services not connected to the property.
It is very important that the Section 32 is properly prepared as a defective Section 32 can allow a buyer to avoid a Contract ie pull out of a purchase.
What do General Conditions and Special Conditions in a Contract of Sale of Real Estate mean?
The General Conditions are the standard terms which are included with the intention of covering many of the most important aspects of a standard transaction. Since each transaction can be different and the parties may have different needs, contracts may also have special conditions added.
Special conditions are included by agreement and can override the standard terms so you need to check the Special Conditions carefully.
We can help you with this either by checking the Contract before you sign it or by helping to draft the Special Conditions.
Why is it important that Owner Builder works are disclosed?
If you are selling and have done any building works in the last 7 years, you need to disclose these before a purchaser signs the Contract. If you do not disclose the works, a purchaser has the right to pull out of the Contract at any time up to settlement.
This is a complex area and you need to give us detailed instructions so that we can advise you properly but, in short, any work done to the property including: bathroom makeovers, kitchen renovations, pergolas and decks need to be disclosed.
If a building permit was obtained and a registered builder is named as the builder, then the works are generally covered by the builder’s insurance and copy permits and associated documents should be attached to the Section 32.
If a building permit was obtained and you are named as the builder OR no permit was obtained, then an Owner Builder Report should be obtained and provided to a purchaser before the Contract is signed. Depending on the value of the works, insurance may also be required.
Please ask us if you have queries about this. It is not worth losing a sale because you did not understand your legal obligations.
What is the “Cooling Off Period”?
Buying a property is likely the highest value transaction that you undertake in your life. It can also be a very emotional decision and, sometimes, you may buy a property without doing all due diligence.
The cooling-off period is a consumer protection provision that gives you the chance to “cool off” from your initial decision after you have had a further chance to review.
During the cooling-off period (within three clear business days of the buyer signing the Contract), the buyer can change his/her mind and cancel the contract. There is a monetary penalty if a buyer chooses to “cool off”.
Cooling off periods do not apply in some cases. One situation where you cannot “cool off” is buying at auction (or within 3 clear business days either side of an auction).
Also, be careful that the “cooling off” notice is served on the vendor and their legal representative. Do not just serve it on the real estate agent as this is not sufficient.
What is a property valuation?
A property valuation is a central step to buying a home if you are needing finance.
A property valuation or market appraisal may be required for stamp duty purposes. We will advise you if this is the case.
What is Stamp Duty?
When you buy a property, you will usually need to pay a State government fee known as “stamp duty”. Limited exemptions and concessions may apply in some cases. We can advise you about this. You can also see detailed information at www.sro.vic.gov.au
The amount of stamp duty is determined by the purchase price of the property together with any concession that you may be entitled to.
Am I eligible for Stamp Duty concessions?
Please note that this information is subject to change and should always be checked with the State Revenue Office (SRO). The SRO website is comprehensive and even has online calculators for you to calculate the stamp duty payable and any applicable concessions. Please ask us for more information or go to www.sro.vic.gov.au
Briefly, some of the most common stamp duty concessions are:
- First Home Buyer (this is separate from the First Home Owners’ Grant);
- Principal Residence; and
- Pensioner Exemption or Reduction.
Please note there are strict eligibility requirements for any stamp duty concessions. The SRO has a compliance department and penalties apply if a stamp duty concession is claimed improperly.
What is a Certificate of Title?
A Certificate of Title (Title Deed) is the record of ownership of a property. In Victoria, Certificates of Title used to be on parchment paper and show the whole history of ownership of the land. Now they only show the current ownership details and they are being converted to an electronic format.
Also, Titles must be surrendered at settlement so you need to know where your Title is if you are selling your property. A lost Title can be replaced (at a cost) but it takes some time so make sure your Title is safe and you know where your Title is.
What is a Strata Title?
There are certain different forms of property ownership that have been created as a result of the way we live and use property. Strata Title is a common form of property ownership and is most commonly associated with units or multi-level buildings.
Usually, owners will have rights and obligations that relate to the shared nature of common property such as: driveways, lifts and foyers.
What are key dates to be aware of during the conveyancing process?
There are several key dates, including:
- The contract date – the date when all parties have signed the contract and agreed to its terms. Other key dates may be expressed with reference to this date e.g. “45 days after the contract date”.
- The “cooling off” period. This is the period within three clear business days of the buyer signing the Contract during which buyer can terminate the contract without needing to rely on a term of the contract. There is a monetary penalty to a buyer for doing this.
- The finance approval date – the date by which a buyer must advise the seller that finance approval has been obtained.
- The building and pest inspection date – the date by which a buyer must indicate to the seller their satisfaction or otherwise with the inspections they have obtained. You should get a licensed inspector to perform the inspection as quickly as possible to meet this date.
- The settlement date – the date on which settlement of the transaction is scheduled to occur.
While both parties may agree to change these dates, it is not always possible to reach agreements to change.
What happens at settlement?
Settlement is the day on which the representatives of all parties, including any banks, meet at a prearranged time to exchange documents. Final document checks are performed to ensure accuracy and completeness, important legal documents are exchanged and payment of the purchase price is made.
Most settlements in Victoria take place in the Melbourne CBD. There are usually up to four parties involved – the buyer and sellers’ settlement agents as well any banks that are involved with mortgages.
At the settlement, the buyer’s bank will hand over the bank cheques to the seller’s settlement agent and their bank. In return, the buyer’s representative (or the buyer’s bank) receives the Certificate of Title, any Discharge of Mortgage and the Transfer of Land.
Once the settlement has happened, your conveyancer will contact you and the selling agent with the good news and you can go to the selling agent and collect the keys!
Settlement is not the end of the process. After settlement, stamp duty is paid on the Transfer of Land and then the Transfer is registered at the Land Titles Office.
Increasingly, settlements are happening electronically via PEXA (Property Exchange Australia). Speak with us if you would like to know more about settling electronically.
What is Joint Ownership/Joint Tenancy?
This is usually the choice of married couples and each owner has an equal, undivided share of the property.
Joint Ownership or Joint Tenants means that, if one of the owners of the property dies, the property is automatically transferred to the surviving proprietor irrespective of what is stated in their own Will.
A legal document called an Application by Surviving Proprietor is required to be lodged but Probate is not required.
What does Tenants in Common mean?
This is usually the choice of unrelated parties or people who wish to keep their assets separate.
It means that each owner’s share of the property (whether they be equal or not) is owned entirely by that owner and, upon death, it can be transferred to whomever they please so long as it is stated in their Will. (If there is no Will, then the laws of intestacy apply but the share of the property is still treated as a separate asset of the person who has died).
Why would you get a Pre-Purchase Building and/or Pest Inspection?
Once you sign a Contract to purchase a property, it is yours and the general rule of “caveat emptor” or “buyer beware” applies. Consequently, you should do your due diligence before you sign. An aspect of due diligence is a pre-purchase building and/or pest inspection.
If you don’t obtain building and pest reports, you may find that your dream house is infested with termites or in need of urgent repairs. Unfortunately, once the Contract is signed, those issues (as expensive as they may be to fix) are your problems as the buyer of the property.
A building and/or pest report is an inexpensive exercise compared with the cost of eradicating pests or fixing building issues.
You may not want to spend money on building and pest report before you are the successful buyer. If so, you should ask for a Special Condition to be inserted into the Contract giving you a period of time to obtain a building and/or pest report that is satisfactory to you.
Bear in mind that an auction purchase is unconditional so any inspection reports will need to be done before auction day.
What is Title Insurance?
During your conveyancing transaction and with any property purchase, there are a number of risks present which even the most stringent due diligence cannot guard against nor prevent.
To protect against these types of risks, you should consider a Title Insurance Policy. For a once only premium (starting at less than $500), you can purchase a title insurance policy.
Title insurance includes protection against several issues including: illegal building structures, fraud and forgery, misdescription of land, boundary disputes, easements and zoning problems – all of which can result in a significant financial loss. For more specific information about Title insurance, please contact us.
Title insurance is available to purchasers or existing owners of residential property.
What is a Purchaser’s Caveat?
We recommend that a Caveat be lodged in the Titles Office to protect your interest as purchaser. By doing so, you will be telling anyone else who tries to deal with the property that your rights come first. If you do not have a caveat on the title, there is nothing to stop the vendor from selling or mortgaging the property nor to stop someone else making a claim to it.
We believe that the cost of a caveat is well worth the peace of mind it offers.
Do you have questions that weren’t covered above?
Please Contact our office and we will answer them for you.