Conveyancing 101: What Is Conveyancing
“Comparing apples and oranges while having to take a bite of a lemon”
That’s one way we’ve heard the process of researching conveyancing quotes described. Beyond the nuts and bolts of buying and selling a home, it can seem like just one more cost to add to the list, and another hassle to be dealt with. Of course, the problem boils down to the question of whether it’s worth saving the money and using a cheaper online service, or if this is one those situations where it’s truly necessary to locate and hire a trusted local attorney or specialised professional to look at the contracts.
There are legal aspects of property ownership where it’s definitely not a good idea to cut any corners, not to mention that swapping stressful processes for painless and quick is certainly worth paying for, but if it’s pretty standard to just sit back and let the estate agent handle the details of conveyancing law, then maybe you’d just be making more work for yourself in hiring an additional person. But before you get started looking at quotes or deciding whether this is a service that you even need, it’s best to understand exactly what conveyancing is. That way, you can make an informed decision about what exactly your needs are, and how much you’d like to pay for it.
When you’re transferring real estate, there’s a whole other set of legal guidelines that regulate how that transfer is conducted. Called conveyancing, this process outlines all aspects of the transfer of real property. Whether you’re planning to buy or sell real estate, or both, having a solid understanding of how conveyancing works, will both prevent the risk of losing the deal you want and ensure the sale is closed quickly, competently and without drawn-out turbulence.
- Chapter 1: What is Conveyancing?
- Chapter 2: Understanding The Conveyancing Act
- Chapter 3: Buying and Selling Property In Australia
- Chapter 4: Elements of A Legally Binding Conveyancing Agreement
- Chapter 5: Settlement and Beyond
Chapter 1: What Is Conveyancing?
Conveyancing refers to the process of transferring the title of a property from one person to another. Ownership of property means you hold a physical object, but when it comes to real property (land or buildings) you also need to have a title which proves that you are the legal owner of that property. In New South Wales, the certificate of title must be registered at the Land and Property Information, which is the land registry for the area, in order for the full transfer of ownership to completed.
What Are the Components of Conveyancing Services?
The entire process of conveyancing can be broken down into three stages.
- Before the exchange of contracts
- After the exchange of contracts, before property settlement
- After settlement
Before the Exchange of Contracts
For both the seller and the buyer, it’s important to review the contract for sale with a licenced conveyancing solicitor before signing. A conveyance solicitor provides clients with advice on the contract and negotiates the terms with the other party on the client’s behalf. The best conveyance solicitors will always work hard to make sure the terms are to your best interests.
The solicitor or conveyancer will perform research on the property to discover information about all aspects of the property, including identifying zoning, land tax, easements, and covenants. If conveyancing solicitors can sometimes seem slow, it’s likely due to their conducting meticulous research to protect the home owners’ interests.
The lawyer will help to make sure that everything goes smoothly during the exchange of contract. During the exchange, you will sign the contract and that will be swapped for the contract signed by the other party. The deposit is paid at the exchange.
After the Exchange
The conveyancer or solicitor of a buyer may arrange for pest and property inspection before the purchase settlement. They may also investigate whether the seller has a survey or council certificate to prove that the property is compliant with applicable regulations. One of the advantages of using a family lawyer who is experienced as a conveyancer is that they will also be able to provide additional services. If a mortgage is used to purchase the property, your lawyer can review the loan documents with you and make sure that everything is in order. They will also be able to let you know accurate calculations for stamp duty and taxes, as well as any adjustments including council rates, water rates and strata levies so that there are no surprises at settlement.
To sell property the conveyance solicitor’s legal work includes making sure that all the seller’s legal documents related to the property sale are in order and arranging for the discharge of mortgage with the mortgage lender.
The Settlement and Afterwards
On the day of the settlement, your lawyer will attend the settlement on your behalf and exchange documents and cheques with the seller’s representatives. If you have taken out a mortgage on the property, your bank’s representatives will also be present. Once settlement is complete, your lawyer will register the transfer document at the Land and Property Information and the title of the property will be transferred into your name.
How Long Does Conveyancing Take and When Should I Get Started?
From the time of exchange of contract, it generally takes 4-6 weeks before the settlement is completed. However, it’s a good idea to engage the services of a conveyancer prior to contract, as that way they can advise you on the terms of the contract before you have signed.
How Much Does Conveyancing Cost?
The fees that you have to pay your conveyancer or property lawyer depend on their level of involvement. Besides their professional fee, you most likely need to pay other fees including:
- Photocopying fee
- Fee for pest and building reports
- Property insurance
- Mortgage registration fee
- Stamp duty and taxes
- Fees for title searches
- Council and water levies
How Do I Determine Who Is the Best Person to go to for Conveyance Services?
Before you decide to hire a conveyancing and property lawyer, you should ask questions to make sure that the person is dependable. Questions you should ask include:
- Is the lawyer familiar with the type of property you’re buying?
- Is the lawyer well-rounded with all aspects of property law?
- Are there any online reviews about the lawyer or conveyancer?
- How much will you be charged?
- When do you pay the conveyance fee?
Although you may be tempted to go with the lowest price for a conveyancing, it is worthwhile to consider what sort of service you may be getting for that price. You may want to consider a lawyer from a local law society, which controls the standards in professional law. However, these solicitors may ask you to pay a bit more. Whether you are buying or selling, you need to ask yourself whether it’s worth the risk of causing the sale to collapse to save a few extra dollars.
Now let’s take a more in-depth look at conveyancing.
- New South Wales Government: Conveyancing
- Conveyancing Process Explained for Buyers
- Conveyancing Process Explained for Sellers
Chapter 2: Understanding The Conveyancing Act
The majority of Australian conveyance law is based on the regulations set forth by the Torrens system of land registration based on the Real Property Act of 1857. Historically, these laws get their basis from English common law. In New South Wales specifically, in addition to the Torrens system, conveyancing is also regulated by the Conveyance Act of 1919. This is what defines the difference between a residential and non-residential property.
The 5-Day Cooling Off Period
In New South Wales, there is a 5-day cooling-off period that is legally required after the exchange of contracts. During the 5-day cooling-off period the buyer may cancel the contract with only a minimal penalty (often 0.25% of the deposit). The minimum of 5 days is legally required for the sale of all residential properties in New South Wales that are not sold at auction.
Registering with the Land and Property Information
In New South Wales, it is also necessary to file any transfer of property with the Land and Property Information (LPI) before the transfer of property can be fully, legally completed. To register with LPI the following forms are needed:
- Transfer Form 01T
- Notice of Sale or Transfer of Land (NOS) form
- the original Certificate of Title for the property (if not on file)
- The Lodgement Fee
Chapter 3: Buying and Selling Property In Australia
Finding the Right Estate Agent
Whether buying or selling, most people turn to estate agents to ensure that all aspects of the process will go smoothly. Of course, the question is, how to find the estate agent that is honest and dependable. Choose carelessly and you could be in danger of losing a fortune, but if you find a genuinely competent estate agent, then you can rest assured that your real estate interests will be protected. One of the best ways to be sure that you’re choosing wisely is to look for online reviews, which can also alert you to the danger of an estate agent who won’t be any help in making a property transaction happen. Here’s one site where you can read ratings for various estate agents. The New South Wales Fair Trading is also an excellent resource
Navigating as a Buyer
For a buyer, it’s extremely common to view a property with the selling agent. This means that the estate agent that you’re working with is actually legally obligated to put the seller’s interests first, not yours. This means that the savvy buyer will avoid mentioning certain things.
- Play It Close to the Vest: Don’t tell the agent that your property has already been sold. The selling agent will interpret this as leverage for you to settle for a higher priced property to avoid finding housing between sale and purchase.
- Keep Your Poker Face On: You might have just found the home of your dreams. But there’s no reason for the estate agent to know that. If you share how emotionally invested you are in a property, that’s going to end up coming back to bite you in negotiations.
- Negotiating 101: Don’t ever let the selling agent know your budget, and definitely don’t disclose the maximum you’re about to pay. Share that information and you can count on the agent doing anything you can to make your maximum budget the selling price you’ll be playing.
Determining the Value of a Home
Fair market value? What that means is the price of a home if the seller doesn’t have extenuating circumstances compelling them to sell, and nor does buyer have factors forcing them to buy. And it doesn’t seem like it should be too difficult to calculate what it is. However, while most numbers can be arrived at through the logical calculations using maths, such is not the case with fair market value, where a host of unseen forces vaguely labelled “the current market” will have an untold impact on the best offer price. Here are a few things that you can do to come to an accurate calculation.
- Don’t Depend on the Assessed Value: The assessed value, in simplest terms, is the value of a home without factoring in the effects of the market. It will tell you how much the size of the property, physical improvements, number of bathrooms and so forth, are worth in a given area, but it won’t take into account the supply and demand aspect that is so much of what determines how a market operates.
- Watch the Market: If you know you’re thinking of selling soon, or you’re considering buying in a certain neighbourhood, then you want to always be on the lookout for any real estate transactions that are happening. Be sure to note the sale price, as well as how long the property has been on the market and any specific details of the property that would affect its value.
- Trust in a Dependable Estate Agent: At the end of the day, no one is more qualified than an estate agent to determine the value, so long as you’re getting the advice of one who works for you and is both competent and honest. By using comparative data analysis, they should be able to break down the more scientific approach to property pricing, but don’t discount the experience agent’s gut instincts.
Appealing to International Buyers
International buyers are making up more and more of the market of home sales in Australia. By investing some effort in marketing to this population, you could be discovering a bold way to sell your house for the highest market value. By determining whether your neighbourhood has potential appeal to an international market, and looking specifically at which nationalities would be most interested in your property, then you can open up an entirely new and potentially extremely lucrative way to sell your home. We’ve included data on which Australian neighbourhoods are most appealing to buyers from various countries below.
- Where International Buyers Are Hunting for Property
- Systematised Sydney Conveyancing
- How to Figure Out the Value of Your Home
- What Not to Tell a Selling Agent
- How to Avoid Choosing a Dodgy Real Estate Agent
Chapter 4: Elements of A Legally Binding Conveyancing Agreement
A conveyancing agreement has the same elements of any other contract, it lays out the offer, contains the acceptance, names the competent parties who have the legal capacity to enter into a contract, it states it is all done lawfully, it lays forth the mutual obligation of all parties to the contract, and finally it includes the details of consideration, or payment that is exchanged for goods and services. Of course, because the consideration is for real property, there is an entire set of property laws that lay out all the specifics of how the transfer of property can take place. It’s certainly a good idea to have a property lawyer protecting your interests.
More and more, people are turning to the internet to seek legal advice. Because you are legally allowed to carry out your own conveyance, is it worth it to use an online conveyance to complete your property conveyance.
Very likely, you will find that the hassle and time it takes to fill out all the paperwork required to fully complete the transfer of title, makes it worthwhile to at least pay for a licenced conveyancer and avoid going the DIY route of an online conveyance. But the fact remains that there is real legal work that goes into property conveyance. Property law is not a simple matter, and it’s often worth paying a little bit more to a licenced member of the law society.
Special Consideration for the Holidays
Because so many contracts are entered into at the end of the year, in part because it is a time of flux for many, and the holidays are a convenient time to move, it’s worthwhile to consider the effect that these holidays might have on the timing of the completion of a property transaction.
The critical business involved in conveyance can only occur on business days. This includes exchange of contracts as well as settlement. Business days are defined as weekdays (not Saturday or Sunday), is not a public holiday in the place where the business is being conducted, and does not fall on or between December 27 and December 31. Factoring in the public holidays at the time of year, means that if a deal is not completed prior to December 25 it will not be able to be finalised until January 2, possibly later if the 2nd falls on a weekend. This means that if you anticipate contracts that need to be finalised at this time of year, it’s best to plan ahead and make any alternate arrangements for housing that could be needed. Because the beginning of January tends to get backed up with settlements because of the extended period when they could not occur, it’s also a good idea to go ahead and schedule settlements for a week or two into January, to reduce the chance of delays.
- Have a Legal Need? Could Google Have a Lawyer Waiting for You?
- What Happens to Contract Dates over Christmas/New Year?
Chapter 5: Settlement and Beyond
The settlement is where the legal title actually changes hands. It’s at this time that the buyer will have to pay stamp duty and the Land Titles Office registration transfer fee. Both of these charges are calculated based on the purchase price, and your conveyance solicitor can let you know what they are precise. Additionally, any remaining balances on mortgages is generally paid off at this time. The keys are usually handed over and the buyer receives occupancy rights.
After the transfer deed is completed the conveyance solicitor will file all the needed paperwork with the Land and Property Information, finalizing the buyer’s ownership and occupancy rights. It is also at this time you will pay your licenced conveyancer or conveyance solicitor as well any payments due to estate agents.
Of course, after the settlement is completed, you now own and likely occupy your new property. But the thing about conveyancing is that your ownership of the property and the right to occupy it hinges completely on the conveyancing being done properly, which as we have seen, requires meticulous care to be done right the first time. Conveyancing that is done carelessly or improperly can lead to a massive collapse that affects every aspect of property ownership.
Whether a poor handling of the conveyancing leads to a hold-up during the exchange of contracts, delays the settlement, causes problems with registering with the Land Titles Office or creates heartbreak years down the road when legal troubles ensue from a failed conveyance, it’s not a risk worth taking. For the seller as well, it’s worth knowing your best interests are protected at every step of entering into contractual agreements, as well as that years later you’re not going to suddenly find yourself liable for something completely unrelated to you because paperwork wasn’t carried out properly. Knowing what conveyancing is, and why it’s important gives you the ability to find a dependable and competent expert to help you with legal advice for this process, and that will make every part of buying and selling your home go that much more smoothly.
If you need an expert in property and conveyancing law, contact us today.