What is Conveyancing?
It is the transfer of the legal title of the property from one person to another. The moment you decide to sell or purchase a property you need to engage a lawyer to handle the conveyancing/paperwork. The system of conveyancing is designed to ensure that the buyer secures title to the land together with all the rights that run with the land and is notified of any restrictions in advance of the purchase.
Why should I hire a lawyer?
When you are buying or selling a property you need accurate legal advice. Only a lawyer can give you legal advice. Lawyers provide a full legal service at a comparable cost with conveyancers and their service is generally better value for money. A lawyer relies on his reputation which is based on his broad legal experience. They will have fewer clients and can give you a more personalised service.
Lawyers have a university degree and are trained in property law, conveyancing, contract law, tax law, equity law, family law, company law and the law of who gets your land after you die as well as other areas of the law too. A conveyancer on the other hand is only required to complete a conveyancing course and can only do conveyancing work. Hence it is important to hire a lawyer to represent you in order to be protected and have the best advantage. Conveyancers on the other hand will have to refer you out to a lawyer if legal advice is required and a problem arises.
Lawyers also have professional indemnity insurance and it is compulsory that it is current. A conveyancer is only insured for doing conveyancing work and if they give you legal advice, their insurance may not cover this advice and it leaves you in a situation where you may have no claim when something goes wrong.
What is a Section 32 Vendor Statement?
It is a document prepared by your lawyer which sets out information about the property such as title particulars, plan of subdivision, easements, covenants, zoning details, local council information regarding rates and building information, notices of what may be happening in the area and Owner’s Corporation information (if relevant). It is imperative that the information is accurate and current. If the information is incorrect the purchaser has the right to rescind the contract on the grounds of a defective Section 32 Vendor Statement and will not proceed with the purchase.
When should I contact my lawyer?
You must contact me as soon as you decide to sell or buy a property.
What are disbursements?
These are costs of certificates which have to be ordered from the council, the water authority, the State Revenue Office or the Owner’s Corporation. They also include the settlement agent’s fees and costs of sundries such as photocopying, telephone calls, faxes etc.
What is settlement?
Settlement is the day on which the representatives of the seller and the purchaser meet at a prearranged time and exchange documents and complete the transaction. A few days after the settlement takes place, the stamp duty is paid at the State Revenue Office and the title is registered in the purchaser’s name at the Land Titles office.
Is it possible to settle both the sale & purchase on the same day?
Yes this can be arranged
What is the stamp duty?
This is a tax imposed by the State Government on the purchase of property. The amount of the duty payable depends on the purchase price.
What is the title registration fee?
This is the fee payable to the Land Titles office of Victoria to get the title to the property registered in the purchaser’s name. The fee payable depends on the purchase price.
What is the title to the property?
The title is the record of ownership of the property. Once the title is registered in your name a Certificate of Title is issued in the name of the new owner. If there is a mortgage on title, the bank will collect the title and hold it as security until the mortgage is paid off.
What is the “cooling off” period?
During the cooling off period the purchaser has the right to withdraw from the contract and not go ahead with the purchase. This is done by giving notice to the selling agent. The purchaser must exercise his right to cool off within 3 business days of signing the contract.
Who notifies the relevant authorities that the property has been sold/bought?
The lawyer will notify the council, water authority and the Owners Corporation manager that that the property has been sold or bought. The client must notify the electricity and gas providers that the property has been sold or bought and must arrange disconnection or reconnection of services.
What is a caveat?
A Caveat is a document which we can register on the title to the property giving notice of your interest as Purchaser. Generally, the effect of the Caveat is that the Registrar of Titles may not register any dealing affecting the land without first notifying us, and it puts third parties on notice of your interest in the land.
In view of a recent Victorian Supreme Court decision, a purchaser under a Contract of Sale being a person with an unregistered interest must do all he can to protect his unregistered interest. If the Vendor fraudulently or under some misapprehension sells or otherwise deals with the property after you have entered into the Contract, your interest may be postponed to the subsequent person dealing with the Vendors unless a caveat is lodged at the Land Registry Office prior to the subsequent person searching the register. While the chance of this occurring is remote, we would be pleased if you could advise our office if you wish to have a caveat lodged.
What is a covenant?
This is an encumbrance on title restricting the manner in which the land can be used. Some covenants stipulate that only one dwelling can be built on the land and prevents subdivision of the land.
What is an easement?
An easement is a section of the land which gives another party the right to use that portion of the land for a specific purpose. An example of an easement is a shared driveway or a drainage or sewerage easement located along the boundary of the land. Generally you are not permitted to construct a permanent structure over this portion of land. The easements affecting a property must be disclosed in the Section 32 Vendor Statement.
What is an encumbrance?
This is a restriction on the title to the property. Examples of encumbrances are mortgages, covenants and easements.
What is the deposit/deposit bond?
Once the contract of sale is signed a 10% deposit must be paid to the real estate agent, who holds this money in his trust account. In the event that you are unable to pay a cash deposit some vendors may agree to accept a deposit bond in lieu of the cash deposit. The deposit bond is a form of guarantee.
About 'Off the Plan' purchases/sales
Benefits of buying OFF THE PLAN
- Stamp duty savings- The Victorian Government offers stamp duty concessions to purchasers who purchase properties Off the Plan. Off the Plan properties are properties where construction has not started at the date the contract of sale is signed or is still incomplete at the date the contract of sale is signed. It allows a deduction from the contract price the cost of construction or refurbishment which occurs on or after the contract date. The purchaser therefore only pays stamp duty on the improved value of the land that is on the non-deductible costs and the construction completed at the contract date.
- Lock in price – you pay the current market value at the time you sign the contract of sale and take advantage of growth in the market when it is time to settle.
- Low initial capital outlay – you only pay a deposit of around 10% of the purchase price and you have plenty of time to organise the balance funds, and sell your current home if that is what you are planning to do.
Risks of buying OFF THE PLAN
- Settlement date is not known – You may not get what you were originally promised by the agent.
- Changes to plan, fixtures and fittings – the vendor has the right to make minor changes to the plans in order to facilitate registration and comply with Council regulations etc and does not require your consent to do so. The apartment/home may be a little smaller than the original plans.
- Time for completion -the construction may take longer than anticipated.
- Repairs – at the time you are required to settle, there may still be items in the property that need to be repaired/completed. The builder has three months from the date of settlement to complete the repairs etc. However you must keep in mind that there maybe items that you consider to be incomplete but the builder may state that as per the contract the builder may dispute the fact that the items in fact need to be repaired/completed.
- Limited time to settle -you are required to settle within 14 days of the plan or subdivision been registered or issue of the occupancy permit and your bank may not have sufficient time to organise the required paperwork. If there is a delay in finalising your loan you may be charged penalties on any delay in settling.
- Stamp duty-the stamp duty that you eventually pay at settlement may not be as low as you expected. The assessment regarding stamp duty is only made by the vendor’s solicitor around 2 weeks prior to settlement, so it is generally not possible to get an accurate estimate of what this cost would be prior to this time.
- Falling property prices – the market value of the property may have fallen since you made the offer to purchase the property and this is something you must bear in mind. If this happens you may have problems getting the finance approved once the property is completed and is ready for settlement.
- State Revenue Office of Victoria – stamp duty calculator http://www.sro.vic.gov.au/sro/srocalcs.nsf/transfer?OpenForm
- State Revenue Office of Victoria – first home owners http://www.sro.vic.gov.au/sro/SROnav.nsf/alltitle/First%20Home%20Owners?open
- Land Titles Victoria – http://www.dtpli.vic.gov.au/property-and-land-titles/land-titles
- Owner Builder Insurance – http://www.consumer.vic.gov.au/housing-and-accommodation/building-and-renovating/owner-builders
- Owners Corporations – http://www.consumer.vic.gov.au/housing-and-accommodation/owners-corporations
- Real Estate institute of Victoria – http://www.reiv.com.au/
- Law Institute of Victoria – http://www.liv.asn.au/