Are you just starting out on your property journey? Or perhaps it’s been so long since you bought or sold property that you can’t remember all the ins-and-outs? Whichever way, clients often have lots of conveyancing questions.
Let us give you the basics so you start off on the right foot. Here we answer some of the most common conveyancing questions and define many of the terms you will come across in your property journey.
For those looking for fast facts, please feel free to click on the questions below to take you straight to the answer you need:
In most cases, the contract is prepared by the vendor’s solicitor before the property is advertised for sale. The agent provides the contract to any prospective buyers of the property. It includes a copy of the title information for the property, the plans for the land and a zoning certificate. We recommend buyers send their contract to Open House Conveyancing to review prior to signing the contract.
A conveyancer is a person qualified to do conveyancing work (the work involved with transferring a property from one person to another). Conveyancing work can be done by licensed conveyancers and lawyers. In addition to the tasks a licensed conveyancer can provide, conveyancing lawyers are qualified to offer legal advice on other matters including taxation and property law disputes.
Conveyancing is the process of transferring ownership of a legal title of land to the new owner. The most common type of conveyancing transaction is when parties are buying or selling property.
Some of the most common conveyancing questions relate to the cooling off period.
In NSW, the buyer receives a 5-business day cooling off period when they sign a contract to purchase land. During this time, the buyer can choose not to proceed with the purchase. If they ‘cancel’ the contract during the cooling off period, the buyer forfeits small deposit, equivalent to 0.25% of the purchase price. For example, an initial $1,250 deposit is payable on a property with a purchase price of $500,000.
The cooling off period can be waived by agreement by the purchaser. A cooling off period does not apply to properties purchased at auction.
Disbursements are amounts payable in a conveyancing matter to third parties. This includes council searches and title searches for the property.
Exchange of contracts is the point when the buyer and the seller sign and exchange contracts. Prior to exchange, both the buyer and the seller can change their mind and not proceed with the sale, despite any verbal agreements. Buyers should be aware that any expenses occurred prior to exchange of contracts may be lost if the seller decides not to proceed.
Sometimes, the NSW government offers a grant to assist people who are buying their first home. This is known as the First Home Owners Grant. Revenue NSW publishes details of grants available to first home buyers, including the eligibility criteria.
With a fixed home loan, the interest rate is set for a period – anywhere from 12 months to 5 years. The interest rate will not change on a fixed loan during this time.
Money Smart provides a nice summary of the different types of home loans, and what you should consider when you are buying a home or refinancing your home loan.
Gazumping refers to a situation where a buyer has verbally agreed to buy a property, but then the seller signs a contract with a second buyer before the agreement is finalised.
Usually, the first buyer has spent money obtaining advice and undertaking searches in respect to the property (such as a building inspection). The buyer loses the property and the money spent on obtaining advice and undertaking searches.
This is one of the most common conveyancing questions we are asked.
A holding deposit is a payment made to the agent, by a purchaser, prior to the contract being signed.
An agent sometimes asks the buyer to pay a holding deposit to show they are serious about buying the property. However, paying a holding deposit does not mean the seller is guaranteed to sell the property to you. The agent may still hold open homes and the vendor may accept a higher offer from someone else.
Until the contract is signed by all parties and formally exchanged, the vendor is free to sell the property to someone else, even if you have paid a holding deposit.
Interest is the fee you pay to use someone else’s money. The amount of interest you pay depends on which lender you are using, the amount of money you borrow, and how quickly you repay the loan. Interest rates change when the Reserve Bank adjusts the cash target rate.
People can purchase property as joint tenants or tenants in common.
Joint tenants means you both own the property jointly and severally. If one person dies, the property is automatically wholly owned by the survivor, with no need to transfer the title. Most couples purchase their property as joint tenants.
The Australian Taxation Office website provides a good explanation on purchasing property as joint tenants, and outlines key taxation considerations.
A lease provides someone with the right to occupy certain premises for an amount of time in return for payment of rent and outgoings. With commercial properties, the lease usually specifies the type of business than can operate from the premises.
A mortgage is registered on the title for a property and shows that a person (or company) has lent money to the owner of the property. The mortgage shows that the property is security for the loan. When the loan has been paid, the mortgage can be discharged from the property.
The person or company who has lent someone money and in return, has lodged a mortgage on a property as security for the loan. In most cases, the mortgagee is a financial institution such as the Commonwealth Bank of Australia, National Australia Bank or Westpac.
The person or company who owns property and has borrowed money from another person or company (such as CBA or NAB) and provided their property as security for the loan.
The NSW Land Registry Service creates and maintains land title records. When you buy or sell property, documents are lodged with the NSW Land Registry Service and the title records are updated to show the new owners’ details.
A registered proprietor is a person who is registered on the title as being the owner of the property.
Settlement is the date when the money is paid to the vendor and the keys are released to the purchaser. On the settlement date, the purchaser becomes the registered owner of the property.
Part of the conveyancing process is calculating settlement adjustments. Council rates, land tax, water rates and other property charges may be adjusted so that the vendor pays the debts up to the date of settlement and the purchaser pays them after settlement.
Stamp duty (also known as ‘transfer duty’) is a tax payable by the purchaser to the state government when they buy or acquire property. The amount payable is set by the government and is dependent upon the purchase price. Concessions are available to some first home buyers who meet the eligibility criteria. Further information is available from Revenue NSW or on our first home buyers page.
When two or more persons buy property together, they may elect to buy as tenants in common or joint tenants.
With tenants in common, if a person passes away, their share of the property will go into their estate to be distributed to the beneficiaries in their Will.
The Australian Taxation Office website provides a good explanation on purchasing property as tenants in common, and outlines key taxation considerations.
With a variable home loan, the interest rate may change over time – most likely when the Reserve Bank increases or lowers the official cash rate.
Money Smart provides a nice summary of the different types of home loans and what you should consider when you are buying a home or refinancing your home loan.
A vendor is a person selling a property.
This is when there is a clause in the contract that benefits a party but they elect not to call on the obligation. For example, the purchaser is entitled to a 5-business day cooling off period but they can waive the cooling off period – meaning the purchaser agrees not to have a cooling off period.
This means ‘to promise’ (or to agree). For example, a contract for the sale of a residential home might have a clause saying: ‘the purchaser warrants they have secured formal loan approval for the purchase of the property’. This means the purchaser agrees they have sufficient funds to complete the purchase of the property.
We hope you have found these answers useful. We are constantly updating this article and adding new information, so be sure to save this page to your favourites!
Please also feel free to reach out to one of our friendly conveyancing lawyers if you have questions or think we can help you with your conveyancing matter.
