Why should I use a lawyer at Shire Legal instead of a conveyancer?
Buying or selling a property is one of the biggest financial decisions you will ever have to make. The consequences of making a mistake can be both costly and heart-breaking. By having a qualified lawyer take care of your property transfer, their qualifications and experience can help protect your assets.
Conveyancing is a legal transaction that requires an intricate knowledge of legal principles, of which a lawyer has expert knowledge after years of university and college education and work experience. Also, conveyancers are not licensed to advise on areas of law that are beyond "conveyancing work", as defined in the Conveyancers Act 2006. While a lawyer can assist the client with all legal matters associated
with the sale or purchase of real estate, a conveyancer must cease to
act for the client as soon as the matter moves beyond "conveyancing work", or the client requires legal advice on areas of law which are outside of the "conveyancing work" but related to their sale or purchase. When this happens the conveyancer must refer the client to a qualified lawyer.
When should I contact Shire Legal?
If you have decided to sell your property, you should contact Shire Legal immediately so that the Contract for Sale can be prepared - usually within 2-3 hours of your instructions. The Contract can then be forwarded to your real estate agent of choice so that they can commence marketing the property without delay.
If you have decided to purchase a property, you should also contact Shire Legal immediately so that the Contract can be reviewed before exchange, and if necessary, negotiated with the vendor's solicitor to be on more favourable terms for you. Furthermore, if there are any encroachments, sewerage, zoning issues with the land, this can be discovered before exchange (and the cooling-off period) - if it's recommended that you not proceed with the purchase, then you will not lose the 0.25% of the purchase price which you would have lost if you had exchanged contracts and then consulted Shire Legal during the cooling-off period.
What documents have to be included in the Contract for Sale of Land?
Section 52A of the Conveyancing Act 1919 (NSW) requires copies of the following documents to be included in the Contract (known as "prescribed documents"):
- Section 149 Certificate (ie. the zoning certificate from the local Council)
- A diagram for the land from a recognised sewerage authority (ie. the sewerage service diagram)
- A property certificate (ie. the title search) and the plan of the land (ie. the deposited plan or strata plan)
- all deeds, dealings and other instruments that create easements, restrictions, positive covenants burdening (or benefiting) the land
Can both the vendor and the purchaser use Shire Legal?
Acting for both parties to a transaction could potentially lead to a conflict of interest, therefore depending on the particular circumstances, Shire Legal will be able to refer one of the parties to another local legal firm.
Should I use the lawyer that the real estate agent referred me to?
No. You are entitled to use your lawyer of choice.
Can I be gazumped?
A vendor is only legally bound to a purchaser once contracts have been exchanged - that is, both sides have signed a copy of the contract, the identical copies are physically exchanged, and the purchaser has paid a deposit. Until then, a vendor is entitled to enter into negotiations with any number of purchasers. Therefore, even if you have negotiated to purchase a property and even agreed on a price with the vendor, the vendor can still decide to sell the property to another purchaser (usually for a higher price, or on more favourable terms) - typically referred to as "gazumping". A vendor can gazump you even if you have paid a "holding deposit" to the real estate agent - this payment has no legal basis and is usually only considered to be a sign of goodwill by the purchaser. Of course, if you are gazumped, you are entitled to a refund of your "holding deposit". However you are usually not entitled to be reimbursed by the vendor for any expenses you may have incurred in anticipation of purchasing the property, such as pre-purchase inspection reports and valuations.
What are my rights with a cooling-off period?
The Conveyancing Act allows purchasers a five day business period commencing the next business day after exchange during which time the purchaser can decide to pull out of the contract and not continue with the purchase. The cooling-off period is a good opportunity for you to obtain your unconditional finance approval from your bank, arrange pest/building/strata inspection reports and make any other enquiries you wish about the property before committing to the contract.
If you decide to pull out of the contract, a Notice of Rescission needs to be sent to the vendor's solicitor before the expiry of the cooling-off period (ie. 5pm on the final day of the cooling-off period). You are then penalised 0.25% of the purchase price (e.g. $1,000 on a $400,000 purchase, or $2,000 on a $800,000 purchase).
If you decide to continue with the contract, you just need to make sure that the balance of the deposit is paid to the deposit holder (usually the real estate agent) before the expiry of the cooling-off period, otherwise you will be in breach of the contract and the vendor would have rights to terminate.
Vendors have the right under Section 66W of the Conveyancing Act to not allow you a cooling-off period. In this case, your solicitor needs to complete a "Section 66W Certificate" certifying that they have explained to you that there is no cooling-off period and that you understand that you will be bound by the contract as soon as it is exchanged.
You also do not have a cooling-off period if you purchase a property at auction.
Vendors do not have a corresponding right to pull out of the transaction during the cooling-off period. The cooling-off period only gives rights to the purchaser.
Who holds the deposit?
The Contract will specify who the depositholder is. The usual position is that the real estate agent will receive the deposit from the purchaser at the time of exchange, and will hold the deposit in its trust account until settlement. Once settlement has taken place, the agent will pay the balance of the deposit (less its commission) to the vendor. If the settlement period is unusually long (eg. 6 months), the agent will contact both parties to ask for permission to invest the deposit in an interest bearing account, with any interest earned shared between the parties.
How long does it take to finalise my sale/purchase after contracts are exchanged?
The standard period from exchange to settlement is 42 days (6 weeks), although this can be negotiated with the other party to be shorter or longer, depending on your individual circumstances and needs. Be careful with negotiating a very short settlement - we suggest that you contact your bank first to make sure that the mortgage documents (or discharge documents, if you are selling) can be prepared in time.
Is it possible to settle both my sale and purchase on the same day?
Yes. Shire Legal can negotiate for the settlement date of both contracts to be the same. You need to make sure that you are out of your sale property and have handed your keys into the real estate agent before settlement. You will be allowed into your new property once settlement has been confirmed with the real estate agent.
However, please be aware that one of your settlements may be delayed for any number of reasons, in which case your other settlement will have to be delayed. Unfortunately this is (usually!) unavoidable and will of course mean rescheduling removalists and making new arrangements for your move.
What happens if I cannot settle on the settlement date?
The Contract will specify what penalties, if any, are payable by you, either as the vendor or the purchaser as the case may be. These penalties will be fully explained to you by Shire Legal during the initial contract review. Typically, purchasers are penalised by paying interest on the balance of the purchase price (e.g. 6%p.a. calculated daily), as well as compensating the vendor for any additional legal expenses they incur as a result of the delay.
What happens at settlement time?
There is no need for you to attend settlement. Shire Legal will attend on your behalf, together with your bank, the other party's lawyer and the other party's bank. Shire Legal will call you as soon as settlement has taken place. Shire Legal will also call the real estate agent so that the keys can be handed over to you.
What happens with Council and water rates?
The relevant Council and water authority are notified after settlement of the change in ownership. You only need to worry about arranging a new account with the telephone and electricity suppliers of your choice.
I am the Executor of a Deceased Estate. Can a Contract for Sale of the Deceased's home be prepared before Probate has been granted by the Supreme Court?
Yes. The Contract can be prepared with the Executor noted as vendor, and a special condition stating that the sale is subject to Probate being granted by the Supreme Court, and that once Probate is granted, settlement can take place within 14 days (for example).
Contact Shire Legal to arrange a consultation with an experienced solicitor.
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Suite 9
46-48 Urunga Parade
Miranda NSW 2228 Australia
Phone: 02 9526 3444
Fax: 02 9526 3499
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