Frequently Asked Questions about buying and selling propertyJan 12, 2022
We literally handle hundreds of sales and purchases of property each year, and whilst our main role is to guide our clients through the legal aspects of the transaction, there are often many non-legal questions that are raised by our clients. Many of these questions are asked by different clients in different matters throughout the year – so we have listed some of these below to assist other clients who may have the same questions.
What happens with a simultaneous settlement? When do we actually have to move out of the property? When can we move into our new property?
Settlement typically is scheduled to take place sometime between 12pm and 2pm. Settlement is when the title to the property changes hands. If you are selling the property, then you no longer own it once settlement takes place, and vice versa if you are purchasing – once settlement takes place, you are the new owner. If the property is sold “with vacant possession” that means that the property must be vacated by the seller by the time of settlement. All furniture, clothing and other personal effects must be out of the property by the time of settlement. If any items remain, then arguable the seller is not providing “vacant possession” and the purchaser would have the right to delay settlement until all remaining items are removed.
A simultaneous settlement creates added pressure for sellers and buyers, because not only does the seller need to be completely out of their existing property (and the keys handed over to the agent) before the time of settlement, but they also cannot get the keys to the new property (usually from the agent) until after settlement has taken place, which can mean a period of time literally hanging around and waiting for settlement to complete. Fortunately in this new age of electronic conveyancing, settlements usually complete within half an hour – which is much shorter than paper settlements which could sometimes take an hour or more, depending on the number of parties were involved, simultaneous settlements were taking place at the same time, documents and cheques required, and so on.
The settlement figures you have sent us show that some of our money is being paid to the seller’s law firm. Why are we paying the seller’s legal fees?
Calculating settlement figures starts with the purchase price, less any deposit that you have already paid. The balance of the purchase price is then “adjusted” to take into account the status of any Council rates, water rates, strata levies and so on that have been paid, are to be paid, or will remain payable as at settlement. This adjusted settlement figure is the actual amount that needs to be paid to the seller at settlement. Once we have provided that figure to the seller, the seller will then let us know where they would like that money to be directed and paid to. Usually, this will include an amount paid to their bank (to pay out the balance of their home loan) and an amount paid to their lawyer (to pay their legal fees). Whatever remains will be paid to the seller. The total amount paid by you as the purchaser does not change. It is still paid to the seller, but in accordance with the seller’s direction. As such, you aren’t paying the seller’s legal fees. Rather, the seller is saying that instead of paying the amount directly to the seller, they would like it to go to their lawyer instead.
Why has the other side’s bank been delayed? Can you contact their bank and chase them up?
In the course of the transaction, we can only speak with you (our client), your bank, the real estate agent, and the other side’s solicitor. We cannot speak with the other side’s bank or anyone else involved in the transaction on behalf of the other side. If the other side’s bank is delayed, we can not control how quickly their own processes operate nor get involved with what is happening and what the cause of the delay is. We are limited to the information that the other side’s solicitor provides to us. Even so, you may have rights under your contract in a situation such as this, such as the right to charge interest, the right to recover your legal costs and so on – depending on the actual terms of the contract.
What happens with the electricity, internet and gas accounts?
As mentioned above, we “adjust” the settlement amount to take into account the payment status of Council rates, water rates, strata levies and so on. These charges are said to “run with the land” – that is, they are charged against the land, and are payable by whoever owns the land. Other accounts such as electricity, internet and gas do not run with the land. They are services that you need to arrange yourself, and set up accounts for. That means that if you move out of your property without paying your electricity account, then you will still owe the outstanding amount to the electricity supplier, even though you no longer live in your previous property.
If you are selling – you will need to contact your electricity, internet and gas providers to let them know that you will be moving out of the property and to make arrangements for the accounts to be closed (and a final meter read done close to settlement).
If you are buying – you will need to contact your providers to let them know that you will be moving into the property and to make arrangements for the accounts to be opened (and the services to be connected).
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