Practical Guide – Selling a Property in Australia
There’s more to selling your house than simply putting it out on the market. The sales process can be a stressful time, which is why it is important you are aware of what is going on “behind-the-scenes” in the conveyancing process and that you have good professionals assisting you along the way.
For most people, a home will be a person’s most valuable asset, so making a mistake can have a serious impact on someone’s finances and lifestyle. A solicitor has the qualifications and experience to ensure that a sale is successfully carried out.
In today’s guide, we will give an overview of the conveyancing process from the perspective of the vendor and explain all the key stages.
Stage 1 – Pre-sale matters
To prepare for the sale, your solicitor will prepare you a draft contract for your property. This is the first thing to be done – in fact, putting your house on the market without having a contract is an offence under NSW law and can lead to fines.
As part of the contract, a number of specific documents need to be included. These are obligations known as the Vendor Disclosure Requirements. It is important that your contract complies with these requirements, because if it does not, the eventual purchaser may be able to cancel the purchase and demand the return of the deposit.
Some examples of the most typical documents that will be included along with the contract are:
- Copies of any mechanisms on the property such as easements, covenants, rights of way or other restrictions
- Drainage diagram
- A copy of the certificate of title
- Zoning certificate
The documents required will depend on the individual property and circumstances, which your solicitor will be able to assess.
For strata (such as an apartment) or community properties, additional documents will also be required.
When preparing the contract, your solicitor will work with you to determine the standard and special terms to be used. It is likely that as part of negotiations, the buyer will want to change some things (such as requesting a longer or shorter settlement period), and your solicitor will assist with advising on you what is agreeable or what is non-negotiable.
Stage 2 – Exchange of contracts
The next stage of the legal process is exchange. It is in this stage that the contract for sale becomes legally binding on both parties. Under this stage, the contract is literally “exchanged” by the parties, whereby in a meeting between the parties the purchaser gives a signed copy of the contract (the offer) to the vendor, in exchange for a copy of the contract that has been signed by the vendor (acceptance of the offer). Prior to swapping the contracts, the lawyers for each party will ensure that each of the copies of the contract are identical and date them. A deposit on the property (usually 10% of the purchase price) is paid.
It is important that exchange always takes part via the parties’ lawyers. A real estate agent does not have the legal training or expertise to be able to identify potential legal issues that may arise.
As the seller, in NSW you are not responsible for paying stamp duty, however, you may have to pay other taxes, particularly if you are selling an investment property (such as the Capital Gains tax). Your solicitor will be able to guide you on this point.
Tip – What is the cooling off period?
One of the common questions people will ask is what the cooling off period actually is. The cooling off period gives a buyer the opportunity to properly consider the decision to enter into the contract once the initial excitement of making an offer and signing the contracts has subsided. Generally, this will last for a week following execution. During the cooling off period, the purchaser will also have the chance to conduct building and pest inspections.
If potential buyers decide to option this clause and pull out during the cooling off period, they will usually forfeit 0.25% of the purchase price.
Sometimes, vendors will request the cooling off period to be waived using a s 66W Certificate, as it provides greater certainty to the seller and helps move the sale process along quicker.
Stage 3 – Finalising the Sale and Settlement
This is the final stage of the conveyancing process, and will generally occur 42 days after the exchange of contracts, however, the parties may also negotiate a shorter settlement period. After settlement, the purchaser will gain possession of the property and the transaction will be completed.
At settlement, the formal documents for transfer of title will be executed, settlement figures signed off on and the balance of funds transferred. The purchaser will pay the balance of the purchase price, and any existing mortgages and caveats will be removed. Since the transition to electronic conveyancing via PEXA last year was completed, the vast majority of settlements will take place virtually, with the legal teams and representatives of the banks logging on to a secure portal to arrange for the parties to finalise the sale remotely.
Immediately after settlement, keys and other access devices (such as security codes or garage remotes) will be made available to the purchaser.
After settlement, the transaction will have been finalised.
If you are considering selling your home or property, feel free to get in touch with our experienced property team to further discuss the process and ways we can add value. Our property lawyers have the skill and experience to ensure your sale runs as smoothly as possible, and in the event issues do arise, know how to manage these and protect your interests.
Harris Gomez Group is an English and Spanish speaking law firm with 25 years experience based in Sydney, with sister offices in Chile and Colombia. We specialise in business, technology and corporations law, property law, and cross-border issues. We assist individuals, entrepreneurs and small to large sized Australian businesses with a variety of issues, including corporations law, intellectual property, property law issues and contract disputes. We are members of both Australian Latin American Business Council (ALABC) and Auscham.
To better understand how we can support you, please contact Harris Gomez at firstname.lastname@example.org
Our Sydney office is located at Level 7, 92 Pitt Street, Sydney NSW 2000.