Frequently Asked Questions About Selling Property
1. What do I need to do before selling my property?
A: You need to find an agent and sign an agency agreement and then instruct a conveyancer to draw up a draft Contract. The conveyancer will need details of your property especially in relation to any work carried out on the property in the last seven years over $12,000.
2. What happens when a buyer is found?
A: The agent will send through a sales advice to your conveyancer and the conveyancer for the purchaser. We will discuss the contract with you in detail including any changes that may be necessary. Many clients prefer a face-to-face meeting at our office and we are happy to accomodate you for this purpose.
3. What happens at exchange?
A: We organise with the purchaser’s conveyancer to exchange contracts and either a 5% or 10% deposit is handed over, usually as well a 66W Certificate, making the contract unconditional. Settlement normally take place 42 days after the exchange.
4. What happens after exchange?
A: The most important aspect at this stage if you have a mortgage on the title is to organise a discharge of such mortgage. If necessary, we will send you a discharge authority to sign, or ask your mortgagee to discharge of the mortgage. Should you be concerned that there is not enough money from the sale to pay out the Bank please let us know.
A: A Transfer will be sent to you for signing once received from the purchaser’s conveyancer and needs to be signed and returned to us in order to be available on settlement.
6. What happens closer to the settlement date?
A: The purchaser’s conveyancer will send through settlement figures for us to check and we will obtain a payout figure from the mortgagee. You need to advise us how you wish to draw the balance of the proceeds. All rates and levies are adjusted as at the date of settlement and if a proportion is unpaid these will come out of the sale proceeds. Please do not pay rates/levies very close to the settlement date as this may not be picked up.
7. What happens on the settlement date?
A: The purchaser will have conducted a final inspection and our agent in the city will attend on your behalf and settle the matter. Your mortgagee will be paid out. Any surplus funds payable to you – if you request – will be deposited to your bank by our agent. Please note that everything possible is done to make sure settlement takes place on the due date. However sometimes circumstances happen beyond our control and settlement may need to be postponed.
1. What is the process before exchange?
A: It is important to make sure that your finance is approved and preferably in writing, and you have carried out your due diligence in getting a pest and building report if buying a house, or strata report is buying a unit. It is caveat emptor – let the buyer beware. There are two ways exchange happens; either with a 66W Certificate which waives your five day cooling off period and the contract is unconditional, or under law there is a five business day cooling off period after you exchange contracts. This gives you time to arrange your finance and property inspections. If you use your cooling off rights and rescind the contract you will have to pay the vendor 0.25% of the purchase price. Please note that you must notify your conveyancer of your decision to rescind the contract as our Notice of Rescission must be served on the vendor prior to 5.00pm on the fifth business day from exchange of contracts.
Frequently Asked Questions About Purchasing Property
2. What is the process buying at auction?
A: It is important to have your conveyancer examine the contract before auction to make sure that everything is in order. It is also important to have your finance arranged with unconditional approval. Also make sure all necessary building inspection have been completed. Talk to the estate agent about auction registration and procedure. If you are successful, you must then sign the contract and pay a deposit. A personal cheque is acceptable. Note there is no cooling off period. If the property is passed in at auction, even though you purchase on the same day there is also no cooling off period.
3. If buying a unit do I need a pest/building report?
A: A purchaser should apply for a strata report and if that discloses any building issues then a building report may be necessary.
4. What type of deposit do I need and does the cheque have to be a bank cheque?
A: The vendor will normally accept either a 5% or 10% deposit. The cheque can be a personal cheque, and you may speak to the agent to see if you can transfer the deposit electronically. Should you not have the funds an application can be made for a deposit bond, however this does cost depending on amount of deposit, and there are requirements that must be met. Not all people are eligible for a deposit bond.
5. What is the process after exchange and what should I do as a purchaser?
A: There are a number of steps that we do as your conveyancer and we will write to you confirming exchange and when settlement is due. We also ask for the stamp duty. We will write to your incoming mortgagee if we have that information and the most important step you need to do during this time is to make sure your mortgage documents are on track whether it is your broker or Bank. If any delays occur in relation to settlement it is usually because finance is not available. There is penalty interest if you do not settle on the settlement date.
6. When does stamp duty need to be paid?
A: Stamp duty needs to be paid, if you are obtaining a mortgage, either two to three weeks prior to settlement as it is necessary to send a stamped transfer to the vendor’s conveyancer for the vendor to sign or pay the stamp duty at settlement. It is necessary, if this is what you want to do, to let us know as we need to send an unstamped transfer to the other side and also settlement needs to be arranged at a venue where we can stamp. There is penalty interest if stamp duty is not paid within three months from exchange of contracts. For some purchases (e.g. off the plan purchases) a longer period for the payment of duty is available. We note that is also Torrens Levy imposed by the State Government on properties over $500,000.00.
7. Do settlement cheques need to be bank cheques?
A: Settlement cheques must be bank cheques – no we cannot electronically transfer.
8. When should I take out insurance?
A: Unless taking occupation prior to settlement insurance needs to start from the date of settlement, make sure that your mortgagee is noted on the policy. There are some instances that we recommend insurance be taken out upon exchange. In relation to strata we obtain a Certificate of Currency to make sure the insurance is current.
9. Should I lodge a Caveat between exchange and settlement?
A: This has become more relevant recently in relation to a recent court case where a writ was lodged on a property after a final search was done by a purchaser’s solicitors. You can lodge a caveat which notes your interest as a purchaser, the cost would be $200 plus GST, legal fees and LPI fees of $104.50 and agent’s fee of $16.50. Should you wish a Caveat to be lodged please let us know.
10. Who informs Council, Sydney Water and Owners Corporation?
A: At settlement we hand over a Notice of Sale which is lodged at LPI with the title documents. This informs Valuer General, Water Board, and Council that there is a transfer of ownership and all future rate notices should be addressed to you as the new owners. Should for any reason you do not receive notices in your name please let us know immediately.
11. Who informs gas, electricity, telephone etc.?
A: It is up to you to have the necessary services connected. I will also send you a direct connect form if you wish to use this service.
12. Am I entitled to a final inspection?
A: You are entitled to a final inspection and need to make arrangements with the agent. You buy the property as you inspected it prior to exchange. Should there be any issues once you inspect the property, please let us know.
13. When and how do I pay the balance of the purchase price?
A: We send settlement figures to the vendor’s conveyancer about a week prior to settlement adjusting all rates/levies and the vendor’s conveyancer advises us how to draw the cheques for settlement. These cheques can be a number of cheques i.e. paying out their mortgagee, paying any outstanding rates/levies, other interested parties. Usually there are about four cheques however can be less or greater depending on the circumstances of the vendor. We will email you all the figures and request a BANK cheque for the balance plus our fees. Usually this is a few days before settlement as the vendor is usually awaiting a payout figure from their discharging mortgagee.
14. Do I attend settlement and when can I collect the keys?
A: We have experienced agents who receive the documentation from us and settles the matter on your behalf. They then contact us to advise settlement has been effected. Thereafter the agent is informed and you are able to collect the keys.
15. Can there be a problems with settling on the settlement date?
A: As with life unforeseen circumstances happen. Every endeavour is made to settle on the due date however there can be problems, for example the vendor is not ready to settle or your incoming mortgagee is not ready. However even at settlement occasionally problems happen. You can be assured that we will do our utmost to settle on the due date. For answers to these questions, which will vary from time to time, you should contact the Conveyancing Team at Hones Lawyers.