1. Why is accurate conveyancing so important?
- Accurate and reliable conveyancing is essential to ensure that a real estate buyer obtains watertight title to the land and improvements (buildings) and to guarantee that the new owner has the legal right to sell or mortgage the property in the future.
- Almost all property sales involve a deadline or settlement date on which the money and title are exchanged by representatives for the buyer and seller. Failure to meet this deadline may cost the buyer a large amount of money, as well as the extra cost of short term bridging finance until the buyer’s money can be handed over. A professional conveyancer will ensure that the settlement takes place in a timely manner.
2. What is the legal difference between single dwelling and strata title?
In legal terms, what is basically being conveyed after a sale is the title of the land itself. In the case of a single dwelling (detached home, semi or terrace), this includes all the structures built on it, legally described as ‘improvements’. In the case of a multi story block, what is being sold is not the land itself, but a share of the air space above the land.
3. Do you need to use a lawyer to make conveyancing legal?
A person acting for themselves does not need any qualifications whatsoever to do conveyancing. You typically have three options:
- Pay a member of the Australian Institute of Conveyancers like MTYF to do the job;
- Pay a lawyer to do the job at law firm rates of charging; or
- Buy a do it yourself conveyancing kit.
Struggling first home buyers may be tempted by the DIY option, but they should be aware that mistakes could cost them dearly in missed settlement dates and penalties, including the loss of up to 25% of the deposit for non compliance. Further, without professional and detailed knowledge of all the pitfalls that may be found in a sale contract, a buyer could be paying market price for an encumbered title. This is why most buyers use the services of a conveyancing professional such as MTYF who are happy to provide an upfront fixed price estimate.
4. What are the benefits and risks of “buying off the plan”?
Benefits: When you buy a home and land package or strata unit of the plan before construction is complete, you enjoy certain benefits. The major benefit is that except for the initial deposit, you don’t have to hand over a cent until completion (other than the possible payment of stamp duty, depending on the period of time between exchange of contracts and completion). This may give you extra time to shop around for cheaper finance or to complete the sale and settlement of another property, before completing the purchase of the new “off the plan” property. Other advantages include the possibility of specifying your own finishes (i.e. carpets and fittings), and you move into brand new premises with brand new appliances and fittings.
Risks: There are also certain disadvantages, since you cannot register the ownership of a residence that is not yet built, nor can you obtain a mortgage on a property that does not yet exist. For this reason “off the plan” conveyancing takes place only immediately before completion. It is also essential to scrutinise the offer to purchase very carefully when buying “off the plan” to ensure you are covered against unreasonable delays in completion, bankruptcy of the developer, poor quality workmanship, and the non-supply of specified fittings and finishes.
5. What does “unencumbered” mean?
“Unencumbered” means that there are no pre-existing liabilities, conditions or third party legal rights to the property that might adversely affect your title. These may include guarantees signed for third parties with the property as collateral, any loans for a purpose made against the value of the property, any easements granted to neighbours guaranteeing them access to the property, and any existing rights for government, state or local authorities or bodies to compulsorily purchase the property for future public use.
6. What are my legal rights and obligations after I make an offer through an estate agent?
Generally, you have a five day cooling off period after the offer is countersigned by the vendor, but unless you are withdrawing your offer because the vendor has misrepresented the property, you may be liable to pay 25% of your deposit to compensate the vendor. You have a right to expect the title to be registered in your name after settlement.
It is important to note that the offer is not accepted unless it is signed by the buyer and the seller – until then, you can still be gazumped by another buyer who makes a higher offer.
Once the offer has been accepted, you have an obligation to pay the seller in full on the settlement date.
7. What are my legal rights and obligations when I am the highest bidder of a property at auction?
There is no cooling off period when you buy under auction conditions (which include after the property passes in at auction but on the same day of auction). The buyer must sign the contract on the spot, so bidders must inspect the contract carefully before bidding. Once you sign the contract, you have an obligation to pay the seller in full on the settlement date, failing which you may lose your deposit. This means that if your funds are delayed, (for example, because settlement on another sale is delayed), you will have to seek bridging finance through a deposit guarantee or similar loan product to enable the sale to be completed.