What is conveyancing?
What is the difference between a lawyer and a conveyancer?
A lawyer is a person who is qualified to provide legal advice regarding the rights and obligations of a seller and buyer throughout the course of a conveyance. For example, a lawyer is qualified to provide legal advice regarding the terms of the contract and whether a particular term has been breached.
A conveyancer is a person who is experienced in the area of conveyancing but is unable to provide legal advice. They are skilled at managing the sale or purchase of a property from the date the contract is signed until the date settlement occurs, under the supervision of a qualified lawyer.
What is a disbursement?
A disbursement or outlay is an expense incurred on behalf of a client during the course of their conveyance. Generally, disbursements relate to the cost involved in obtaining searches such as council rates, survey plans and body corporate reports. Disbursements can also include fees for instructing an agent to attend settlement in a location that is distant from the conveyancer. It can also include bank cheque fees if the conveyancer is required to draw cheques on behalf of their client.
What is PEXA?
PEXA is an online settlement process. This process although new to Queensland can be used to settle matters without the need for parties to meet and exchange documents and bank cheques. The process is completed electronically which means for a Seller your funds are distributed more quickly and for purchasers your property title is in your name sooner.
What is a 'cooling off period' and who does it apply to?
A cooling off period applies to the buyer of a residential property. It commences on the day the buyer or their agent (e.g. solicitor) receives a copy of the signed and dated contract. It ends 5 business days later. A ‘business day’ is a weekday. It does not include a Saturday or Sunday. If a buyer or their agent receives the signed and dated contract on the weekend, the cooling off period will commence on the next business day.
The purpose of a cooling off period is to enable a buyer to change their mind about proceeding with a contract with minimum penalty. No reason is required to be provided to terminate a contract during the cooling off period. Notification must be given to the seller in writing.
If a buyer chooses to terminate during the cooling off period, the seller may impose a penalty of up to 0.25% of the purchase price from the deposit. The balance of the deposit must be refunded to the buyer within 14 days.
There are some exceptions to the applicability of a cooling off period. In particular, a cooling off period does not apply to properties which are purchased at auctions.
What is a formal offer?
A formal offer is an offer which has been submitted to the seller in writing. It is generally signed and dated and contains consideration. ‘Consideration’ is the amount of money a buyer is willing to offer to purchase a property.
Generally, a real estate agent will ask a buyer to submit a formal offer in the form of a contract. As a buyer can be bound by the terms of their offer if it is accepted by the seller, it is not recommended that a buyer sign a contract of sale without first obtaining the advice of their lawyer.
What is the difference between a standard purchase and an 'off the plan' purchase?
An ‘off the plan’ purchase involves purchasing land which does not yet exist. For example, the seller may own a large area of land which they propose to subdivide into smaller blocks and sell as individual lots.
Information concerning the purchase relies entirely on material provided by the seller or their agent and the purchase is reliant upon registration of the land with the local Council. Generally, such registration must take place within 3½ years of the contract date. If registration does not occur by this date, either the seller or the buyer may terminate the contract without penalty.
A standard purchase involves purchasing vacant land or property which has already been surveyed and registered with the local Council.
What are key dates to be aware of during the conveyancing process?
Key dates to be aware of during the conveyancing process include:
- The contract date;
- The cooling off date;
- The date finance approval is due;
- The date a building and pest inspection is due;
- The date a pool inspection is due;
- The date any special conditions are due (e.g. a due diligence search or soil inspection); and
- The settlement date.
What happens at settlement time?
On the day of settlement, the solicitors representing the buyer and seller will meet at an agreed location and at an agreed time. The location of settlement is determined by the contract. For example, the contract may state the location for settlement is to be in Brisbane or the Gold Coast.
Settlement will usually take place in the afternoon to enable the banks sufficient time to provide a payout figure and draw cheques.
At settlement, the seller (and their financier) will provide the buyer with a document which will enable any mortgage secured over the property to be released and to enable the property to be formally transferred to the buyer. The documents will already be signed by the bank and seller and will be checked by the buyer’s solicitor for accuracy. In exchange, the buyer (or their financier) will provide the seller with cheques totalling the balance payable at settlement.
The balance payable at settlement is determined prior to the settlement time as it generally includes adjustments for expenses such as council rates and water, body corporate levies and rent. An adjustment ensures the seller is only responsible for the payment of any liabilities up to the settlement date.
Once settlement occurs, the agent is notified and authorised to release the deposit to the seller and the keys to the buyer.
What if either party cannot settle on the due date?
If settlement cannot occur on the due date, the party who is unable to effect settlement will generally request an extension from the other party. If the request for an extension is accepted, time will remain the essence of the contract. It is important to retain ‘time of the essence’ as it enables a party to force the performance of the contract should they be required to do so at a later date.
The risk with a buyer requesting an extension of settlement is the imposition of a monetary penalty by the seller. The amount of the penalty is determined by the terms of the contract. Generally, the penalty is a fixed percentage calculated per day on the balance owing until settlement occurs.
If settlement does not occur on the due date and a request for an extension is not agreed upon, the contract will lose its ‘time of the essence’. This means the seller and buyer cannot force settlement to occur on a specific date which can have significant implications for the party who wants to settle at a later time.
What is stamp duty?
Stamp duty is also known as transfer duty. It is a tax imposed by the Queensland Government when purchasing property. The amount of stamp duty is determined using a sliding scale. The higher the purchase price, the higher the amount of stamp duty payable.
The amount of stamp duty payable can be reduced if a particular exemption or concession applies. Typical stamp duty concessions involve a first home buyer or a person purchasing a property as their principal place of residence. An exemption can apply if, for example, a property is being transferred from a deceased person to a beneficiary under the terms of a Will.
A stamp duty concession will not apply if a property is being purchased by a company or trust or if the property is being purchased for investment purposes.
What are registration fees?
Registration fees are a fee imposed by the Department of Natural Resources & Mines (otherwise known as the Titles Office) when lodging documents which affect property.
The registration fee to release a mortgage, for example, is a fixed fee set by the Titles Office. In contrast, the registration fee to transfer the ownership of a property will depend upon the amount which was paid to purchase the property. Similar to stamp duty, the fee is based on a sliding scale. Therefore, the higher the purchase price, the higher the registration fee which will be payable.