A conveyancer is a licensed and qualified professional whose job it is to provide advice and information about the sale or purchase of a property, prepare documentation and conduct the settlement process related to the sale or purchase.
The most common reasons you would engage a conveyancer is when you are:
- buying or selling a property;
- subdividing land;
- updating the title of a property (for example, if someone has passed away or as a result of a divorce settlement); or
- registering, changing or removing an easement.
If you are buying a property your conveyancer should:
- review the contract for sale and advise you on the terms and conditions (including any special conditions) of the contract;
- investigate the title of the property and check for any matters on the title which might affect you as a buyer and let you know about them. The types of things your conveyancer might bring to your attention are easements (that is, rights of access across the property), drainage and services such as telecommunication;
- explain the process of transferring the property to you including exchanging contracts and settling contracts. This process is what your agent and others will refer to as “conveyancing”;
- attend to exchange of contracts on your behalf;
- lead you through the process of dealing with your bank;
- calculate stamp duty which you will need to pay on your purchase;
- calculate adjustments for Council and water rates; and
- attend settlement of the property. Settlement is the day that the property is transferred to you.
If you are buying a property your conveyancer should:
- prepare the contract for sale and communicate with your chosen agent in relation to the contract;
- advise you on any amendments requested by potential purchasers;
- attend to exchange of contracts with the vendor’s conveyancer;
- help you deal with your bank regarding the discharge of your mortgage; and attend settlement of the property.
In New South Wales conveyancing was traditionally undertaken by solicitors and the cost of such work was charged according to a pre-determined scale based on a percentage of the value of the property. In 1992 legislation was passed which enabled conveyancing work to be also undertaken by licensed conveyancers. The introduction of licensed conveyancers has seen the cost of conveyancing services reduce significantly.
Licensed conveyancers must hold professional indemnity insurance and comply with a Professional Code of Conduct. Licensed Conveyancers are required to belong to an industry body known as the Institute of Conveyancers (www.aicnsw.com.au).
Licensed Conveyancers specialise in ‘real property’, that is “bricks and motor” or land. They do not carry out other work which solicitors do such as the preparation of wills. Conveyancers must have completed a minimum 2 years of study at tertiary level of real property law.
In addition to their tertiary study, conveyancers must have at least 2 years supervised practical experience in conveyancing before they can apply for a conveyancing licence. Conveyancing licences are issued and administered by the NSW Office of Fair Trading.
The majority of Licensed Conveyancers are self-employed and run their own business. This means that you are likely to be dealing with the principal of the conveyancing business. A Licensed Conveyancer can also work in the office of a law firm.
If a transaction becomes litigious or is beyond the scope of what is considered conveyancing work under the Conveyancers Licensing Act 2003 then a Licensed Conveyancer must refer the transaction to a solicitor for assistance.
In summary, more people are now using the services of a Licensed Conveyancer than a solicitor as they tend to be more price competitive and easily contactable.
If you buy residential property in New South Wales then a “cooling off period” of 5 clear working days applies unless specifically excluded.
This means you have 5 working days from the date of exchange of contracts to elect to proceed with the purchase or not. If you decide to proceed with your purchase during the cooling off period, you will forfeit a small amount of money to the seller being 0.25% of the agreed price of the property.
The main purpose of the “cooling off period” is to enable you to arrange for pre-purchase inspections in relation to the property such as building and pest reports and to obtain unconditional loan approval from your bank.
During the cooling off period the owner of the property not allowed to sell the property to another buyer.
There are some circumstances in which a cooling off period will not apply. They are:
- If the property (whether vacant land or not) is used wholly for non-residential purposes; or
- If a property (whether vacant land or not) is more than 2.5 hectares in area; or
- If the cooling off period is explained to you by your conveyancer and you elect to waive your cooling off period. In this case, the contract for sale will be binding on both the seller and the buyer at the date of exchange of contracts;
- If the property is sold by public auction; or
- If a contract is exchanged on the same day as the property was offered for sale by public auction but passed in.
In New South Wales, it is the law that an agreement to sell real estate (including houses and units) must be in writing. This agreement is usually called a “contract for sale” or simply “the contract”.
The first time you might see the contract is when you view a property at an open house. It is a legal requirement that real estate agents have available a copy of the contract for potential purchasers to look at an open house.
Your conveyancer will need the contract for sale in order to provide you with advice in relation to a property. If you are interested in a property, ask the real estate agent for a copy of the contract. It is usually the case that the real estate agent will be able to email you an electronic copy of the contract. This is most convenient because it means that you can easily forward it to your conveyancer for them to review it on your behalf.
Whilst it would be unusual, if you experience difficulty getting a copy of the contract from the real estate agent and do not understand the reason why, your conveyancer may be prepared call the real estate agent on your behalf to get to the bottom of the problem.
The contract for sale does not need to take a particular form but, if you look at more than one property before finding “the one” you will notice that most contracts look more or less the same. This is for a few reasons.
The first reason is that most conveyancers and solicitors in New South Wales preparing a contract for sale use the standard form of contract prepared and recommended by the Law Society of New South Wales. Presently, there are two versions of that contract being used – the 2005 edition and the 2016 edition. Eventually, it is expected that all conveyancers and solicitors will transition to using the 2016 edition.
Both the 2005 edition and 2016 edition are made up of a front and second page and a set of standard conditions. The front page, amongst other things, sets out details of the property, the person selling the property (the “vendor”), the person buying the property (“the purchaser”) and the price (when it is eventually agreed). The standard conditions set out the main agreement between the vendor and purchaser and deal with questions such as when the purchaser is required to pay the balance of the purchase price to the vendor and what happens if the purchaser does not pay the balance of the purchase price by that date.
The second reason that contracts for sale tend to look the same from property to property is that conveyancing legislation in New South Wales requires a series of documents be attached to contracts for sale which disclose information about the property to purchasers. These documents include:
- documents which are registered with Land and Property Information relating to the property including any easements or covenants affecting the property;
- a planning certificate issued by the local council setting out details of planning restrictions affecting the property; and
- a drainage diagram showing the location of the sewer and other drainage on the property.
Buying “off the plan” usually means purchasing a property from a developer before the house or unit has been built or the plan that creates the property has been registered by Land and Property Information. It might be that, in addition to not having built the house or unit, the developer is also still waiting for finance approval for the development and/or for Council approval for the development.
The contract for sale should set out exactly what the developer needs to do before you are required to buy the property. Usually off-the-plan contracts are much larger in size than a contract to purchase a property where the house or unit has already been built and the plan has already been registered. This is because the contract needs to describe what the developer needs to do and the time by which the developer needs to do those things.
Your conveyancer will be able to explain to you the timeframes and also advise you on any stamp duty concessions you might be able to claim because you are buying “off-the-plan”. Your conveyancer will also discuss finance pre-approval and the type of information your bank will want to know regarding an “off-the-plan” purchase.
Of course, one of the difficulties buying “off-the-plan” is that you cannot see physically what you are buying! It may be a good idea to look at other projects the developer has built or been involved in to consider the quality and design of the developer’s work. While there is no guarantee that the developer’s work will be the same from project to project, some purchasers find comfort in looking at prior projects.
The quick answer to this question is as soon as possible! Most of us need to borrow money from a bank, credit union or other financial institution to purchase a property and the sooner this is organised, the more confidence you can have in making offers to purchase a property.
The more detailed answer is that, in practice, most purchasers will approach a bank or mortgage broker before they start looking at properties to buy. At that early stage, you will likely make an application for “pre-approval” which is a preliminary approval from a financier to lend a certain amount of money but is not related to a particular property.
When you find a property to purchase, it is usual that you will need to make a further application for unconditional approval which is an approval for finance to purchase a particular property. A step to obtaining unconditional approval may be that the financer needs to carry out a valuation of the property.
It is prudent to obtain unconditional approval before entering into a contract for sale although your conveyancer will discuss with you and help you understand the exact timing.
If you decide to make an offer to buy a property, you should make the offer to the real estate agent representing the person selling the property.
There is no rule as to how an offer needs to be made – you may make the offer in person to the agent or by calling the agent. It is however a good idea to put your offer in writing at some stage so that you can be certain that you are accurately conveying your offer and have a record of your offer. Usually, this can be done quite easily by an email to the agent.
It is likely that you will hear real estate agents and your conveyancer mention “exchange” or “exchanging contracts”. Exchanging contracts is the process of comparing a contract signed by the person selling a property (“the vendor”) with a contract signed by the person buying a property (“the purchaser”). For exchange to occur, both copies of the contract, on comparison, must be identical and then dated.
“Exchange” is important because it requires that the vendor and purchaser agree on the terms of the contract, including the price. It is also important because it signifies entry into the contract by the vendor and purchaser and that both the vendor and purchaser are bound to the terms of the contract.
“Exchange” is a necessary part of buying or selling real estate in New South Wales and happens regardless of whether a property is bought or sold by negotiation (known as “private treaty”) or at auction.
Some things to remember about exchange:
- Usually, exchange is carried out by your conveyancer or the real estate agent;
- A purchaser generally needs to pay the deposit to the vendor upon exchange of contracts;
- Purchasers of residential property are usually entitled to a cooling off period of five business days following exchange of contracts.
“Settlement” is sometimes referred to as “completion”. Both terms have the same meaning which is the conclusion of a contract for the sale of property, It is the point at which the legal ownership of a property is transferred from the seller of a property to the purchaser of a property upon payment by the purchaser of the balance of the purchase price.
Settlement usually takes place six weeks after exchange of contracts, but can take place any time after exchange of contracts in accordance with an agreement between the seller and purchaser. Perhaps even more importantly, settlement is also the day on which you will be able to pick up the keys to your new property!