Contract

Once you have decided to sell your property, you must provide us with the necessary information so that we can have the Contract for Sale of Land drawn up. We will go through a detailed questionnaire with you to gather all the relevant information required.

The contract will include the legal terms and conditions of the sale between the seller and the buyer. We will also advise you of the mandatory documents that must be disclosed in the contract. Contracts can be varied in many ways by shortening or extending the settlement date, specifying what items should be included or excluded in the sale or perhaps you may want to sell with vacant possession rather than subject to an existing tenancy. These variations, among others, are things that are very important to discuss with us so that a proper disclosure can be made in the contract.

In the case of residential properties, the agent cannot commence advertising the property for sale until they have received the contract from us. This rule does not apply to commercial properties.

We can prepare a contract in less than an hour. We are able to obtain most ‘prescribed documents’ instantly online. The only document that may cause some delay is the Section 10.7 (formerly Section 149) Zoning Certificate, which some councils are still working on a way to provide online.

Exchange of Contracts

There will be two copies of the sale contract: one for you and one for the buyer. You each sign one copy before they are swapped or ‘exchanged’. This can be done by hand or post and is usually arranged by the agent or the conveyancer.

Once a buyer is found and their offer has been accepted, then the decision needs to be made if contracts will be exchanged with or without a cooling off period.

In most cases, contracts will be exchanged with the agent with a 5 business day cooling off period whereby the buyer pays a deposit in the amount of 0.25% of the purchase price. Within those 5 business days the buyer will receive advice on the contract, request any changes to the contract, obtain unconditional loan approval and obtain any necessary reports. If for any reason the buyer decides not to proceed with the purchase then they will forfeit the 0.25% deposit to the seller, however, if the buyer decides to proceed with the purchase then they must pay the balance of the 10% deposit prior to the cooling off period lapsing. This option is usually undertaken if the buyer is worried about being gazumped, however, this option is not available if the property is sold at auction, if it is a commercial property or if it is a rural property over an area of 2.5 hectares. Please note that a 5% deposit or an extension to the cooling off period can be requested by the buyer. There is no cooling off period for the seller. Once contracts have been exchanged, sellers are generally bound to complete the agreement. Contracts become binding once the cooling off period expires.

The alternative is to exchange contracts without a cooling off period whereby the buyer would seek advice on the contract, request any changes to the contract, obtain unconditional loan approval and obtain all necessary reports prior to exchanging contracts. Contracts would become binding once the counterpart contracts are both signed and dated, when the buyer has paid the 10% deposit or a 5% deposit if agreed by the seller and when the buyer’s conveyancer has provided a Section 66W Certificate which waives the buyer’s cooling off rights.

We can assist if you are unsure of which option to accept when exchanging contracts.

The Deposit

The buyer pays a 10% deposit on exchange of contracts. However, sometimes the buyer may prefer to pay a 5% deposit which is only allowed if the seller agrees. The agent normally holds the deposit in their trust account and is released to the seller after settlement.

An alternative to a cash deposit is a deposit bond or bank guarantee. They can be used to substitute a cash deposit in case the buyer’s cash is tied up in other investments and is not easily accessible. This simply means that the buyer pays the full purchase price on settlement. The seller’s conveyancer will hold the deposit bond or bank guarantee on their file until settlement.

Between Exchange & Settlement

Once contracts are binding, we will then undertake the necessary paperwork to transfer the property into the name of the buyer which usually takes 6 weeks to settle the matter. The settlement period can be shortened or extended through negotiations between the parties.

During this time, we will write to you advising of the next steps; we will contact your discharging mortgagee (if any) so that they have enough time to prepare the discharge of mortgage form and provide us with their payout figure; we will sign the Transfer form on your behalf; we will check the settlement figures have been calculated correctly for the adjustment of council rates, water rates and strata levies (if any) and leading up to the settlement we will give you a full break-down of all the settlement figures.

Settlement will be booked in with all parties to occur at a mutually agreed time which is usually 2.30pm on the day of settlement. We will confirm the time with you about a week prior to settlement.

It is usual for the buyer to contact the agent to arrange a suitable time for the buyer to undertake a pre-settlement inspection (usually on the morning of the settlement) to ensure that the property is in a satisfactory condition with the agreed inclusions. If prior to settlement the property in question has been damaged, there is usually sufficient time to take care of any last minute discrepancies prior to settlement. However, this can depend on the magnitude of the discrepancies.

Settlement

Settlement is the finalisation of the sale process. There are usually four parties involved – the seller and buyers’ conveyancers and the banks for the seller and buyer.

Traditionally on settlement, the buyer’s bank would exchange cheques as per the instructions of the buyer’s conveyancer and, in return, would receive the Certificate of Title and Discharge of Mortgage (if any) from the seller’s bank.

Settlements now occur via PEXA which stands for Property Exchange Australia. PEXA is a national online system which provides for electronic settlement of property transactions including payment of settlement monies, duties, taxes and any other disbursements and it also allows for electronic lodgement of dealings to the appropriate Land Registry which will change over your ownership of the property.

SettleMe by PEXA tracks settlement in real-time. Instant notifications keep you informed. We can keep you updated on the progress of your settlement whereby you can track your settlement.

There is nothing you will need to do on the day of settlement. You will simply need to provide all sets of keys to the agent so they can hand them over to the buyer immediately after settlement.

After Settlement

Once settlement has taken place, we will telephone you to congratulate you that it has all completed. We will also in due course write to you to sum everything up.

The balance of the sale proceeds will be deposited into your nominated bank account.

We will write to the agent to have them pay the deposit monies to you (usually less their commission) and for them to release the keys to the buyer.

After settlement, we will arrange for registration at the Land Registry Services office so that the property can be transferred into the buyer’s name. In turn, the Land Registry Services office will notify the council and water authority of the change in ownership.

If the property is strata or community title, then we will write to the strata manager notifying them of the change in ownership as well.

If necessary, you will need to arrange for the disconnection of your telephone, electricity, gas and other services and you will also need to contact your insurance company to cancel or transfer your building and contents insurance (if any).

Contact us to discuss the sale of your specific property!

Disclaimer: The content of this publication is for reference purposes only and should not be relied upon as legal advice. Specific legal advice should always be sought to take into account your individual circumstances.

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