The Conveyancing Process in a Nutshell
This article will give a broad overview of each stage in the conveyancing process and what you can expect when buying or selling your property.
Formation Of Contract
Generally, it will be the real estate agent who prepares the contract of sale, after the buyer has made the decision to purchase the property from the seller. A standard contract (e.g. REIQ or ADL) will generally be used, which contains various standard conditions. However, the parties may agree to add in special conditions to suit their circumstances.
There is a statutory 5-day cooling off period for all residential contracts, whereby either party are free to change their mind during this time. However, a termination penalty of 0.25% of the purchase price applies if the buyer terminates the contract during this period. This period begins once the buyer has received a copy of the signed contract.
The buyer will need to pay the nominated deposit to the real estate, which should be no more than 10% of the purchase price, on signing or shortly thereafter.
The contract may be subject to the buyer obtaining an approval for finance, obtaining satisfactory building and pest reports or fulfilling other special conditions agreed by the parties, such as the sale of the buyer’s existing property.
‘Time is of the essence’ in all Queensland REIQ contracts, meaning each condition must be fulfilled by 5 pm on the due date. The buyer must advise the seller in due course of the outcome of each condition, or they may need to request an extension of time. However, the seller does not need to agree and may decide to terminate due to the condition not being satisfied.
Once the contract is ‘unconditional’, the buyer’s solicitor will conduct the standard searches. These include:
Title Search: to check for any encumbrances (such as easements and mortgages) and to ensure the current owner/land description recorded match the contract.
Registered Plan: to confirm the land’s location, size and boundaries.
Land Tax Certificate, Rates Search & Water Search: to find out any amounts owing by the seller, so any necessary adjustments can be made to the settlement figures.
There are additional searches that can be conducted at the buyer’s election. For example, a Building Records Search is a good idea if the buyer is concerned about any structures on the land not having Council approval. However, the buyer will not have the right to terminate the contract for any adverse findings unless the contract is subject to this condition.
Preparing For Settlement
Release of mortgage
The seller must arrange for the release of their mortgage over the property. The release documents will be handed to the incoming bank (or the buyer’s solicitor for a cash purchase) at settlement.
The solicitors will prepare the transfer documents to be lodged at the Department of Natural Resources Mines and Energy (DNRME) after settlement. These are lodged by the buyer’s bank, or the buyer’s solicitor if no bank is involved.
If the buyer is obtaining finance, the bank will provide the purchase money. Otherwise, the buyer themselves will be responsible for arranging purchase money. They will also need to provide all legal fees, DNRME registration fees and transfer duty. The buyer’s solicitor will prepare the settlement statement, including all necessary adjustments, before sending it to the seller’s solicitor for confirmation.
A pre-settlement inspection is usually conducted by the buyer 1-2 days prior to settlement.
The period between the date of the contract and settlement is generally 30 days. However, a later settlement date may be agreed between the parties to suit their circumstances.
Settlement will usually occur where the release of mortgage is held (if there is one) between 2 – 3 pm. It is not necessary for the buyer or seller to attend settlement unless they are self-acting. Both solicitors will attend settlement with the bank/s. The parties will be notified by their solicitor once settlement has occurred and the keys are held at the real estate for collection by the buyer after settlement.