Introduction

Firstly, we would like to thank you for engaging our company to assist you in your conveyancing transaction. Our company prides itself on the level of service provided and looks forward to assisting you throughout this transaction. We encourage you to contact our office with any queries you may have in relation to your purchase.

Whilst the conveyancing process is still a paper heavy one, in an effort to reduce the amount of paper we use we endeavour, where possible, to communicate with you via either email or telephone. We invite you, where possible, to do likewise. Please save our email address in your address book to avoid missing or junked email, our email address is listed at the bottom of the page.

Purchasing a property is more often than not the most expensive and intimidating process most of our clients undertake. Recognising this, we try to make the process as simple and clear as possible, in order that the transaction can be completed with minimum stress. We encourage our clients to be involved in the process, this ensures that you stay informed about what is happening and minimises the possibility for communication breakdowns.

The purpose of this information is to provide you with an outline of what is involved in the conveyancing process, as well as to make some recommendations for what you can do to ensure the process is a smooth one both for yourself and for us.

The contract of sale

The contract of sale is the most important document in the conveyancing process. The contract records the terms of your agreement with the vendor regarding the purchase of the property.

The contract is a legally binding document, and breaches of contracts of sale can have potentially devastating legal consequences. As such, we assist you to make sure that you comply with your contractual obligations.

As the contract is designed to record your whole agreement with the vendor anything which was agreed orally does not form part of the contract and you should not rely on any such agreements. If you are concerned you should contact our office.

A statutory right to ‘cool-off’ or change your mind in relation to the purchase may exist for a very limited time after signing the contract. Cooling-off does not apply to properties purchased at Auctions, Farms or Commercial properties. Please contact our office immediately if you are considering cooling-off so we may discuss your options.

It is a condition that prior to entering into the contract you were handed a properly executed vendor’s statement. If this is not the case contact our office to discuss your options

Joint purchasers will be equally liable for performance of the contract.

Verification of Identity

The purpose of an identity check is to reduce the risk of fraud by requiring you to verify your identity as a buyer or seller and your authority to buy or sell the nominated land or property: You should have your identity verified if you are;

• buying land or property, or one of multiple purchasers buying land or property
• selling land or property, or one of multiple owners selling land or property
• transferring land or property to someone else, having land or property transferred to you, or one of multiple parties involved in the transfer of land or property

This applies to both paper and electronic property transactions.

We can complete your verification of identity at our office, Verification of Identity is valid for 2 years for all transactions completed at Central Victoria Conveyancing

Release of deposit

Purchasers usually pay a 10% deposit at the time the contract is signed and this amount must be held by a stakeholder usually the real estate agent until settlement. It is possible for the deposit to be released prior to settlement, but the purchaser is entitled to have full details of any amounts owed in relation to the property. The Vendor must satisfy the purchaser the vendors debt on property does not exceed 80% of sale - the purchaser is not obliged to release the deposit, but the vendor can resubmit request multiple times and if the reason for saying no is satisfied it is released. As the purchaser, you must give valid reason for refusal If that information is provided, it is usual for the purchaser to consent to release of the deposit.

If there is no mortgage over the property the vendor is entitled to release of the deposit 28 days after the date of the contract, unless the purchaser can give valid reason by his time.

The agent is entitled to take the commission from the deposit once it is released, which might help to explain why agents are so keen for the deposit to be released.

Once the deposit has been released the sale is unconditional.

Caveat

You have the right to lodge a caveat against the title, to protect your interest in the property as purchaser.

This gives notice to any intending mortgagee or caveator of your interest in the property. It also means that if there is a delay in stamping the transfer and lodging registration, notification will be sent by the registrar if anyone else tries to lodge a document in respect to the title. We will not lodge a caveat unless instructed by you although we do urge you to instruct us to prepare and lodge the same.

About the property

Services

Electricity, gas, water, sewerage, and telephone services are set out in the vendor’s statement. You will have to arrange for connection of services in your names as from the date of settlement, and you will have to pay any relevant connection fees. If for some reason you discover that services are not available for connection, you need to advise us as this may constitute a false representation by the vendors. We therefore suggest that you contact the utility providers regarding connection in your names a reasonable time before settlement.

Building works

If it appears that any works at all have been carried out at the property during the past 7 years, you need to tell us because this could mean that these works were unauthorised. If unauthorised works were carried out, you could have the option of withdrawing from the purchase and/or compel the vendors to obtain the necessary permits, inspections and warranty insurance, if applicable.

If you have not already done so, we recommend that you consider obtaining a building inspection report from an authorised building inspector. Of course, this will largely depend upon the vendors agreeing to grant access to the property. However, even if you cannot obtain an inspection before settlement, a report will enable you to plan the future maintenance OR repair of the property and/or if any action may lie against the vendors later for any deliberate concealment or misrepresentation.

If you intend to carry out any works at the property once you settle, and you do not intend using a registered builder, please ask us about your owner-builder obligations – particularly in regard to any future sale.

If there is a swimming pool at the property relevant fencing standards must be complied with. Also, there are now requirements regarding smoke alarms. This means that you will be liable from the date of settlement, and must contact the council to ascertain the exact requirements. Failure to comply may result in fines, and could affect your insurance protection.

Planning

We will check the current zoning of the property. We recommend that you make enquiries with the planning authority and the council to ascertain permitted and prohibited uses under these restrictions, particularly if you intend redeveloping the property in the future.

Rates and outgoings

We will check the information provided in the vendor’s statement and make any necessary monetary adjustments. You need to arrange a week or so before settlement for a special meter reading to be undertaken by the water provider on the day of settlement and for transfer of the account into your name.

Sewerage and drainage

Registered easements are shown on the plan attached to the title. Further information in relation to sewerage and drainage is available from the responsible authorities.

Notices and orders

The vendor’s statement provides that the vendors are aware of any notices or orders affecting the property – other than current rates notices. If a notice or order is issued in respect to the property, generally you will be responsible to comply with it from the date of the contract.

We will undertake normal checks in relation to these matters and the property generally. If there are any unusual matters or you have any particular concerns, please contact our office to discuss further possible inquiries.

Measurements

We enclose a plan of the land obtained from the title.

We recommend that you immediately check the occupational measurements of the property against title measurements for any discrepancy, including the connecting distance to the next street, because you need to ensure that the property is of the right dimensions and that the location is correct. You must check that any fences on the property are situated exactly on the boundaries. A variation of over 5% in fence placement does make the contract eligible for termination. You also need to check that nothing has been built over any easement shown on the plan. Please tell us immediately if the measurements are incorrect or something has been built over an easement. Any objection has to be made to the vendors within 21 days of the date of the contract. An objection may possibly justify a claim for compensation and we will advise you further if necessary.

Easements

If you wished to build something of a permanent nature over an easement at some later time, you must first seek the written consent of the water authority.

You also need to be aware that easements may also be ‘implied’ for the purposes of sewerage, gas, electricity and telephone lines. Please inform us if there appear to be any such easements evident from your inspection of the property.

Recommended council enquiries

You should check with the council that the property is not in a special area designated for things such as flooding, bush fire prone, significant snowfalls. The local council will be able to provide you with maps designating these areas. You should also check with the council that there are no matters which will otherwise impact on the property such as land fill etc.

What you will be asking the council, in plain terms, is if there are any town planning permits allowing anyone in the area to do something which is not strictly in line with the zoning of the property you are buying; or if anyone has a private section 173 agreement with the council which allows/imposes certain requirements on the property or any properties in the area, which you would not normally be able to discover by just looking around the area.

You should also check: * Whether there are any additional site-specific controls or particular local planning schemes which are not necessarily referred to in the planning certificate i.e. council ‘rules’ relating to the type of pets which may be kept within the municipality. These will all impact on your proposed future use and/or enjoyment of the property; * Whether there are any proposed freeway plans for the general area; and * Whether the property or the area in which it is included is of site or heritage or archaeological significance.

Joint tenancy or tenancy in common

When two or more parties buy they must elect to buy as joint tenants or tenants in common. On the death of a joint tenant the survivor by law automatically receives the deceased share regardless of the provisions in a will. This is the way spouses usually buy their home. There is a legal technicality you should be made aware. In this age of blended families often one or both have children from a previous relationship. If both are killed in a car accident at the same time then the law provides that the youngest survives the eldest and in that moment of time, joint tenancy property passes to the youngest. If they do not have wills dealing with the situation then the home would pass to the children of the youngest, leaving the children of the eldest with no share in the home.

Tenancy in common is usually the way that unrelated parties who want their families to inherit their share hold property. The share in the property can be any size from 1% to 99%. Separate title deeds can issue for each share, which can, in theory although difficult in practice, be separately sold and mortgaged.

Building Insurance

Whilst the standard contract does provide that the property remains at the risk of the vendor we nevertheless recommend that purchasers insure the property against loss and damage as well as occupier’s liability, as you have an insurable interest from the date of the contract. Also, if the property were substantially damaged you may want to have the option of proceeding, relying on your insurance to reinstate the improvements.

A lender will require a certificate of currency of insurance or policy document showing the purchasers and the incoming mortgagee, for a minimum insurance value the lender will specify.

Title Insurance

Title insurance is indemnity insurance that protects the holder from financial loss sustained from defects in a title to a property. Such as unforeseen land acquisitions by authorities, undisclosed building modifications or unsafe building materials. This insurance is a once off and relatively cheap, we can arrange a quote and supply you further information.

Financing your purchase

Given the large sums of money required to purchase properties, the vast majority of purchasers obtain finance from a bank or financial institution to help fund the purchase. Ensuring that your finance is approved and the relevant loan documents signed well in advance of the settlement date is therefore critical.

In our experience, too many purchasers assume that engaging the services of a mortgage broker means that they do not need to do anything to obtain their loan; they take the view that the mortgage broker will sort it out. This is a dangerous mistake to make as unfortunately all too often we find that brokers, mobile lenders and home finance managers fail to ensure that mortgage documents are prepared and executed by clients correctly.

Without correctly signed mortgage documents your bank will not advance the money you need to settle your purchase. This can lead to delays in settlement and unnecessary cost to you in the form of penalty interest and additional legal fees. Whilst it may be convenient to use a broker to assist you to obtain a loan, ultimately it is your responsibility to make sure your loan is in order in time for settlement.

We recommend that mortgage documents are signed at least two weeks prior to the due date for settlement. This takes into account that inadvertent mistakes can be made and ensures there is time to attend to these errors without the danger of going past the settlement date. We urge our clients to routinely follow up their lender throughout the transaction to make sure that everything proceeds on a realistic timeframe.

Signing documents

During the conveyancing process, there will be a number of documents you will have to sign. It is important that you use the same signature when signing all documents as financiers are most pedantic in relation to signatures.

Many of these documents will also have to be witnessed as evidence that you are in fact the person who signs the document. Some documents can be witnessed by any adult person but documents known as statutory declarations must be witnessed by authorised witnesses who actually see the person signing the document.

You must make sure when signing these documents that you do so in accordance with the appropriate procedures. If a document is returned to our office not witnessed or incorrectly witnessed, we will have to send it back to you to be re-signed. This wastes your time and our time and can lead to delays in settlement. Furthermore, incorrectly signed statutory declarations can attract fines and other punishment, as they are governed by Victorian legislation.

If you receive a document and are unsure of how it is to be signed you should always contact our office rather than simply guessing and sending the document back.

We use an electronic client signing program Docu-Sign and will provide you instructions on how to access this program if you are required to sign any documents during the transaction. As transactions are being moved over to compulsory electronic conveyancing we will be required to sign documents within the PEXA or Simpli electronic systems on your behalf, we will provide you with the means to authorise our authority to sign these documents on your behalf.

Vacant possession

If the contract provides for it the property must be vacant at the time of settlement. In reality, it may be that the vendors could still be loading their removal truck at the time – we suggest that if you plan to move in immediately, you contact the agent to discuss timing. The actual time of settlement will not be arranged until shortly prior to settlement.

Please confirm that you will be occupying the property as your principal place of residence, as we must include this information in a notice we send to the government taxes office, council and water authority.

Subject to tenancy

Many properties are bought as investments and are bought subject to the existing tenancies. Full details of the tenancies will be attached to the contract. By virtue of the law on completion of the purchase you automatically step into the shoes of the vendor and the lease becomes enforceable by you. Prudently a discussion with tenants before exchange will reveal any issues that might exist that would otherwise remain undisclosed. The fact that a tenant is a poor performer will not entitle you to terminate the contract after exchange.

Taxes

If the property is not to be your principal place of residence, then on resale there will be a taxable profit or deductible loss either under normal income tax rules or under the capital gains tax rules. If you are a developer, then the sale will probably produce a tax result under the usual rules relating to income.

If you are not a developer the only matter to be decided at the time of purchase is the entity through which to buy. The main provision to bear in mind is that the 50% discount on capital gains does not apply to companies. Nevertheless, there may be losses in a company to offset or other good reasons to use a company.

GST does not apply to residential property unless new or vacant land. It does apply to commercial and industrial property. There are a number of possibilities that might apply to the purchase, whether or not you are paying GST and if so whether it is in the price or additional to the price and whether you are entitled to get it back as an input tax credit.

Further advice on your tax position may be necessary.

Capital gains withholding payments

If the foreign resident capital gains withholding payments provisions apply to this transaction we will need to discuss this with you further.

Where the sale price is $750,000 or more then the foreign resident capital gains withholding payments provisions of the Taxation Administration Act 1953 apply from 1 July 2016.

If the foreign resident capital gains withholding payments provisions apply to this transaction we will need to discuss this with you further.

The vendor must establish that they are not a foreign resident failing which the purchaser must remit up to 12.5% of the sale price to the Australian Taxation Office.

Stamp duty and related fees

All property purchases in Victoria attract stamp duty. Stamp duty is a state government tax levied against a purchaser when they purchase a property. Generally speaking, the amount of duty payable depends on the value of the property, with more duty being levied the more expensive a property is.

The state government, through the Land Titles Office, also charges a fee to have a title registered into the name of a new purchaser. This fee is calculated on the value of the property.

Where you borrow money from a financial institution to fund your purchase, that financial institution will be responsible for paying the stamp duty and titles office fees on your behalf. These fees, together with any fees charged by the financial institution for their services, will generally be deducted from the amount the bank lends you. For example, if you borrow $300,000 and your stamp duty, titles office fees and other fees total $15,000, the bank will only provide $285,000 at the settlement. If more money is required for the settlement we will then need to obtain it from you.

Too often we find that brokers fail to factor these fees into their calculations for purchasers, and when we advise the purchasers of the additional funds required for settlement they are not in a position to provide them. Regardless of who may be to blame for this oversight, it will be the purchaser who ends up suffering the most, and it is therefore in your interest to ensure that all expenses are taken into account when ascertaining how much you need to borrow.

Various exemptions and concessions are available, such as the principal place of residence concession (up to $550,000), pensioner exemption and off the plan concession. We are able to assist you in applying for these concessions and full details are available at www.sro.vic.gov.au.

Unfortunately, many agents and brokers do not understand the off-the-plan concession and often over-estimate the savings. The earlier in the construction process that you buy, the greater the duty saving, however duty is calculated on the full price less the value of building work after contract. It is not calculated on the value of the land on the contract date and any information in the contract relating to that value is often misleading.

Duty can only be calculated when the builder provides a statutory declaration relating to the cost of works after contract. This is governed by a strict formula and the declaration required to calculate the concession will not be available until all works have been completed.

Accordingly, the builder cannot provide this declaration until very late in the conveyancing process and this often leads to uncertainty, because the financier will want to be sure that sufficient funds are available to pay duty at the FULL rate if the builder’s declaration does not support a reduction. Unfortunately, the process is flawed and we simply need to do the best we can to achieve the best possible outcome for you.

Final inspection

It is the vendor’s responsibility to hand the property over at settlement in the same condition as at the date of the contract, fair wear and tear excepted. You are entitled to conduct a final inspection of the property in the week before settlement and you should contact the agent to arrange this.

During the final inspection, you should check that all chattels specified in the contract remain, and that no fixtures have been removed. If you are in any doubt about whether an item is a fixture which should remain, or an unspecified chattel which may be removed by the vendors, please discuss the matter with us.

Briefly, the rule of thumb for the difference between a chattel, which may be removed by the vendors if not listed in the contract and a fixture, which must remain, is that a chattel is generally removable. A dishwasher which is only connected by a power point and may be removed without damage to the property will generally be regarded as a chattel. A fixture tends to be something so built in that it forms part of the property, and the property would be damaged if the fixture were removed. A dishwasher permanently affixed under a bench is generally regarded as a fixture.

If the property is not in the same condition as at the contract date, fair wear and tear excepted – other than being substantially destroyed, or if chattels sold with the property have been removed, you have no legal right to delay settlement, but only have a right to sue for compensation later – although if you let us know there is a problem we may be able to resolve it prior to settlement.

If the property had marks on the walls or spots on the carpet or appliances that did not work when you first inspected, then the vendors do not have an obligation to clean the property or fix the appliances – they only have to hand it over in the same condition as at the contract date, fair wear and tear excepted.

Settlement

Settlement is the time when purchasers (and their lenders) pay the balance of purchase price to the vendor. Purchasers must provide us with funds required for settlement by bank cheque or direct deposit. These funds need to be to our office Three (3) clear business days before settlement is due.

If settlement is to take place in the paper medium, settlement takes place at the place where the title to the property is held. As most vendors have a mortgage, their titles are held at their bank’s head office in the Melbourne CBD. We appoint a settlement agent to attend settlement on our behalf and you do not attend the settlement agents fee of $70.50 is calculated in the final adjustments on the purchase. At settlement, the purchaser’s representatives hand over the money due to the vendor and in exchange the vendor’s representatives hand over the relevant documents to enable the purchaser to become registered as the owner of the property. This process normally takes between five and twenty minutes, depending on the complexity of the transaction.

If settlement is to take place in the electronic medium, settlement takes place in a secure work platform online where all parties involved in the transaction complete their actions to facilitate the transaction. We do not use a settlement agent but do incur a settlement fee of $110.50 this is added to the final adjustments on the purchase. As of October 1st 2018 all transactions for properties in Victoria must be completed electronically, many of the types of transactions are now mandatory electronic only we can advise you if this is the case with your transaction.

If you do not settle on time then the vendors have the right to demand payment of penalty interest and perhaps additional losses. The vendors would also have the option to issue a rescission notice and then to retain the deposit and re-sell the property, suing you for any deficiency in price.

Rate adjustment

The vendor is obliged to pay the rates on the property until settlement and the purchaser thereafter. Therefore, rates are adjusted at settlement to ensure that this happens. This is done by deducting from the money paid to the vendor any amount outstanding for rates, and then adjusting those rates as paid, so that the purchaser pays back to the vendor the rates paid by the vendor for the period after settlement. A cheque is then forwarded to the rating authority for any amount owing and rates are therefore paid until the end of the rating year. We also notify the rating authorities of the change in ownership.

Keys

Keys are usually collected by the purchaser from the agent after settlement. The agent will only hand over keys upon receipt of written authorisation from the vendor, which will be faxed to the agent after settlement has taken place. Other keys will normally be left in the property, along with instruction books and household information.

Registration

When the title is handed over at settlement it is still in the vendor’s name. If you are not borrowing from a lender, we will attend to payment of stamp duty and registration of your ownership and the transfer will usually be registered within a week.

When a purchaser borrows money from a financier the title will be handed over to that financier’s agent. The agent will then take the title to the State Revenue Office to pay the stamp duty and then to the Land Titles Office for registration.

Given that most financial institutions have thousands of clients and hundreds of settlements every day, the lodging process can take anywhere between one and eight weeks, depending on the workload of the institution at the time. The institution will write to you following settlement and registration to confirm that the title is in your name and to set out the relevant information regarding settlement.

Completion

We will provide you with full financial details relating to the settlement and we will also advise the local council, water authority and Land Tax department of your purchase. It is your responsibility to arrange for connection of electricity, gas and telephone services and steps should be taken in advance of settlement as there are sometimes waiting periods.

If you have borrowed money to assist you with the purchase, your financier will also report to you after settlement.

Consider checking out our page on Buying Property.