What is Conveyancing?

Conveyancing is the process by which the ownership of a property is transferred from one party (the Seller) to another party (the Buyer).

There are, however, many parts to the conveyancing process, all of which need to be completed, not only in a timely manner but correctly, in order for ownership to be transferred to the Buyer and for the interests of the Buyer and Seller to be adequately protected.

The key steps in the conveyancing process are listed below:

Sale Documentation - it is crucial that the documentation that supports the transaction is properly drafted and contains all of the required information. The Seller needs to provide the Buyer with a signed and dated Vendor’s Statement (sometimes referred to as a S.32 Statement). If this is not done prior to the Buyer signing the contract, that contract will not be binding. The Vendor’s Statement needs to contain certain required information and this information must be both accurate and current upon the contract being entered into.

A Contract of Sale needs to be signed by the Seller and Buyer, which contains all of the terms of the transaction, such as price, deposit amount and settlement date. The Contract also needs to include what are referred to as “special conditions” that apply to the transaction. The most common ones are making the contract subject to finance and also to a satisfactory building and pest inspection. If there are other special conditions that the parties feel are warranted given the nature of the transaction they should also be included.

It is vitally important to obtain proper advice in relation to the Vendor’ Statement and the Contract of Sale whether you are the Seller or the Buyer to ensure that the transaction has a solid foundation and adequately protects your interests. It is also important that any contract special conditions are properly monitored.

Property Searches - The conveyancer needs to obtain title and property searches in order to validate the information that the Seller provided in the Vendor’s Statement and to ascertain any third party rights that are registered on the title (such as mortgages, caveats) so that they can be removed prior to settlement.

Transfer Documentation - Documents that are required to effect a change in ownership need to be produced and signed by both parties. It is crucial that these documents are accurate and properly executed otherwise there could be a delay to settlement.

Getting ready for Settlement - the Buyer needs to ensure that loan documents are signed with the lending bank well in advance of settlement so that there is ample time for the Buyer’s conveyancer to arrange settlement with the lending bank and be advised of the funds available for settlement. If the amount provided by the lending bank (after deduction of stamp duty, other transfer and lending costs) is less than the amount needed for settlement the Buyer will need to contribute the shortfall. These details are provided to you by your conveyancer once made available by the lending bank.

Likewise, the Seller’s bank needs to be advised that the property has been sold and the details of the settlement date so that they can prepare the relevant discharge of mortgage and provide your conveyancer with the amount that will need to be paid to them at settlement.

A week or so prior to settlement a Statement of Adjustments is prepared by the Buyer’s conveyancer and checked by the Seller’s conveyancer, so that the precise amount (down to the last cent!) to be handed over at settlement can be calculated. It is called a Statement of Adjustments as it results in an adjustment to the purchase price so as to take into account the apportionment of council and water rates (which are the responsibility of the Seller up until the settlement date and the responsibility of the Buyer after the settlement date) so that each party bears their fair share of the rates for the particular rate year in which the settlement occurs. Other miscellaneous adjustments are also made, if applicable.

Settlement - On the settlement day the representatives of the Buyer, the Seller, the lending bank and the Seller’s bank (who holds the title) meet and exchange documents and cheques. All of the documents that are required to effect a change of ownership are checked to make sure they are all in order and signed correctly and the cheques are also reviewed to ensure that the correct amounts have been brought to settlement. Your conveyancer will contact you to advise that settlement has been completed.

Post Settlement - Once settlement has been completed your conveyancer will notify the relevant council and water authority of the change of ownership and the Buyer’s lender (or the Buyer’s legal representative if there is no lender) will arrange for the transfer document to be stamped and then lodged at the Land Titles Office, so that the title can be updated to reflect the new ownership of the property.

A settlement letter is mailed to you so that you have a record of what occurred at settlement.

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