5 Frequently Asked Questions: Buying and Selling your home in New South Wales
Over the past 65 years, the experienced property and commercial team at Willis and Bowring have dealt with and overseen the sale and purchase of thousands of residential properties across New South Wales. Whether it’s for investment purposes or personal enjoyment, we understand that the conveyancing process can be daunting. That’s why we’ve collated five of the most-asked questions by our clients and answered them here below to assist anyone else who may be thinking of selling or purchasing a property.
1. I want to sell my property and fund the purchase of a new house with the sale proceeds. How do I ensure my sale and purchase are simultaneous?
The introduction of electronic conveyancing (eConveyancing) and Electronic Lodgment Network Operators (ELNOs) has modernized the way that we conduct settlements. It is an efficient, accurate and secure replacement of the paper and manual processes which have been traditionally utilized for over 150 years in property transactions.
During the pre-exchange stage of your matter (or in the cooling off period), your legal representative will often engage in negotiations with the other side. As a Purchaser, it is crucial to ensure your negotiations include arranging a completion date that falls on the date as your sale. Your legal representative will then ensure the ELNO workspaces are linked and the settlement time is simultaneous.
Like many things, a simultaneous settlement has its pros and cons. It often creates added pressure for sellers and buyers to complete on time if the purchase funds for one transaction is solely reliant on the sale proceeds of another. Fortunately, electronic conveyancing allows your legal representative to link workspaces, meaning the proceeds of a sale can be allocated to the purchase simultaneously and instantaneously.
Make note that transactions of this nature are interdependent, so if they aren’t meticulously coordinated then the failure of one will ultimately affect the other.
2. Who are the parties involved in the settlement process?
For standard, non-complex conveyancing transactions, parties to a settlement typically involve four (4) parties:
1. The Proprietor on Title (the Seller’s legal representative);
2. The Mortgagee on Title (the Seller’s lender);
3. The Incoming Proprietor (the Purchaser’s legal representative); and
4. The Incoming Mortgagee (the Purchaser’s lender).
The legal representatives oversee the overall operation of the e-settlement process and ensure essential documents such as the Transfer and Notice of Sale are prepared. If applicable, the mortgagees prepare documents such as the Discharge of Mortgage and National Mortgage.
If you are a seller, you have a legal obligation to give the Purchaser a clean or unencumbered title at settlement. This means that any loan or caveat must be withdrawn on or before settlement. It is important to make sure that your legal representative has liaised with interested parties (if any) to arrange for the removal of any encumbrances so that you can transfer a clear title.
3. What do I need to do before settlement to ensure it all runs smoothly?
The introduction of e-settlements means that buying and selling property and the preparation of settlement documents can be done from anywhere around the world. Once contracts have exchanged and you have a trusted legal advisor to assist you in the transaction, you need to make sure that all of your obligations have been or are in the process of being finalized.
Purchasers must ensure their loans are unconditionally approved and any additional funds are ready to be drawn from. You are also entitled to one pre-settlement inspection prior to completion. Ensure that everything is in order and notify your legal representative of any issues that arise out of the inspection as soon as possible.
If the property is mortgaged, vendors must notify their lenders and provide them with a Discharge Authority as soon as possible. It is also crucial to ensure that the property is being sold with a clear, unencumbered title. Liaise with any interested party to have their caveats withdrawn on or before settlement.
Time is of the essence and both parties must make good on their legal obligations under the Contract.
4. I don’t think I can compete on time. What legal affect does this have on me?
Banking complications, final inspection issues and other unforeseen factors can all contribute to the delay of settlement. However, it is important to understand that Contracts for the Sale and Purchase of Land are legally binding and enforceable agreements. This means that any breaches to the terms of a Contract (like not settling on the date of completion) have serious legal ramifications for the defaulting party.
As a Purchaser:
If you are unable to complete settlement on time as a Purchaser, you may be served with a Notice to Complete that compels you to meet your contractual obligations within a reasonable period of time (usually two weeks) from service of that notice. If it is a condition of the Contract, you may be liable for the payment of liquidated damages set at a rate outlined in the Contract (ordinarily between 8-12%, payable on the balance of the purchase price) and you may also be liable to pay the legal costs incurred by the Vendor as a consequence of the delay by you.
As a Vendor:
If you are unable to complete settlement on time as a Vendor, you may also be served with a Notice to Complete. If you remain unable to settle after the expiry of the notice period, the Purchaser may elect to terminate the Contract and seek damages.
Either party may also apply to the Supreme Court of New South Wales (Equity Division) for an order of Specific Performance, which is an equitable remedy that compels a defaulting party to perform a specific act. While this is not the most common route to take, it is available, albeit time consuming and costly.
5. I’ve just settled! What now?
Congratulations! Post-settlement, your legal representative will notify you that settlement has been completed. If you are a Vendor, the deposit will be released to you after an Order on the Agent (or Order on the Solicitor) has been provided. For Purchasers, this Order will simultaneously call for the keys to be released to you.
If you are now on Title, ensure you keep up to date with the council, water and, if applicable, strata rates. NSW Land Registry Services will notify local authorities of the change of ownership so that all future rates notices are issued to the new owners. For strata purchases, your legal representative will provide the relevant owner’s corporation a Certificate under Section 22 of the Strata Schemes Management Act 2015 (NSW) that lists information about the new owner in order to have the strata roll updated.
If you or someone you know needs help or more information about navigating through a sale or purchase of land in New South Wales, please contact our office on (02) 9525 8100 to speak to one of our property and commercial solicitors.