We caught up with Colleen Buck, founder and owner of Cheltenham Conveyancing, to find out everything you need to know about conveyancing when buying and selling property.
Colleen has been working in conveyancing for more than 30 years and won Licensed Metropolitan Conveyancer of the Year in 2014, so we were excited to learn more about the process from such an expert!
Here are the key takeaways from our chat, but make sure you check out the whole interview in the video below.
What is a conveyancer?
A person who transfers titles, so conveyancers do all the legal paper work involved in transferring a title from a vendor to a purchaser. We also do transfers of land and subdivisions. We’re exactly the same as a property lawyer, except we solely concentrate on conveyancing.
What is the difference between a conveyancer, a licensed conveyancer and a solicitor?
The difference between a conveyancer and a licensed conveyancer is that licensed conveyancers have actually got the qualification to be licensed. Licensed conveyancers are required to display their licence number on their letterhead and you can also check that they’re listed on Business Licensing Australia and Consumers Affairs Australia. It’s actually illegal for unlicensed conveyancers to do conveyancing for money.
Licensed conveyancers and solicitors/property lawyers pretty much do the same job, however, in a law firm, it’s often the law clerks doing the conveyancing because most firms also handle litigation, probate and lots of other areas of law. Whereas with conveyancers, we’re doing conveyancing day in, day out and it’s the licensed conveyancer that actually handles your transactions.
What is a Section 32 and why does it take so long to prepare?
A Section 32 is a disclosure statement to a purchaser about a property being sold. The time it takes to prepare depends on how long it takes the client to get back to the conveyancer with their initial instructions.
If you’re thinking of selling your property, the first thing you need to do is contact your conveyancer to give your instructions. We have some people who ring up and say “my auction is in two weeks.” Some of the certificates we need to apply for from council take three to four working weeks to come back, so we need as much notice as possible. I normally send out a vendor email to my clients which is a list of questions about the property that I need answered. The minute you get those answers back to me, that’s when we can start.
It’s important to note, as real estate agents, we can’t legally sell a property without that Section 32.
How do Section 32/vendor statements work with villas, apartments and units because of owners’ corporations (body corporate)?
Owners’ corporations are one of the things that holds conveyancers up the most because they have 10 working days to provide the certificate. If you need to, you can pay extra fees and get priority certificates. It’s an extremely important certificate because a Section 32 is only valid for as a long as the information in it is still correct and hasn’t changed. So at any time, an owners’ corporation might strike a levy and it has to be disclosed, so we’d have to redo the Section 32.
Why do I need an owners’ corporation certificate?
It’s about disclosure under the Section 32 – you need to let a purchaser know as much information about a property as you can. An owners’ corporation certificate will let you know what the current fees are, they’ll tell you if there’s any special levies, what the insurance is and most importantly, it’ll give you a copy of the minutes of the last general annual meeting. You must take the time to read this certificate so you know what the rules of living there are.
Does an owners’ corporation certificate need to be provided if there’s no body corporate and if so, who does this?
If there are more than two units on site, an owners’ corporation certificate still needs to be provided and this will be the seller’s responsibility.
Important note for anyone living on a site with more than two units – there needs to be public liability/owners’ corporation insurance for the common areas, such as the drive way. Don’t just rely on your own personal insurance because if someone has an accident in that drive way, for example, and can no longer work, they are able to sue each individual unit owner.
Are conveyancers able to provide real estate agents with a partly finished Section 32 while you’re waiting on the other certificates?
No because if the real estate agents go and rely on that and there’s something vital missing, then the contract can become voidable at the option of the purchaser right up until settlement. So you could have a 90-day settlement and on the 88th day, two days before settlement, the purchaser can withdraw if the Section 32 is defective.
What happens if someone has done some building without a permit?
Many people just put structures up themselves, usually a pergola or decking, and don’t get a permit which means it’s not a legal structure. If the property gets sold with an illegal structure and the purchaser chooses to take out title insurance and something goes wrong, for example, someone might ring the council and say “I’m thinking of buying this property, can you please tell me if it has a permit for the veranda,” and the council look it up and say no it doesn’t, they might then go out and look at that property and serve you with a building notice. This then slows settlement down because the vendor has to comply with the building notice and have the structure removed.
What is the difference between purchasing a property at auction compared to a private sale?
At auction when you purchase, you’re purchasing unconditionally, so there’s no wheeling and dealing like you do with a private sale, you can’t write special conditions into the contract.
If you’re going to buy a property through private sale, make sure you write everything you need into the contract, for example, there’s an old car sitting on the nature strip that the seller has said they’ll get rid of. In the contract you would say “the vendor will remove the item prior to settlement at their own expense – this is an essential term of the contract.” If you don’t have that wording, then you don’t have a leg to stand on!
If there is a specific date for ‘subject to finance’ in the contract, does that mean that condition expires at that time or is there extra time?
In the general conditions of the contract, you have two days to notify the vendor in writing as to whether your loan has been approved or not. Most people give more notice than this because after the two days, the contract becomes unconditional and you have to go ahead with it.
If you’re thinking about buying a property, organise with your finance people what you can and can’t borrow and get pre-approval because what happens and what causes a lot of angst is when people go along and sign a contract subject to finance and then commonly get told that the Commonwealth Bank are running at a 20-day turnaround now for processing or the like, so you have to go back to the vendor to get an extension of time for settlement. It causes anxiety for the vendor because you can’t put your sold sign up, the purchaser is anxious because they want to buy the property and for conveyancers, it creates a lot of extra work, going backwards and forwards all the time. It ends up creating tension between the vendor and the purchaser, which you really don’t want.
What are the specific terms and conditions for pest and building inspections?
It’s really interesting that in NSW, virtually every purchaser gets a building inspection and in fact, in some of their legislation, part of their Section 32 is that a building inspection has to be done. In Victoria, very few people get building inspections. Acting for a purchaser, I would love to have a special condition that says we want to get a building inspection done subject to our satisfaction, but the vendor won’t agree to that! The standard building inspection clause generally states that you can only withdraw from the contract if there’s a major structural defect. A lot of people don’t understand that most things aren’t major structural defects, for example, rotting window frames, down pipe spouting needing to be fixed, etc. And then people say, “can I go back and renegotiate the price?” Well you can try, but it won’t happen! Remember that all properties need maintenance. The great thing about a building report is that you know what you need to address first when you buy the house and the same with the pest inspection – often it just needs to sprayed.
What is a ‘Chattel’?
According Osbourne’s Law Dictionary, it’s a moveable, tangible article of property, so it’s basically something that’s going to stay with the property, but you can move it, such as some dishwashers. One of the questions we ask clients when we’re getting instructions for a Section 32 is “are there any items you specifically want included or excluded from the sale?” If you put it in your contract, there’s no confusion about what’s staying and going.
Legally, a property is required to be delivered to a purchaser in the state it was in when the purchaser signed for it (general wear and tear excepted). This is why it’s so imperative to check everything before you sign – water pressure, taps, broken windows, etc.
What are the rules for the buyer’s final inspection?
Legislation states buyers have seven days prior to settlement to conduct their final inspection and of course people can negotiate to do it earlier than that. One mistake a lot of people make is they leave it too close to settlement – they say “I want to do it the day before settlement because I want to make sure they’ve packed up everything and it’s clean.” But if something is wrong, it doesn’t give us enough time to fix it, so make sure you allow a reasonable amount of time!
Special note: Make sure you or your real estate agent notifies your conveyancer when you have sold so they can look out for the contract, particularly if it’s a 30-day settlement.
What is a Section 27?
A Section 27 is the early release of deposit. People mistakenly think the deposit is released to the vendor 28 days after the sale, but that’s not necessarily the case. When we prepare a contract and a Section 32 for a client, we also prepare the Section 27. Prior to preparation of the documents, we get all the instructions from the clients – what’s owing under their loan, is it a line of credit, have they got redraw, what are their monthly repayments, what’s their interest rate, etc. That document gets served on a purchaser. They also have to be given a letter from the bank in support of the Section 27. This letter can take weeks, so as a vendor, don’t forget to chase up your bank!
How do ‘cooling-off’ provisions work and what’s involved?
A cooling-off period refers to the time you have to back out of a contract you’ve already signed. In Victoria, purchasers have a cooling-off period of three business days.
It used to be that a purchaser could just cool-off directly – they’d serve notice in writing to the agent saying “I exercise my right to cool-off under the contract.” But in a recent court case, it was shown the notice has to come from the purchaser’s representative (conveyancer or solicitor), so what I do for my clients who have cooled-off, is I say to them “it has to come from me – I have to serve a notice on the agent and the vendor’s conveyancer or solicitor, telling them you’ve cooled off, but I also suggest you do it as well.”
Please note there is no cooling-off period for properties purchased at auction.
Is there a difference in cost for a conveyancer acting for a buyer and a seller?
I don’t charge differently, but it depends what the transaction entails. There’s a lot more work involved when people buy in a self-managed super fund or in a trust situation, but for every day mums and dad and young people buying and selling, we charge the same amount per file. The varying factor is the disbursements, which are all the out of pocket expenses in relation to the file, for example, cost of rate and planning certificates, title search fees, file archive fees, settlement fees, etc.
Special note: If you’re buying and selling at the same time – it’s best to have both settlements on the same date because you usually need the money from your sale to go towards your purchase.