Shoalhaven heads / Nowra Property Lawyer

FAQs

Selling Property in New South Wales

​In NSW it is the law that before you or your Estate Agent can market your property for sale, a Contract for the Sale of Land needs to be available to any prospective purchaser. Certain documents must be attached to the contract. Your solicitor will know what additional information needs to be included in the contract depending on the type of property you are selling and what is included in the sale. 

Q: Where do I start when I want to sell my property?
A: Vendors need to approach their estate agent or solicitor first. Your solicitor will draw up a contract of sale for you. Your agent will make arrangements to have your property photographed and advertised online and in other media.

If you are behind on the mortgage or rates payments, and are receiving letters of demand from your mortgagee or Council, you should contact your mortgagee and/or Council and advise them of your plan to sell your property. Normally, a mortgagee or Council will not have a problem with this. You should also let your solicitor know.

Q: How long does it take between the time of instructing my agent or solicitor and the time marketing of my property can commence?
A: To market your property, your agent must possess a complete contract of sale. It takes 2- 3 days for solicitors to draw up the contract, but this assumes documents are readily available. Some councils take up to 4 weeks to provide documents that are required to be attached to the contract, so vendors should bear this lag in mind when deciding when to engage a solicitor. It is best to make enquiries earlier than you think you may need the services of a solicitor or conveyancer.

Q: How soon after the purchaser makes an offer will the contracts exchange?
A: Usually within 2-3 weeks, but contacts can exchange in as little as a couple of days where there is a ready cash buyer. The exchange may take longer, for example, because there are issues with the property that the purchaser needs to investigate first, or the purchaser's financial arrangements are a bit more complex than is usual and it is taking time to put in place arrangements for payment of the deposit and the balance of the purchase price. It is largely the purchaser or their lender who controls the speed with which matters proceed at this point.

Q: What happens after the purchaser makes an offer to buy my property?

​A: Once you have an offer on the table, and assuming you accept it, the prospective purchaser will usually require a building and pest inspector to have access to your property.  Buyers of strata will order a Strata Report to determine whether there are any issues with the strata complex as a whole; for example, owners that don't pay their levies, proposed special levies, insufficient insurance cover, issues with neighbours, pet issues and pest infestations.

Negotiations about the property may follow on the receipt of these reports as well as receipt of legal advice. For example, the purchaser may request further documents or reports relating to the property from the vendor or other authorities, may request to pay the deposit by way of Deposit Bond, or request that the settlement period be reduced. Issues about the condition of the property might also come to light and the price, terms or inclusions are sometimes re-negotiated. 

Once the purchaser receives the inspection reports and negotiations have been finalized, and the purchaser still wants to proceed with the purchase, the purchaser will put down a purchase deposit (or where agreed, provide a Deposit Bond Certificate) with the Estate Agent or vendor’s Solicitor (where an Estate Agent is not used). The vender will sign the contract. The purchaser will also sign a copy of the same contract. Soon thereafter, the vendor’s solicitor may exchange the contracts, which then become binding on both vendor and the purchaser.

The purchase deposit is always 10% of the purchase price unless you and the purchaser agree otherwise. If vendors agree to accept a lesser deposit on exchange, they take the risk that if the sale does not proceed once contracts exchange, they might not recover the full 10% deposit owed to them by the purchaser. Whether this is an acceptable risk for vendors depends on their particular circumstances at the time and is a matter best discussed with your solicitor.

Settlement

​Once contracts exchange, settlement will generally occur 4-6 weeks later, but the settlement period can be shorter or longer depending on what is agreed by the parties before the exchange or even, at times, after the exchange.

​In that time, your solicitor will attend to getting everything ready for settlement. Certain matters must be attended to in all property purchases in NSW before settlement, including:

1. Replying to the purchaser's requisitions
Your solicitor will draft answers to these for you and check with you that they are correct. The most important task you have as a vendor is to be upfront and honest about any issues with the property you are selling. In NSW the law assumes that the vendor has made certain warranties (i.e. legally enforceable promises) under the contract of sale - for example, that there are no demolition orders made about the property. If the vendor deliberately hides defects about the property, this can lead to legal claims being made by the purchaser against the vendor before or after the settlement.

2. Checking documents in anticipation of settlement
For example, the Transfer needs to be checked to ensure it is correctly drafted and tax certificates must be clear.

3. Co-ordinating settlement with your outgoing mortgagee (if any)
Your solicitor will need to find out how much money is owed on your mortgage on the day of settlement and this amount must be paid to discharge the mortgage. As interest is compounded daily on mortgage accounts, usually this figure is only known 24 hours prior to settlement. 

4. Verifying what the final purchase price will be
While the purchaser's solicitor makes an adjusted settlement figure calculation, it needs to be checked and verified by the vendor’s solicitor.

5. Preparation of payment directions
This is normally only able to be done 24-48 hours before settlement and once parties agree on the final purchase price. Here your solicitor directs the purchaser how the purchase sum is to be paid. The direction tells the purchaser who needs to be paid, what amount needs to be paid to each person or institution that needs to be paid, and how.

6. Finalising settlement arrangements
The time and date of settlement all need to be arranged and agreed upon with the legal representatives for the purchaser and all lending institutions.

Most settlements will take place online through an Electronic Lodgement Network Operator (ELNO) of which the most well-known and often used in NSW is PEXA. It means that by the settlement date, all parties to the property sale will have done everything they need to do to transfer title in the property from the vendor to the purchaser. All the data needed to proceed with the transaction is recorded in the ELNO. The funds for the transfer are verified, released and paid to the vendor and/ or their outgoing mortgagee, and other payees at the settlement time. Immediately after that, title is registered in the purchaser's name by the ELNO lodging documents at Land Registry Services. At registration, the purchaser becomes the owner of the property. Simultaneously, the vendor's name is removed from the title.