hat is conveyancing?
Conveyancing is the process of transferring ownership of a legal title of land to the new owner. In Queensland the entire conveyancing process is governed by several pieces of State and Federal legislation.
In Queensland, all paid conveyancing work must be done by a Law Firm. These must comply with the rules and regulations of a Legal Profession Act which is administered by the Queensland Law Society and Legal Services Commission. Licensed Conveyancers and Paralegals can be employed in these law firms, but all work must be supervised by a Solicitor. The conveyancing process differs quite significantly for purchase and sale and the process of purchase is generally more complicated and hence more expensive.
The usual steps involved during a conveyancing process are:
Preliminary stage (usually no solicitor is involved at this stage)
- inspection of property
- negotiation where the real estate agent usually acts as an intermediary
- making sure defects in the title are disclosed by the seller.
Formation of contract
- real estate agent usually draws up the contract
- buyer signs contract in duplicate, pays deposit and then delivers the contract in duplicate back to seller
- seller signs, and a copy of the contract is provided to the buyer
- buyer has a five-business-day cooling-off period (if residential property).
Between contract and completion
- buyer may engage a solicitor (one may engage the solicitor from the formation of contract step, but it becomes crucial from this stage onwards)
- buyer or their solicitor investigates title, searches various departments and may conduct a survey
- any objections to title are delivered
- transfer documents are delivered to seller
- buyer or their solicitor attends to stamping contract
- once the conditional terms of the contract have been satisfied, the Buyer must advise the Seller that the contract is unconditional. In Queensland, there may be serious financial and legal consequences if the Buyer does not give the required notice.
- if search results are satisfactory, the contract heads towards completion
- the settlement figures are also worked out during the last phase before completion when all adjustment of outgoings, council rates, water usage, strata levies (for units) and taxes on the land have to be divided fairly between the Buyer and Seller. These amounts are called “the adjustments” and the differences are negotiated between both the sides. Later a date, time and place is set for Settlement
- during Settlement, the Seller will hand over the Title Deed, the Transfer and the Notice of Sale and receive from the Buyer the remaining money and a letter to the Real Estate Agent authorising them to release the deposit.
- buyer (or their lender if finance is required) attends to registration of transfer, with the buyer becoming the legal owner upon registration
- notification of the change of ownership is given to the relevant government departments.
As the conveyancing process is crucial to ensure the transfer of property from one person to another, the sellers and the buyers must organise the relevant documents, cheques and inspections so the process can be completed effectively.
Important things to note –
Cooling off Period
When a Contract of Sale is signed in Queensland the buyer receives a five-day ‘cooling off’ period, in which time they can pull out of the Contract without having to provide a reason. This includes situations such as;
- Buyer deciding to purchase without legal advice (e.g. on the spot at a Saturday inspection)
- The need to get finance approval or have a building and pest inspection done (in the case of buying a house)
- Have a Strata Inspection Report done (in the case of buying a unit) or
- General reconsideration of decision.
If the buyer elects to terminate the Contract and pull out, the seller is entitled to keep 0.25% of the purchase price out of the deposit made. The ‘cooling off’ period starts on the day the buyer receives the fully executed Contract, signed by both the buyer and the seller.
There is no cooling-off period available if the decision to buy is made at an auction so one needs to have finance approved and a building and pest report done before the auction.
Payment of Transfer Duty
Transfer duty (or stamp duty) is a tax which needs to be paid by the buyer to the State Government when the transfer of ownership in property is made. The amount of tax payable depends on the purchase price of the property. The transfer duty payable varies depending upon the type of property namely – residential property, or an investment property investment. There are also concessions available to first home buyers in Queensland.
‘Time is of Essence’
The term that govern all conditions for standard contract of sale in Queensland is that of – ‘Time is of the essence’. Essentially it means that each deadline must be fulfilled by 5 pm on the due date. During the conveyancing process in Queensland there are many dates and times that must be adhered to and a failure to comply with these can place the parties in breach of the Contract and may allow the other party to terminate the Contract or sue for specific performance.
Buying or selling a property is a big decision and involves complex issues. As the conveyancing process is crucial to ensure the transfer of property from one person to another, the sellers and the buyers must organise the relevant documents, cheques and inspections so the process can be completed effectively. There are varied and complicated steps in the conveyancing process and other matters to be considered include stamp duty, cooling-off periods, payment of deposits and insurance risk.
While one may decide to go through the rigmarole of the conveyancing process alone, it is advisable that legal help is sought to avoid any kind of missed deadlines which may make the parties liable for breach of contractual terms.