If you want to buy a home, land or investment property you’ll have to sign a contract of sale. The legal work involved in preparing the contract of sale, mortgage and other related documents is known as conveyancing. It’s possible to do your own conveyancing but most people pay a licensed conveyancer or solicitor to do this work for them.
The contract of sale
A residential property cannot be put on the market until a contract of sale has been drawn up. The contract includes the terms and conditions of the sale and valuable information about the land.
If you are interested in a particular property, request a copy of the contract as soon as possible, so you can ask your solicitor or conveyancer to review it.
If you wish to change any part of the contract, your solicitor or licensed conveyancer can do this on your behalf.
Exchanging contracts and paying a deposit
Exchanging contracts legally completes the process of buying a home. Up to this point, the agreement is usually not binding and both you or the vendor have the right to change your minds.
After discussing the contract with your solicitor or conveyancer and making the proper inquiries and necessary financial arrangements, you will be ready to exchange contracts.
There will be two copies of the sale contract: one for you and one for the vendor. You each sign one copy before they are exchanged.. This can be done by hand or post and is usually arranged by your solicitor, conveyancer or the agent.
At the time of the exchange you will be required to pay a deposit.
When you buy a residential property in NSW, you have a five business-day cooling-off period after you exchange contracts. The cooling-off period starts as soon as you exchange and ends at 5pm on the fifth business day after exchange. During this period, you may get out of the contract as long as you give written notice.
A cooling-off period does not apply if you buy a property at auction or exchange contracts on the same day as the auction after it is passed in.
You can waive the cooling-off period by giving the vendor a ‘66W certificate’. It is also possible to reduce or extend the cooling-off period by written agreement with the vendor.
If you use your cooling-off rights and withdraw from the contract during the five business-day period, you will have to pay the vendor 0.25 percent of the purchase price. This works out to be $250 for every $100,000.
Settlement usually takes place around six weeks after contracts are exchanged. This is when you pay the rest of the sale price and become the legal owner of the property.
On settlement day, your solicitor or licensed conveyancer will meet with the vendor’s solicitor/licensed conveyancer and representatives from your bank and the vendor’s bank. At settlement, each party will exchange the necessary cheques and documents for title in the property to be transferred to your name.
To ensure this process runs smoothly, maintain regular contact with your solicitor or licensed conveyancer throughout the settlement period to ensure that your property is on track to settle on time.
On the morning of settlement day, you should conduct a final inspection of the property to ensure it is in the same condition as when contracts were exchanged. The last thing you want is to pick up the keys to the property and find that the house has fallen apart.