Get your contract ready!
The conveyancing process must start before the property is even put on the market as you are legally required to have a contract for sale to show your prospective buyers. In the ACT, new laws now also require the seller to obtain specific legal and technical information concerning the property that forms part of the contract for sale. These documents are designed to help buyers make an informed decision about making a purchase and to protect the them from being gazumped by shortening the time between the seller accepting an offer and the exchange of contracts. The seller has the right to ask the buyer for reimbursement for the building and compliance inspection report and the pest inspection report. These costs will normally be taken out of the buyer’s initial deposit following the exchange of contracts.
Word of Advice: Ever been gazumped? Gazumping occurs when the seller accepts an offer from a buyer, but before contracts can be exchanged the seller accepts a higher offer from another buyer and the first agreed sale falls through.
Choosing a conveyancer
As with the agency process, it is worthwhile asking around for a recommendation of a good solicitor or specialist conveyancer. If you opt for a specialist, check that he or she is licensed and has professional indemnity cover because since conveyancing was deregulated solicitors are no longer the only professionals offering these services. Keep in mind that a skilled conveyancer could save you thousands in the long term so do not select someone solely on the basis of their low fees. Some charge a flat fee, but this does not include disembursements such as council searches. You should be able to ask for an idea of how much these extra costs will be however if the transaction turns out to have unforeseen complications, these costs could be more substantial than originally suggested.
Contract for sale
When you instruct your conveyancer to draw up the contract for sale you may want to include special conditions or limitations within the contract. For example, if you intend to auction your house the highest bidder will be bound to sign the contract immediately following the fall of the hammer as well as other specific conditions. Inclusions such as fittings and fixtures will also form part of the contract and you should decide now what you are leaving and what you are taking. Don’t assume that the buyer will know you will be taking the special TV antenna you installed or the matching curtains to your bedspread. Many sales have fallen through because the owner got greedy after accepting an offer and decided to take or even replace items on show at the time of the buyer’s inspection. Make it clear from the start by putting everything in writing in the contract for sale. Ask your conveyancer about these and other conditions which may be in your interest to include in your contract.
Word of Advice: There is the option of doing your own conveyancing however unless you are specially trained in this area, attempting to do it yourself could be a foolish decision. With unfamiliar forms to fill, documentation to be collected and different states having their own requirements, there are many areas open for oversights. Your most expensive transaction is on the line and there is much more to be lost than dollars saved if something goes wrong. If you employ a professional you will have legal protection if a problem later arises.
Exchange of Contracts
The sale is not legally binding until the contract has been signed by the buyer and the seller. Once the seller and buyer sign a separate copy of the contract and the contracts are exchanged the seller is obligated to sell and the buyer is obligated to buy. The seller can choose to arrange the exchange of contracts by either the real estate agent or the two parties’ solicitors.
Cooling off period
A buyer of a residential property is entitled to a five (working) day cooling off period during which time they can change their mind and withdraw from the contract. Should the buyer choose to exercise this right, he or she must pay the seller a forfeiture of $250 per $100,000 (0.25%) of the purchase price. This cooling-off period does not apply if:
- the property was purchased at auction or by tender;
- The property was purchased on the same day as a public auction at which the property was passed in and the buyer was a registered bidder;
- The buyer is a corporation.
Settlement
You’ve sold the house, contracts have been exchanged and the day of settlement has arrived. This means that the house is no longer yours and you are legally obliged to move out of the house with your possessions leaving it vacant for the new owners. In terms of stress levels, moving a household is usually right up there with coping with relationship breakdown. The more prepared you can be, the greater your chances of preserving your sanity. Take a look at our moving successfully pages to help you start planning the move as far as 8 weeks in advance.
