As one of the leading law firms specialising in property law in Melbourne, TNS Lawyers understands that when you sell a property, the last thing you need is for something to go wrong.
For this reason, our property solicitors and conveyancers are experts in giving peace of mind to our clients by ensuring that any property-related transaction runs as smoothly as possible.
In line with that, here are our top ten tips on what you need to consider when selling a property in Victoria.
Tip No. 1: Make sure you check the Contract of Sale closely.
In Victoria, the sale for any property must be in writing. This usually comes in the form of a contract of sale for real estate.
What is a contract of sale?
The contract of sale is a document that contains the following relevant information:
- Details of the property
- Your name and the buyer’s name
- Your agent’s details (if you are using an agent)
- Details of both the buyer and your legal practitioner/conveyancer
- The price you have agreed on with the buyer
- The required deposit amount and payment due date
- The balance of the purchase price owing at settlement
- The settlement period that both you and the buyer have agreed on
- Any inclusions or exclusions of the property (e.g. air conditioning system, washing machine, dining table etc.)
- The general conditions of the sale of property
- A disclosure statement (section 32)
You also need to consider whether you want any special conditions included in the sale, such as:
- Each party's rights and obligations when the sale of land is subject to a lease/tenancy
- Penalties for a delay in settlement including what your reasonably foreseeable loss will include in the event of the default by the buyer
- Any repair that you have agreed to undertake
- A special condition requiring the buyer to do its own due diligence on the property (i.e. planning restriction, condition of the property) to limit any unexpected claim by the buyer against you
- The condition of the property that you are obliged to provide to the buyer at settlement
- An agreement regarding pool safety compliance and certificates
Who prepares the contract of sale?
You will need a lawyer or conveyancer to prepare the Contract of Sale.
Don’t be tempted to handle the conveyancing yourself because you will not have the lawyer or conveyancer’s professional indemnity insurance, which means you could be personally liable if something goes wrong.
Tip No. 2: Make sure the Vendor’s Statement (or Section 32 Statement) is accurate.
In Victoria, before you sell your property, you must give the buyer a Vendor’s Statement (Section 32 Statement). This should also be prepared by your lawyer or conveyancer.
The statement must include information on the property’s title, including:
- A title search of the property
- All encumbrances affecting the property (e.g. mortgages, covenant, easements)
- All notices, orders, and declarations against the property
- Building permits issued in respect of the property
- Owners corporation information (if there is any owners corporation applicable)
- All the outgoings pertaining to the property (e.g. council rates)
- Zoning and planning overlays affecting the property
- Non-connected services to the property (e.g. water service, sewerage service)
A vendor’s statement is a legal document so it must be factually accurate. If you have included inadequate or inaccurate information, the buyer might be able to withdraw from the sale or take legal action against you for misrepresentation or providing misleading information.
Please be aware that if you are an owner-builder, you must attach the certificate of currency in the Section 32 statement. Otherwise, the contract of sale may be voidable.
How long does a Section 32 last in Victoria?
Generally, the Section 32 statement does not have an expiry date. It should remain valid as long as the information in the statement is up-to-date and accurate.
However, our advice is to update it every 3 months. This is because most certificates from local councils and other authorities are usually updated every quarter, and providing false or out-of-date information can potentially lead a purchaser to rescind a contract of sale.
What is the cost of Section 32 in Victoria?
Completing a Section 32 statement does not cost a significant amount of money (unless it's OC certificates). Most of the money spent in completing a Section 32 statement is performing searches from your state revenue office, owner's corporation, local municipal council, etc.
If you need assistance in reviewing or producing a Section 32 or Vendor's Statement, get the help of TNS Lawyers.
Tip No. 3: Check which chattels and fixtures you want to be included in the sale.
Are there any items that could be considered ‘fixtures’ or ‘fittings’ that you intend to remove from the property?
What is a chattel?
A chattel is generally defined as a free moving item that rests on its own weight.
What is a fixture?
A fixture is something that is ‘affixed’ to the property (or attached to the property or land) to any great extent.
How does a Contract of Sale deal with chattels and fixtures?
Generally, the Contract of Sale will specify which chattels (moveable items) will remain with the property. If it does not, then all chattels need to be removed upon settlement of the property.
Chattels include things like:
- Pot plants
- Hanging baskets
- Portable marquees
- Some pool and spa equipment
- Garden equipment
- Wheelie bins
- Washing machines
Fixtures include things like:
- Hot water systems
- Ceiling fans
- Air conditioners (provided it is not a portable air conditioner)
- Built-in bookshelves
- Plants buried in the earth
- A garden shed that has been cemented in
- A basketball hoop attached to a garage wall
- A water tank resting on its own weight
- Solar panels
Tip No. 4: Check whether you need a building inspection report.
If you have undertaken any building activity or renovations as an owner-builder and are considering selling within six and a half years of the construction, you will need to obtain an inspection report (defect’s report). This report, subject to any defects listed, will guarantee the property for defects in workmanship for the remainder of the period.
You may also have to provide particular promises (warranties) about the quality of building work carried out, the quality of the materials used, and the compliance with laws and requirements in carrying out the building work.
Tip No. 5: Make sure you disclose any easements in the Vendor’s Statement.
An easement is an interest in land that allows another person to use the land for a particular purpose.
In Victoria, one common type of easement is where the Government has the right to run electrical mains or drainage through a property.
There are also many cases where a neighbour has the right to use the driveway of an adjoining property.
Are there any easements affecting your property? If so, you will need to disclose them in the Vendor’s Statement (Section 32 statement).
Tip No. 6: If there are any restrictions as to the use of the property, you will need to disclose them.
If there are any restrictions as to the use of the property, you will need to include them in the Vendor’s Statement.
Some examples of restrictions are:
- Building covenants on building height, colours, and setbacks
- Covenants designed to protect the neighbourhood character
- Covenants that impose rules of communal living on lot owners
Tip No. 7: If the property is currently leased, you will need to disclose this in the Vendor’s Statement.
If the property is currently leased or tenanted, you will need to disclose this in the Vendor’s Statement.
You or your property agents may wish to speak to the tenants as organising inspection times could be difficult.
Further, you may want to consider when your lease finishes as the purchaser might want to occupy the house after settlement.
Tip No. 8: Investigate whether you should sell the property via auction or private sale.
You need to consider whether you should sell the property via auction or private sale.
There are pros and cons for each method of sale.
Generally, if the property market is hot and clearance rates are high, auctions are an appropriate method to sell your property. On the contrary, if clearance rates are low and the property market is in a slump, auctions might not be the most appropriate method to sell your property.
In any event, make sure you select the most appropriate method for you and your property. This may involve doing some research and getting a good understanding of the property market in your area.
You might also want to speak to a few real estate agents before selecting the most appropriate method to sell your property.
Tip No. 9: Make sure you can locate the Certificate of Title.
In order to sell the property, you will need to present the Certificate of Title. Newer properties will generally have an electronic certificate of title.
Sometimes, the certificate of title will be with the owner; sometimes, it will be with the bank (if there is a mortgage generally).
Make sure you know where it is.
Tip No. 10: Get legal advice.
Before signing a contract, you should ensure that both the Contract of Sale and Vendor’s Statement has been checked by a lawyer who specialises in property law.
Are you selling a property in Melbourne or Victoria? At TNS Lawyers, we specialise in providing clients selling residential properties with cost-effective legal advice. Please call us on +61 3 9052 3214 or email us at firstname.lastname@example.org