Conveyancing is the transfer of legal ownership of a property from one person to another. It includes the preparation, verification, and lodgement of multiple documents.
We at TNS Lawyers understand that for a first-time seller, meeting the requirements can be daunting and confusing. That is why we’ve come up with an easy-to-follow guide to the conveyancing process in Victoria, which is designed for property sellers within the area.
Step 1: You decide on whether you want to retain an agent to sell your property.
If you want to sell your property, the first question you need to consider is whether you want to handle the sale privately or through an agent.
Using a real estate agent to sell your property
Most people use real estate agents to sell property. Agents can make the process easier because they provide a third party who can act as a buffer between you and prospective buyers.
You can expect the real estate agent to:
- Advise on the best method of sale
- Provide a marketing plan
- Advertise and market the property
- Organise and attend open inspections and other inspections
- Attract prospective buyers
- Organise and conduct an auction (if you choose this method of sale)
- Arrange the signing of the contract
- Collect and hold the deposit
If you do decide you want to use an agent, make sure you do your research and shop around to find the best match for you and your property.
Be aware that ordinarily the real estate agent’s commission is not fixed but negotiable.
Selling a property privately
If you decide to sell the property without an agent, it will involve:
- Deciding on the price you want for the property
- Advertising the property
- Negotiating the price
- Obtaining a deposit
- Providing a Contract of Sale and Vendor’s Statement
- Arranging for the Contract of Sale and Vendor’s Statement to be signed
- Handling settlement
Step 2: You decide how you want to sell the property.
There are generally two methods by which you can sell your property:
- Private sale
For a private sale:
- You negotiate with a buyer regarding both price and the terms of the sale.
- The contract can be conditional with your approval, which means that the buyer can make the sale contingent on obtaining finance or selling their existing property.
- For residential and small rural properties, the buyer has a 3-day cooling off period.
At an auction:
- The price is determined in a competitive bidding process between buyers.
- The contract is unconditional, which means that the buyer cannot make it conditional on obtaining finance or selling their existing property.
- There are usually additional costs such as the auctioneer’s fee.
- While you may have a better chance of selling the property by a particular date, there is no guarantee that your property will sell.
- There is no cooling-off period.
Using an agent
If you use an agent, they will advise you on the best method of sale based on:
- The type of property you are selling
- The location of the property
- Your timeframe and personal preference
Step 3: You arrange for your lawyer to prepare Contract of Sale and the Vendor’s Statement.
If you are selling a property, you will need your lawyer to prepare a Contract of Sale and a Vendor’s Statement (a Section 32 Statement). You need to check these documents carefully.
The contract should contain:
- Details of the property
- Your name and the buyer’s name
- Your agent’s details (if you are using an agent)
- Details of both your and the buyer’s legal practitioner/conveyancer
- The price you have agreed on with the buyer
- The required deposit amount
- The balance of the purchase price owing at settlement
- The settlement period that both you and the buyer have agreed on
- Items at the property that are part of the purchase
In Victoria, before you sell a property, you must provide the buyer with a Vendor’s Statement (or a Section 32 statement). The statement must include information on the property’s title, including:
- Outgoings (for example, rates)
- Declaration if located in a bushfire prone area=
A Vendor’s Statement is a legal document so it must be factually accurate. If you include inadequate or inaccurate information, the buyer may be able to withdraw from the sale or take legal action against you.
Law Institute Victoria has free pre-contract and post-contract checklists which property sellers and practitioners can download. You and your lawyer could go over these to make sure you didn’t miss any other important conveyancing file.
Step 4: Prospective buyers inspect the property.
At this stage, prospective buyers inspect the property.
If you are using a real estate agent, they will arrange times for inspections. If your property has a tenant, your real estate agent generally notifies them and organises a suitable inspection time with the tenants.
Step 5: Accepting an offer for the property.
If a prospective buyer makes an offer for your property and you accept it, they will pay you a deposit.
The deposit is usually 10% of the purchase price. However, if you agree, they can either pay the full deposit or part of the deposit with the remainder payable at a time specified in the contract of sale.
You should be aware that even if your property is under offer, this does not prohibit other potential buyers from making an offer or viewing the property.
A property remains on the market until both you and the buyer agree on the price and sign the Contract of Sale.
Step 6: The buyer obtains a building inspection and/or pest inspection report.
At this point, the buyer may want to obtain building and/or pest inspection reports. This is generally to ensure that the property has no structural damage or insect/pest infestation.
Step 7: You exchange contracts with the buyer and they pay a deposit: the property is sold.
Once the buyer has conducted their building inspection and pest inspection and you agree on the final price, you can sign the contract.
Depending on the buyer’s circumstances, they may want to insert some special conditions into the contract, including:
- Making the purchase of the property conditional on obtaining finance
- Making the purchase of the property conditional on selling their existing property
It is up to you whether you are willing to agree to these conditions being inserted into the contract.
Once the buyer and seller have signed the contract, the property is sold.
In Victoria, buyers generally have a 3-day cooling-off period after signing the contract. This means that the buyer has 3 days to change their mind and withdraw from the Contract of Sale.
It is important to note that cooling-off periods do NOT apply to properties:
- sold at auction
- over 20 hectares and primarily used for farming
- mainly used for industrial or commercial purposes
- where the buyer previously signed a contract for the property on the same terms
- where the buyer is an estate agent or a corporate entity.
If a buyer decides to withdraw from a sale during the cooling-off period, they will be entitled to a full refund of the deposit, minus $100 or 0.2 per cent of the purchase price (whichever amount is greater).
Step 8: The buyer’s lawyer/conveyancer undertakes checks on the property.
During this period, the buyer’s lawyer will search the relevant certificate of title at the Land Registry. This will show all registered caveats, easements, covenants, mortgages and mortgage discharges that affect the property.
Their lawyer can also conduct other searches that determine whether the property is affected in other ways. For example, they can check whether the property is affected by land contamination.
Step 9: The sale is finalised.
The sale of the property is finalised when the buyer pays the balance of the purchase money in exchange for you providing the transfer documents and the certificate of title.
At this point, the property is transferred to the buyer. The property must be handed over in the same condition it was in on the day it was sold. A buyer will normally carry out an inspection in the week prior to settlement to confirm this.
When change of ownership takes place, your lawyer will notify all authorities on your behalf.
Are you selling a property in Melbourne or Victoria? At TNS Lawyers, we specialise in providing clients selling residential properties with cost-effective conveyancing. Please call us on +61 3 9052 3214 or email us at email@example.com