If you choose elringtons as your conveyancing lawyers for the purchase of your house in Canberra, we will safely guide you through the formalities of this legal process. This article is a general guide to help you understand the conveyancing process.
If there is an Agent involved, often the first communication elringtons will receive is the Sales Instructions from the Real Estate Agent. Sales Instructions is a document prepared by the Agent once ‘offer and acceptance‘ between a Buyer and Seller has been reached. It contains details of the Buyer and the Seller, their respective lawyers, the purchase price, property details and inclusions, settlement time frame, and any special conditions.
The Contract for Sale is prepared by the Seller’s solicitor using information contained in the Sales Instructions. When elringtons are instructed to represent you in the purchase, we will request the initial sum of $500.00 from you, which will be deposited into our trust account. From this sum we will pay disbursements (out-of-pocket expenses) for property searches and enquiries. The $500.00 also covers part of our professional fees.
Building & Pest Inspections
The Seller engages a Building Consultant to carry out Building, Pest and Energy Rating inspections – by law, this should be done before the property is marketed and reports documenting their findings are included in a marketing contract that you should see before you make your offer to buy the house. The information in these reports is supposed to help you make an informed decision about your purchase. These reports then form part of the Contract for Sale, and you may have rights of recourse if any information in these reports turns out to be false or incorrect. The Building Consultant’s Tax Invoice also forms part of the Contract for Sale and, if you proceed to buy the property, it will be your responsibility as the Buyer to reimburse the Seller for the cost of the reports (excluding the Energy Efficiency Rating Report unless this is part of the building report) at the time of settlement.
Contract for Sale
The Seller’s lawyer prepares the Contract for Sale and forwards the document to us. The Contract is prepared in duplicate, with one copy provided to us for your review and signature, and the other copy retained by the Seller’s lawyer for the Seller’s review and signature. It may take up to a week for us to receive the Contract from the Seller’s lawyer.
When we receive the Contract for Sale, an elringtons solicitor will arrange an appointment with you to:
- Review the Contract for Sale
- Discuss your finance arrangements
- Discuss your entitlements as a first home owner (if applicable)
- Generally discuss and explain the procedure, time frames etc
- Sign the Contract
- Obtain from you a cheque for $500.00 for out of pocket expenses (if not previously paid)
- Obtain from you a cheque for the deposit
- Discuss with you the amount of stamp duty to be paid (and any exemptions that may be applicable), and tell you when it will need to be paid
Exchange of Contracts and payment of deposit
Exchange of Contracts takes place when both parties are satisfied with the terms of the Contract, when both parties have signed their respective copy of the Contract, and when your finance (if applicable) has been approved in writing.
We recommend that you arrange a pre-exchange inspection the property with the Agent to check the working order of appliances (stove, oven, cook-top, air-conditioning, heating etc). Any problems should be communicated to us immediately following the inspection, and before the exchange is carried out.
The Buyer provides a cheque for the agreed deposit (usually payable to the Real Estate Agent’s Trust Account) and that cheque is handed to the Seller’s lawyer on exchange. They forward the cheque to the Agent following exchange. The deposit is held in the Agent’s Trust Account until settlement has occurred. If there is no Agent, the deposit will be held in the Seller’s lawyer’s Trust Account. This money cannot be released to either the Seller or the Buyer without agreement from both parties.
During the exchange process, both Contracts (one signed by the Buyer, the other signed by the Seller) are checked to ensure that their contents are identical. The documents are then dated and physically exchanged (swapped). We receive the Contract signed by the Seller and the Seller’s lawyer receives the Contract signed by you. Once Contracts are exchanged, they are binding and both parties are locked into the transaction.
On exchange, the Buyer’s lawyer provides a Section 17 Certificate to the Seller’s lawyer, waiving the Buyer’s right to any ‘cooling off’ period.
Stamp duty in the ACT is calculated based on the purchase price of the property. We will advise you of the amount of stamp duty payable when you attend your first appointment with us. We will also advise when the stamp duty is to be paid (must be paid prior to settlement and usually within three months from exchange). Hefty penalties are imposed by ACT Revenue Office for late payments of stamp duty, therefore it is important that stamp duty is paid on time.
Stamp duty payments must be by BANK CHEQUEpayable to the ACT Revenue Office.
At the appropriate time, we will ask you to deliver the bank cheque for the stamp duty to our office and we will attend ACT Revenue Office and pay the duty on your behalf.
As a general rule, Stamp duty cannot be paid on settlement from monies loaned by your bank. Stamp duty needs to be paid in advance of settlement, so your bank will need to advance these funds early, or you need to have this money available from your own funds.
As the settlement date draws near, we will communicate with the Seller’s lawyer and obtain settlement figures and details of the cheques they require on settlement.
We will prepare and provide you with a detailed Settlement Statement setting out adjustments for rates, deposit paid, allowances for pest & building reports, legal fees etc.
Mortgage (if applicable)
We will write to your Mortgagee immediately after exchange and notify them of the date for settlement and provide the details they need to prepare mortgage documents.
You should expect to hear from your Mortgagee shortly after exchange as they will need to arrange for you to sign the mortgage paperwork in time for settlement.
In the weeks leading up to settlement, we will contact your Mortgagee to ‘book in’ settlement. A day or two prior to settlement, the Mortgagee will provide us with the exact amount of money available for settlement. Once we receive that figure, we will finalise details of the settlement cheques and let you know if you will be required to provide us with additional cheques for settlement.
Please note that any additional cheques provided by you for settlement must be BANK CHEQUES and these will need to be delivered to our office no later than 12:00 midday on the day of settlement.
You should book a pre-settlement inspection of the property with the Agent either the day before settlement or on the morning of settlement. When the Seller vacates the property, it should be left in a clean and tidy state and in the same state as at the time of the exchange.
During the inspection, you should check that the inclusions documented in the Contract (carpets, window treatments, light fittings etc) remain and that appliances are in working order.
If the pre-settlement inspection is unsatisfactory, you should notify us immediately so we can try to resolve any problems with the Seller’s lawyer prior to settlement.
You may have the right to delay settlement if resolution cannot be achieved in time.
We emphasise the importance of a pre-settlement inspection as your right to object to the condition of the property, the removal by the Seller of any inclusions, or the working order of appliances etc may expire once settlement has occurred.
Keys will be available to you after settlement. You can usually collect keys from either the Agent or from our office. We will notify you before settlement of the location of keys so you can arrange to collect them after settlement.
We will phone you and advise when the settlement has taken place.
We will then write to you to confirm that the purchase is complete and we will provide you with a detailed Settlement Statement, our Tax Invoice, the original Contract and any other relevant documentation.
Electricity, gas and telephone connections
The cancellation of these services is the Seller’s responsibility. Reconnection is your responsibility.
Rates and Water
ACT Revenue Office (rates) & ActewAGL (water & sewerage) will be notified of the change in ownership of the property by the Department of Regulatory Services (formerly ACT Land Titles Office) following registration of the Transfer into your name. Once this occurs, rates notices will issue directly to you as the new owner.
If you have purchased the property subject to existing tenancy, letters will be sent to the tenant and the Managing Agent after settlement advising of the change in ownership of the property and providing your contact details.
 Off the Plan purchase agreements have different requirements for payment of Stamp Duty: DUTIES ACT 1999 – SECT 16A Payment of duty—‘off the plan’ purchase agreements