So you have found the property that you wish to purchase. What next to secure the property? This is where we at the Conveyancing Studio can help you.
The Property Purchase Process
The process of buying property consists of the following steps:
Step 1 – Prior to Exchange of Contracts
On receipt of your instructions, we will review the contract for sale, advise you on the terms of the contract, stamp duty liability, the availability of any government grants and order any inspections that you may require (if instructed). Prior to purchasing a property a prudent purchaser should obtain a pest report, a building report and if the property is a unit, villa or townhouse, a strata inspection report. This is because the contract for sale does not cover the quality of the buildings.
Also, it is at this stage that any amendments to the terms of the contract are requested and your lender is contacted to confirm you have unconditional approval of funds.
Step 2 – Exchange of Contracts
At exchange, the two identical copies of the contract – one signed by you and the other by the vendor – are dated and physically exchanged so that we hold the contract signed by the vendor and the vendor’s representative holds the contract signed by you. At this point the contract becomes binding on both the parties.
It is at exchange that you pay the 10% deposit or the balance of the 10% deposit if a holding deposit has already been paid to the agent. If agreed to by the vendor, a deposit bond can provided in lieu of the payment of the deposit. Please see your financial institution regarding the providing of a deposit bond.
In NSW, when you buy a residential property, the law provides for a 5 business-day “cooling off period”. This cooling off period allows the purchaser (you) to opt out of and rescind the contract for sale within that period. The cooling off period begins as soon as contracts are exchanged and ends at 5pm on the fifth business day. If you back out, you will be required to pay to the vendor 0.25% of the purchase price. Cooling-off periods do not apply at auctions. If both parties agree, cooling off periods can be extended in writing before the expiry of the cooling off period. Cooling off periods can also be waived at exchange of contracts.
Step 3 – After Exchange
After exchange the form of Transfer is prepared by us and it together with the Contract for Sale are stamped. The contract must be stamped within 3 months from the date of the contract to avoid any interest or penalties. Once stamped, the form of Transfer and requisitions on title are sent to the vendor’s representative – the Transfer for signing by the vendor and the requisitions for answering.
Also, all the necessary government enquiries will be ordered by us and we will help you to ensure that all your financial institution’s requirements (if applicable) are met.
Once everything is in order, we will prepare settlement figures to work out the exact amount which will be payable to the vendor and provide those figures to the vendor’s representative for approval. Once the figures are agreed to, the vendor’s representative provides us with details of how the funds at settlement are to be drawn, we then pass these details on to you and direct your financial institution.
Step 4 – Settlement
The parties that attend settlement are the purchaser’s representative (us), the incoming mortgagee (if applicable), the vendor’s representative and the discharging mortgagee (if applicable).
It is at settlement that the balance of the settlement money is paid to the vendor’s representative in exchange for the signed Transfer and the title deed – it is when the property is transferred to you.
Step 5 – After Settlement
After settlement we contact the agent and advise them that settlement has taken place so that they can release the keys to you. We also advise all the relevant authorities of the purchase and release all documentation to you for your records.
If you have an incoming mortgagee, they will hold onto the title deed until your loan is paid off.