Ultimate Conveyancing Guide

This is a Guide to buying residential property in New South Wales. If you have a question about selling property please feel free to call and speak to one of our Property Lawyers on 1300 553 343.

Buying a property involves making one of the most important decisions that you will have to make in your lifetime and is not something that should be rushed into. It typically involves making a commitment to repay hundreds of thousands of dollars and undertaking obligations to make repayments to a Lender over a number of decades.

The aim of this Guide is to:

• assist Buyers to more fully understand the things they need to address before buying a property so that they are better prepared and are more likely to be the successful Buyer when two (2) or more people are interested in purchasing a particular property, and
• to educate Buyers in relation to the legal issues and procedures involved in buying property in NSW.

Roberts Crosbie Mortensen is committed to providing outstanding legal services whilst maintaining an optimal balance between quality and value. Our experienced and specialised legal team operate within a framework of diligence, professionalism, expertise and strategic commerciality to position our clients to get the very best results.

We can represent buyers and sellers anywhere in New South Wales. We strive to ensure that our Solicitors and Conveyancing Assistants can take your calls every time and utilise modern technology to provide a superior conveyancing experience to our clients. This includes:

• telephone and online conferences to review Contracts, where necessary, and
• use of file sharing software so you always have access to relevant documents and reports.

Our Property Lawyers have extensive experience in buying and selling real property (both residential and commercial) and will explain things to you in plain English.

An important preliminary step in buying a property is deciding how you want to own the property. If you neglect to consider the structure of your ownership of a property at an early stage you may find that it is too late to change later and encounter delays and/or additional costs. For example, if you have:

• already obtained conditional finance approval from a Lender in say, your and your partner’s name, you will likely encounter additional delays in obtaining unconditional Finance Approval if you later decide to purchase the property in your partner’s name only.
• already found a property and there is interest from other prospective Buyers, delays caused by you making a new loan application in another name may result in you missing out on the property.
• purchased property one way and later want to change it, this may result in additional Transfer Duty (formerly known as Stamp Duty), legal and loan expenses.

Depending on your circumstances it may be preferable, for asset protection or tax minimisation purposes, that you:

1. own your property jointly (as joint tenants or tenants in common), or alternatively
2. do not own the property at all, and instead the property is purchased solely in the name of your partner, a Company, a Trust or even a Self Managed Super Fund.

You should obtain advice from a Lawyer experienced in modern Estate Planning and Asset Structuring in relation to the preferred manner for you to own a property before making any loan applications. Call now and speak to one of our Property Lawyers to discuss Asset Structuring appropriate for your circumstances.

Most people need to borrow the majority of a price for a property. Before you start looking at properties you should contact a Lender or Mortgage broker to find out how much you are able to borrow. Money you owe on credit cards or car loans will influence your ability to borrow. You should, therefore, endeavour to pay out credit cards and be prepared to refinance car loans when applying for finance for a property.

While all banks and other financial institutions can offer you home loans and provide details of their terms and fees only Mortgage brokers can offer you a range of home loans from a number of Lenders with a rate, fees and conditions most appropriate for your circumstances. Like any service provider not all providers in the industry provide the same level of service. You should, therefore, ask friends and family to recommend a Mortgage broker. Alternatively, please feel free to contact us and ask one of our Property Lawyers to recommend one or more Mortgage brokers to you.

Just because you may be able to borrow an amount of money does not mean you can afford the repayments. Living expenses vary and generally increase over time. Also, unless you are borrowing money at a fixed rate of interest, interest rates can also vary.

Before going looking for properties you should prepare a detailed budget and work out exactly how much you can comfortably afford to pay each week/month on account of Mortgage repayments. If you have had difficulties preparing or following a budget in the past you should speak to a cash flow financial planner and obtain assistance to prepare a realistic budget.

Again, if you do not have a financial planner ask your friends or family to recommend one or speak to one of our Property Lawyers and ask for a referral.

Without personal insurances it is likely that:

• you would be unable to afford your Mortgage repayments and be forced to sell your property should anything happen to you, for example, if you were unable to work permanently or for any significant period as a result of any illness, injury or disablement, or
• your spouse and/or family would be unable to afford Mortgage repayments in the event of your untimely death. Your spouse and/or family may be forced to sell the property.

A summary of the common personal insurances generally available can be found in the Personal Insurances chapter.

The assessment of your financial circumstances and personal insurance needs is not a matter that Solicitors are able or licensed to advise you on. You should, therefore, consult a Financial Planner in relation to your personal circumstances and needs in relation to the personal insurances and costs before binding yourself to a Contract or bidding at an auction.

Even if you already have personal insurances you should review your personal insurances before buying a property to ensure that the insured amounts are still appropriate for you and your family’s circumstances once you have purchased a property.

If you do not know a trusted Financial Planner, please feel free to contact us and ask one of our Property Lawyers to recommend.

Once you have worked out how much you can borrow and afford to repay you should then set a maximum price that you can afford to pay.

The maximum price will be a combination of the amount you can borrow, the savings you have, your eligibility for any Government Grants, Exemptions & Concessions, plus Transfer Duty (unless you are entitled to an exemption) and other costs payable in respect of the purchase. Complete the table below to calculate an approximate maximum price:

When considering whether you can pay a deposit it is important to remember that the money you intend to borrow will not be available until completion of your purchase. Generally, a deposit of 10% of the price is payable when you sign a Contract.

If you do not have savings equivalent to 10% of your maximum price then you may need to negotiate a lesser deposit with the Agent. It is not uncommon for a Contract to provide for a 5% deposit payable on exchange with the balance due on settlement.

If you can’t pay any deposit, or if the Seller will not accept a deposit less than 10%, you may need to apply for a Deposit Bond. A Deposit Bond is effectively a bank guarantee for payment of an amount of money if called upon by the Seller. However, you cannot use a Deposit Bond to pay the deposit unless permitted in the Contract. Your Mortgage broker or lender will be able to assist you to apply for a Deposit Bond if necessary.

There are many different types of properties and property titles that exist. See chapter “Types of Property Titles” for a breakdown.

As Lawyers we are not qualified to provide advice in relation to what type of property suits you best. Generally, we recommend that you speak to friends or family who have lived in a similar property to the one that you were thinking of buying before choosing what type properly suits you best. For example, if you were thinking of buying a unit speak to someone who has owned or lived in a unit before. If you were thinking of buying land and building a house or carrying out substantial renovations, speak to someone you know who has gone through that experience.

When building or renovating be wary of builders’ quotes and costs of variations, and make sure you allow a contingency of 10% and/or obtain an independent construction cost report from a qualified Quantity Surveyor who can give you an accurate indication of the real likely cost of the building works you intend to undertake.

The Home Building Act 1989 (NSW) applies to ‘residential building work’ and ‘specialist work’ performed in New South Wales. ‘Residential building work’ includes any work involved in, or involved in coordinating or supervising any work involved in:

• the construction of a dwelling, or
• the making of alterations or additions to a dwelling, or
• the repairing, renovation, decoration or protective treatment of a dwelling.

The Home Building Act creates a series of statutory warranties. These statutory warranties can be enforced by a subsequent home owner against an original builder or owner builder despite the subsequent owner not being a party to the Building Contract.

The Statutory Warranties imposed by the Home Building Act and limitation period within which claims may be brought are set out in the Glossary of Terms chapter of this Guide.

The New South Wales Government offers financial assistance to some people purchasing real estate in the form of monetary grants and Transfer Duty concessions or exemptions. The grants, exemptions and concessions are generally intended to assist first home buyers to enter the property market and/or to stimulate the building industry.

The most common schemes existing at the time of publication of this Guide include the:

1. First Home Buyers Assistance Scheme, which allows for a full or partial exemption from transfer duty (application made through your Solicitor or Conveyancer), and
2. First Home Owner Grant (New Home), where you receive $10,000.00 towards the purchase price of your home (application made through your Lender).

All grants, exemptions and concessions are subject to strict eligibility criteria, and it is highly recommended you seek advice as to whether you satisfy those eligibility requirements prior to making an application for or receiving any benefit from a scheme.

The sale of property by private treaty refers to the process of negotiating a price with a Real Estate Agent or owner directly followed by the recording of that bargain in writing by the signing and exchanging of counterpart Contracts for Sale of Land.

If you are purchasing a property by private treaty it is important to be aware of the following:

1. Do not be rushed or pressured into signing a Contract. Remember the Real Estate Agent acts for the owner and not you. It is generally not recommended that you sign a Contract unless:
   • you have satisfied yourself in relation to the condition of the structures on the land, if any (see Buying Residential Property in NSW – Step 8),
   • you have written finance approval (see Buying Residential Property in NSW – Step 7), and
   • your Solicitor has already advised you in relation to its terms and conditions (see Buying Residential Property in NSW – Step 9).
2. Don’t rely on anything that you are told about a property or its potential. Nearly all Contracts contain Special Conditions that provide that you acknowledge that you have not relied on any representations made by the owner or any Agent on his/her behalf when entering into the Contract.

If you have been told things about the property that will influenced your decision to make an offer you should verify those matters independently, for example, by contacting Council directly.

The sale of a property by auction refers to a process of marketing a property to prospective Buyers to be sold on a particular date to the person willing to pay the highest price for the property provided that that price is greater than the owner’s reserve price.

If you are considering purchasing a property at auction, it is important to be aware of the following:

1. It is possible to negotiate amendments to a Contract for a property being sold at auction. However, any such amendments should be agreed in writing prior to the auction and are typically negotiated by a Solicitor on your behalf before the auction date.
2. The Seller has the right to make one (1) bid at the auction. This can be made by the Seller or by the auctioneer or a Real Estate Agent on the Seller’s behalf. However, if this occurs the auctioneer must announce the bid as a Seller bid.
3. You cannot rely on any building or pest inspection report provided to you by a Real Estate Agent. This is because the inspector who has prepared the report does not owe any contractual liability or duty of care to you and, therefore, would not be liable to you if the report is inaccurate or misleading in any way.
4. You need to register to bid at an auction. To register, you need to provide proof of identity (for example, a drivers license, Council rates notice, vehicle registration papers etc.) to the selling Agent as well as your name and address. Your details will be recorded by the selling Agent and you will be provided with a bidder’s number. If you are bidding as a couple or with a partner, only one (1) of you needs to register to bid.
5. If you are the successful bidder at an auction you will be bound to purchase a property from the moment the auction ends regardless of the fact that you have not yet signed a Contract. You will also be required to pay the deposit (usually 10%) immediately after the auction. Ideally, you have obtained a formal loan approval before attending the auction. Remember that there is no Cooling Off Period (see Buying Residential Property in NSW – Step 14) following the purchase of a property at an auction.
6. You should not bid at an auction unless you have obtained advice from a Solicitor about the property and the Contract.

Before bidding at an auction, you should have undertaken Steps 2 and 6-9 below.

The Latin concept of “Caveat Emptor” is commonly used in the context of legal property transfers and translates to “Buyer Beware”. Under general law, a Seller of land is under no obligation to disclose to a Buyer any defects in the property or Title other than latent defects in Title. Latent defects in Title are undisclosed interests of third parties in the land which are not discoverable on reasonable investigation of the land or of the Title.

Contracts for the Sale of Land, therefore, do not cover a Buyer for defects in the structures on the land or discoverable defects in Title. As a result, the onus is on a Buyer to ensure that they have fully investigated the structures on the land and the Title prior to signing a Contract as the subsequent discovery of any such defects will not give a Buyer a right to rescind a Contract or any claim for compensation.

Gazumping is when you have a verbal agreement with an Agent or Seller to buy a property at an agreed price but the property is not sold to you in the end. This usually happens when the Seller has decided to sell the property to someone else, usually for a higher amount. Gazumping is not a common occurrence, however, it does happen and it can be very disappointing if it happens to you, especially if it could have been avoided.

As agreements in relation to land are not binding unless they are in writing (see Buying Residential Property in NSW – Step 12), if you are gazumped, neither the Agent nor the Seller is liable to compensate you for any money you may have spent on legal advice, inspection reports, finance application costs or searches and enquiries.

Gazumping is more likely to occur when the Agent has indicated that the Seller needs to sell the property quickly, for whatever reason, and is predominantly concerned with making a binding Contract with a Buyer (that is, Contracts being unconditionally exchanged) than getting the highest possible price. If you have negotiated a price on a property where these circumstances exist you should contact your Solicitor immediately and explain the circumstances to them and your concern that you may be gazumped.

If you are concerned about being gazumped you should:

• Ensure that you have a conditional loan approval.
• Ensure that you can pay a 10% deposit promptly (or negotiate a lesser deposit that you can pay promptly with the Agent directly).
• Obtain a copy of the Contract for the Sale of Land and give it to your Solicitor to review without delay.
• Be wary of what you say to the Agent during inspections or negotiations. You don’t want to say something that may lead the Agent or the Seller to think that you are not as capable of performing the Contract as another Buyer.
• A Seller is not obliged to sell the property to any specific person and can change their mind at any time prior to the exchange of Contracts. Sellers may not necessarily sell to the person offering the highest price, for example, where they feel that there is more certainty that the sale will be completed on time due to another Buyer still needing to obtain finance approval or waiting to sell their house to pay the purchase price.
• Insist on the Agent passing your genuine offers to the Seller and obtain written proof of this occurring. If you are advised that other offers have been made, ask to see written evidence. If you are certain that you want the particular property, be ready to increase your offer to the Seller.
• After speaking to your Solicitor, seek to exchange Contracts with the Seller as soon as possible. To ensure exchange is effected offer to be involved or ask your Solicitor to attend to exchange in person. If you have not done so already, following exchange of Contracts, you will then need to arrange appropriate Pre-Purchase Inspections and Unconditional Finance Approval on an urgent basis and within the Cooling Off Period. The Seller will be bound by the Contract from exchange, however, unless your Solicitor has waived your Cooling Off Period you can still cancel the Contract if the satisfactory inspections or Unconditional Finance Approval cannot be obtained within the Cooling Off Period (or any agreed extension of the Cooling Off Period).
• Be prepared to forfeit 0.25% of the purchase price if you subsequently decide to cancel the Contract during the Cooling Off Period.

If you want to buy or sell property you will need to sign a contract. The legal work involved in preparing the Contract for the Sale of Land, Mortgage and other related documents is called conveyancing.

Who can do Conveyancing work?

There are three (3) options available to you for doing the conveyancing in relation to your purchase:

1. You can do your own conveyancing,
2. You can use a licensed Conveyancer to do your conveyancing, and
3. You can instruct a Solicitor to act on your behalf (see page 10).

You are able to act for yourself and do your own conveyancing, though you may find this difficult to do so. Conveyancing can seem like a fairly straight forward process, however, there are many aspects of the transfer of property which need to be considered and coordinated as well as risks and problems to be dealt with including:

• entering into a legally binding Contract for a large sum of money,
• negotiating amendments to the Contract,
• coordinating the purchase with incoming finance,
• dealing with the Revenue NSW,
• dealing with breaches or non-performance of the Contract by the other party, and
• dealing with electronic conveyancing requirements (see Electronic Conveyancing Requirements chapter).

In addition, anyone buying a property should first be considering:

• How best to structure their ownership of the property- Asset Structuring and asset protection (see Before you Start chapter),
• Will the purchase of the property and/or sale of any existing properties affect my Estate Planning,
• How will I be taxed on the income and capital gains generated from the property, and
• Will I pay less tax if the property is owned in another way?

Doing your own conveyancing can also carry a substantial degree of risk because you are unable to get the same insurance available to a Solicitor or licensed Conveyancer. This means that if you make a mistake while doing your own conveyancing you could end up being personally financially responsible for such mistake – a potentially very, very expensive mistake.

In New South Wales, Conveyancers must be licensed with NSW Fair Trading. Most Conveyancers hold an unrestricted licence that allows them to perform conveyancing work for the transfer of residential, commercial and rural property.

However, Conveyancers are restricted to performing legal work only in relation to conveyancing. Should any issue arise in relation to the purchase of your property which is not strictly related to conveyancing work, your Conveyancer would then be required to instruct a Solicitor to advise you in relation to the issue and/or continue acting on your behalf.

Conveyancers are also not able to advise you in relation to Asset Structuring, Estate Planning, Family Law or Tax Laws.

See also Why Use a Solicitor and not a Conveyancer chapter below.

A Solicitor is qualified to give you legal advice about all aspects concerning your conveyance including aspects that are outside the scope of work of a Conveyancer, and also other legal matters including Asset Structuring, Estate Planning, Family Law and Tax Law. For example, your Solicitor can:

• assist you with other legal needs such as Asset Structuring Advice for asset protection and tax minimisation as well as advice about other Modern Estate Planning issues,
• continue acting for you if there is a breach or threatened breach of the Contract, and
• continue acting if Court proceedings are commenced or need to be commenced.

A competent Property Lawyer should be able to answer any legal question you have concerning your sale or purchase of property.

The conveyancing industry is now a highly competitive market. While the prices for performing conveyancing work used to be regulated by legislation, once that regulation was abolished, the increased presence of Conveyancers and the continued undercutting of competitors’ prices has resulted in the widespread undervaluing of an important legal service which requires a considerable level of experience and expertise.

The resulting situation disadvantages everyone, particularly the customer. For example, in an attempt to provide you with the cheapest quote, some Solicitors or Conveyancers might reduce the number of government searches in relation to your new property to a bare minimum. While you may have saved $200.00, you remain unaware of a possible proposal to acquire part, or all of your property, which might end up costing you tens of thousands of dollars.

In addition, aggressive marketing by some Conveyancers provides the community with incorrect information about the role of Solicitors in conveyancing. The writer read the following statement on a Conveyancer’s website with shock:

“The difference between a solicitor and a conveyancer is that a solicitor can go to Court whereas a conveyancer cannot…. Solicitors who can also act for you in relation to a Conveyancing transaction can be held up in Court or conferences and may not have the time to meet your needs”.

This statement is grossly misleading.

The price of a service can sometimes be a good indicator of the quality of service you can expect to receive from a professional. Conveyancers often charge a reduced fee so their business model depends on volume not quality of service. Because most Conveyancers’ costs are lower, they require more files to ensure the continuance of their business. As a result, you may not receive the same amount of attention as you would with a Solicitor, particularly as a Solicitor has a greater duty of care to you and greater ethical obligations to the wider community than a Conveyancer.

It is in your best interests to instruct a Solicitor, rather than a Conveyancer, to act on your behalf because:

• Solicitors can assist you with all legal matters associated with the sale or purchase of real property.
• Solicitors are also qualified and required to advise you broadly in relation to contract and property law, asset structuring, asset protection, estate planning, family law and tax law issues when engaged to act in relation to a property transaction.
• Conveyancers are not licensed to advise on areas of law that are beyond “conveyancing work”, as defined in the Conveyancers Licensing Act 2003.
• A Conveyancer must cease to act for a person as soon as the matter moves beyond “conveyancing work”, or the client requires legal advice on areas of law which are outside of the scope of “conveyancing work” but related to their sale or purchase. When this happens, the Conveyancer must refer you to a Solicitor for advice.
• Conveyancers must cease to act for a person if legal proceedings need to be commenced or defended, most likely for breach of the Contract. This means that just as ‘the going gets tough’ the Conveyancer you had entrusted with your property transaction can no longer help you.
• A Conveyancer may inadvertently cause you to become in breach of a contract, for example by the issue of an invalid Notice to Complete or Notice of Termination (see page 30).
• Conveyancers are not qualified to provide you with asset structuring advice which should be a fundamental first consideration to any purchase (see page 4).
• If a problem or legal issue arises during your purchase a Conveyancer will refer you to a Solicitor for legal advice. If this happens any costs saving will quickly be lost as a result of the Solicitor needing to review the Contract and the Conveyancer’s file in order to properly give advice.
• A good Solicitor will prevent problems not create them.
• Solicitors are bound by much more onerous ethical and professional responsibilities and owe a greater duty of care to their clients than Conveyancers.
• Most Solicitors offer greater expertise and experience of the law (and, therefore, a better service and higher accountability).
• Solicitors are better equipped to deal with pre-contractual negotiations and disputes.
• Many Solicitors, including Roberts Crosbie Mortensen, offer a very competitively priced conveyancing service.
• Solicitors have undertaken far greater study and training to obtain their qualification to act in relation to property transactions.
• Conveyancers often charge a reduced fee so their business model depends on volume not quality of service.
• Because most Conveyancers’ costs are lower, they require more files to ensure the continuance of their business. As a result, you may not receive the same amount of attention as they would with a Solicitor.

It is likely that you are reading this Guide because you want to a have a thorough understanding of issues relating to your purchase in order to protect your interests to the best of your ability. Every day, many people choose to instruct a Solicitor rather than a Conveyancer to act in relation to their conveyancing because they want the most qualified professional to act on their behalf.

For more information about how Roberts Crosbie Mortensen charges for conveyancing work or to instruct our Property Lawyers to act in relation to your purchase please call us on 1300 553 343 or visit our website.

As of 11 October 2021, New South Wales has transitioned to 100% electronic conveyancing, subject to certain exemptions. Electronic conveyancing (sometimes referred to as “eConveyancing”) has not replaced the entire process of a property transaction, but rather the means by which settlement is prepared for and finalised. In particular, this includes replacing many of the paper and manual processes involved in lodging and registering Transfers, Mortgages and Caveats, and the payment of Transfer Duty, rates, and sale proceeds.

It allows interested parties to the transaction (such as lawyers, conveyancers and banks) to interact in an online environment managed by an Electronic Lodgement Network Operator or “ELNO”, where documents can be drafted, verified, lodged and registered directly with the proper authority (such as NSW Land Registry Services and Revenue NSW). The two (2) most common ELNOs in NSW are PEXA and Sympli.

The ELNO also deals with the disbursement of funds on settlement – rather than having to draw a number of cheques which are handed over on settlement, the funds available and required for the transaction are recorded in a financial settlement schedule and simultaneously withdrawn and disbursed with the lodgement and registration of the relevant land registry documents.

To effect settlement, your Solicitor or Conveyancer will sign property documents, such as the Transfer and Notice of Sale, on your behalf using a digital signature specific to that practitioner. To enable them to do this, you must complete a Client Authorisation Form which expressly authorises the practitioner to sign and lodge the documents on your behalf. A signed Client Authorisation Form has effect according to its terms only and is not a Power of Attorney for the purposes of any other law.

The benefits of electronic conveyancing include a greater transparency between the interested parties, reduced risk of manual errors and delays in settlement, access to real-time updates on issues that may affect the title of the property you are purchasing, and reduction in time and costs associated with employing agents to attend paper settlements, chasing mortgagees to prepare for settlement, and clients attending on their Solicitor to sign any required property documents.

Most people sell their properties with the assistance of a Real Estate Agent, however, the use of a Real Estate Agent is not a legal requirement and you may find properties advertised privately for sale in your local newspaper, on the internet, or through a sign posted in front of the property.

Most Real Estate Agents advertise their listed properties in local newspapers, their websites, in their office windows, and on public websites such as realestate.com.au and domain.com.au.

These days, internet searches for properties can be performed efficiently and searches can be filtered on the basis of areas, property types, number of bedrooms, number of bathrooms and number of parking spaces as well as price.

Most Real Estate Agents will conduct “open houses” of properties for sale. An “open house” is when a property is made available for inspection by prospective Buyers at a set time, usually on a weekend or afternoon. “Open houses” are a good opportunity to inspect numerous properties or to get a feel for the features that you are after and the likely market price for the property that you want to buy.

Most Real Estate Agents are also only too happy to arrange a private inspection for you for any property that you wish to inspect or reinspect, on relatively short notice.

Whilst it is always recommended that you obtain Pre-Purchase Building and Pest Inspection reports (see Step 8 below), when inspecting a property that you are considering making an offer to purchase, it is useful to use a checklist to ensure that you do not overlook any aspects of a property that you may regret later.

When looking for a property, you should have a clear idea from the start about what you are looking for. The following questions will help you identify what you are looking to find and reduce the amount of time you spend searching for properties:

Location

• How far are you willing to travel to get to work?
• How good are the local schools, shopping centres and other public facilities such as parks and sporting grounds?
• How convenient is public transport?
• What has been happening or is planned to happen in the area?

Features

• What do you like about where you currently live?
• What don’t you like about where you currently live?
• How many bedrooms and bathrooms do you want or really need?
• What are the essentials? e.g. ensuite, garage, views, balcony, yard etc.

A Contract in relation to the sale of Land is not binding unless it is in writing and signed by each of the parties. The mere request for a copy of a proposed Contract and even the payment of a holding deposit will not, therefore, result in any enforceable agreement arising.

In New South Wales, a Seller must have a proposed Contract for the Sale of Land available for inspection by a Buyer before offering a property for sale. A Contract for the Sale of Land will typically consist of a cover page setting out the details of the property, standard clauses, Special Conditions and prescribed documents.

The Contract will also include important information about the type of property title applicable to the property (see Types of Property Titles chapter).

Every Contract for the Sale of Land in New South Wales must contain the following Prescribed Documents where available:

• A Section 10.7 Certificate from the local Council detailing the applicable zoning of the property and other important information including details of any proposals impacting on the land that the Council is currently aware of.
• Diagrams from a recognised sewerage authority that show the location of the sewer line and possible sewerage infrastructure in relation to the land.
• A Property Certificate from NSW Land Registry Services detailing all registered interests in the Land such as Mortgages, Caveats, Easements, Restrictive Covenants etc.
• A copy of the Deposited Plan (or Strata or Community Plan) relating to the land which will identify the location of any existing Easements, Rights of Carriageway or other affectations as well as the area of the lot.
• Copies of all dealings and other instruments recording the details of any Easements, Restrictive Covenants, Rights of Way or other affectations registered in respect of the land and referred to in the Property Certificate.
• If the Contract relates to a lot in a strata complex, a Property Certificate and plan for the Common Property and copies of any applicable By-Laws in respect of the Strata Scheme.
• If there is a swimming pool on the property (other than a strata property), a copy of a valid certificate of compliance, a relevant occupation certificate, or a valid certificate of non-compliance.

A Contract for Sale of Land must also include the statutory notices listed under section 16 of Schedule 1 of the Conveyancing (Sale of Land) Regulation 2017 in relation to smoke alarms and loose-fill asbestos insulation.

Where the property is less than six (6) years old or where residential building work with a total price/value of over $20,000.00 (or $12,000.00 prior to 1 February 2012) has been carried out in relation to the property in the last six (6) years, a Certificate of Insurance under the Home Building Compensation Fund (formerly called Home Warranty Insurance) in relation to the works should also be attached to the Contract.

It is worthwhile to review the Contract particulars page, Special Conditions and Prescribed Documents and, if necessary, make enquires with the relevant local Council in relation to any of the matters that you identify in the prescribed documents at this stage. Depending on the value of the property and your level of experience, it is recommended you consult a Solicitor to provide advice in relation to the proposed Contract.

Residential Tenancy Agreements

If the property you wish to buy is currently subject to a Residential Tenancy Agreement and the Contract does not say that vacant possession will be provided on completion, you will be agreeing to buy the property subject to the Residential Tenancy Agreement, if any, and the tenants’ rights under the Residential Tenancies Act 2010 from settlement. The law about Residential Tenancy Agreements is outside the scope of this Guide.

For general information about the rights and obligations of landlords and tenants under the Residential Tenancies Act 2010 visit the New South Wales Government Fair Trading website (www.fairtrading.nsw.gov.au).

Once you have found a property that you wish to buy you will need to negotiate a price. Keep in mind that in most cases if you want to obtain the best price you should not offer the maximum that you are prepared or are able to pay initially in case the Seller rejects your offer and makes a counter offer. If you have any questions in relation to the negotiation process generally you should consult your Solicitor or a Real Estate Agent who is not the Seller’s Agent.

An offer can be made verbally or in writing. Where an offer is made verbally it is common for the Real Estate Agent to ask that it then be confirmed in writing (usually an email will be sufficient).
When you are making a written offer care should be taken to ensure that the offer is expressed to be subject to signing of a formal Contract for the Sale of Land.

Once you have negotiated a price, you may be asked to pay a sum of money as a “holding deposit” as a sign of good faith. Most holding deposits are a minimum of $1,000.00 or 0.25% of the purchase price.

As you will not be bound to purchase the property until a written Contract for the Sale of Land has been signed and exchanged you should feel comfortable paying a holding deposit in the knowledge that if for any reason you change your mind prior to exchange of Contracts the holding deposit will be refundable to you in full.

Conversely, you should keep in mind that the payment of a “holding deposit” does not prevent the Seller from selling the property to any other party and will not be bound to sell the property to you unless and until a written Contract for the Sale of Land is signed and exchanged. Therefore, the payment of “holding deposit” will not eliminate the risk of being gazumped (see Gazumping chapter).

Once a price is negotiated and you have paid the holding deposit (if required), the Real Estate Agent may ask you to sign a Contract. Generally, you should not sign a Contract except in the presence of your Solicitor and after having followed Steps 6 to 9 below. If, however, there is a suggestion that one or more other Buyers are willing to purchase the property and that the Seller will enter into a Contract with the first Buyer to sign a Contract, then you should endeavour to discuss the circumstances and the proposed Contract with your Solicitor before signing a Contract for the Sale of Land. Many law firms are accommodating and will arrange for an urgent appointment if required. Please contact us on 1300 553 343 to discuss any urgent matters.

In most cases, once a price is negotiated the Real Estate Agent will ask you for details of your Solicitor so that they can issue a Sales Advice. A Sales Advice is an instruction to the Seller’s Solicitor to issue a Contract for signing. The Sales Advice will include the following details:

• the name(s) of the Buyer,
• the price and deposit,
• the Buyer’s Solicitor, and
• any Special Conditions relating to the sale (such as that the Contract is to be subject to the Buyer obtaining Unconditional Finance Approval etc).

Once you have provided your Solicitors’ details to the Real Estate Agent you should contact your Solicitor and formally instruct them to act on your behalf in relation to the purchase, if you have not already. The Solicitor will typically then:

• provide you with preliminary advice and take your instructions in relation to the obtaining of appropriate Pre-Purchase Inspections and Certificates and order those inspections and certificates on your behalf so that they are obtained at the earliest possible date and so that any risk of you being gazumped is minimised,
• correspond with the Seller’s Solicitors to formally request the submission of a Contract without delay, and
• liaise with your Financier (if you have one) in relation to the provision of required details of the property to enable your proposed Lender to promptly obtain a valuation of the property in order to determine whether or not it will provide the required loan (unconditional loan approval).

Before signing a Contract or bidding at an auction you should either have an unconditional loan approval in respect of the particular property or otherwise be supremely confident that either you do not require finance or that you will easily be able to obtain finance approval from a Lender.

Unless you already have sufficient equity in other properties your proposed Lender will normally require its own valuation of the property before providing you with an unconditional loan approval. Depending on which Lender you are using and how promptly details of the property are provided to it by your Solicitor, it may take several days or even a week for your Lender to obtain a valuation and issue you with an unconditional loan approval.

Once you have an unconditional loan approval you can feel confident signing a Contract for the Sale of Land knowing that the required finance will be available to you to pay the purchase price when necessary.

Under general law a Seller of land is under no obligation to disclose to a Buyer any defects in the structures on the land. Further, there is no requirement that the Seller has to disclose whether or not the structures on the property have been built with Council approval. It is, therefore, always recommended that you satisfy yourself in relation to the condition and legality of the structures on the land before signing a Contract or bidding at an auction. You will typically have no right to make any claim for compensation if any defects or illegality are discovered after you become bound to the Contract.

You should discuss with your Solicitor and carefully consider whether the following forms of Pre-Purchase Inspections are required:

Building Inspection Reports

Pre-Purchase Building Inspection Reports are prepared by Building Inspectors and can help you assess the quality and condition of the building and other structures on the land and identify minor or major defects or damage, if any. These reports will generally comment on all areas and aspects of the building that are reasonably capable of being inspected. If you wish to be present during the inspection let your Solicitor know so that this can be arranged with the Inspector.

Most Building Inspectors are not qualified to give advice in relation to structural defects. If the Building Inspector considers that there may be structural defects they will typically recommend that you obtain a report from a Structural Engineer, for example, if there are potential issues with piering, structural walls or retaining walls.

If your Pre-Purchase Building Inspection Report identifies significant defects or damage you may wish to reconsider purchasing the property or attempt to renegotiate the price. However, keep in mind, that nearly all properties have minor defects of some nature which defects may not make any difference to the market value of the property.

If you have a family friend or relative who you intend to use to provide you with an opinion about the condition of the property please keep in mind that one of the key purposes of obtaining formal Pre-Purchase Building Inspection Report is to:

1. identify any defects that may influence your decision to purchase the property or the price you are prepared to pay, and
2. to ensure that there is a third party with appropriate professional indemnity insurance against whom you can bring a claim for compensation if that person (the Building Inspector) has negligently failed to identify any defect in relation to the property which would have influenced your decision in relation to the property or price you were willing to pay.

If inspections are carried out by a family friend or relative they will typically be uninsured and/or you may find it difficult to sue that person to recover losses if they fail to identify defects that would have otherwise been discovered.

If you intend to engage your own Inspectors to perform appropriate Pre-Purchase Inspections you should ensure that they maintain adequate professional indemnity insurance.

Pest Inspection Reports

Pest Inspection Reports identify whether the building suffers or has suffered from any pest infestation or related damage. Most pest inspections will include information on termites, borer beetles, wood decay, environmental conditions that are conducive to timber pests, drainage, ventilation as well as the presence of non-structural pests such as cockroaches, ants, rats and mice.

Electrical Safety Audit Reports

An Electrical Safety Audit Report will determine whether the property you intend to purchase requires any major rewiring or safety upgrades and whether there are any existing electrical dangers that could potentially result in fires or personal injury. The costs of rewiring a property could be a significant and may influence the price you are willing to pay for a property.

We typically recommend that Buyers obtain an Electrical Safety Audit Report if the property is over 50 years old or if there appears to be any unauthorised improvements to the property.

Strata/Community Scheme Inspection Reports

If the property is part of a Strata or Community Scheme (for example, a unit or property in a new estate) it is recommended that Buyers obtain a Strata/Community Scheme Inspection Report. Strata/Community Scheme Inspection Reports will identify and detail specific information pertaining to the Strata Scheme for the property including management, maintenance, repairs, levies, insurances, by-laws and other information that will be of assistance to you.

Owners of strata properties are required to contribute to costs associated with the Common Property, including:

• Compensation to persons who may have been injured on the Common Property, or
• Rectification works.

These hidden costs may not be apparent without a report by an experienced Strata Property Manager.

Identification Survey Reports

An Identification Survey Report will identify the location of the building on the subject land and should be obtained unless a satisfactory Survey Report is available from the Seller or you are satisfied that no structure on the land could possibly be over a boundary. Survey Reports will help to ensure that the buildings you are purchasing are contained wholly within the boundaries of the land you are buying and that no adjoining structures encroach onto the land.

If there is any doubt about whether a structure may encroach on a boundary a Survey Report should be obtained as an owner of adjoining land affected by an encroachment can insist that the part of the building that encroaches be moved. This is obviously easier said than done, hence Survey Reports can avoid substantial expenses that might arise if part of the building encroaches onto an adjoining owners land.

Survey Reports will also identify the proximity of eaves to boundaries (which would also constitute an encroachment) as well as the location of Easements, Rights of Way and the like that may affect the property.

Council Building Information Certificates

If it appears that the whole or any part of the property may have been constructed without Council approval you should carefully consider obtaining a Council Building Information Certificate in relation to the property. Regardless of who may have performed the work, if unauthorised works have been performed Council may issue an order requiring that the building be repaired, demolished, altered, added to or rebuilt.

Council Building Information Certificates are issued if Council is requested to inspect the property and certifies that the improvements comply with a Council Development Approval. If Council discovers that approval was not obtained for any improvement it will issue a Council Building Information Certificate if there is no matter discernible by the exercise of reasonable care and skill that would entitle the Council to:

• order that the building be demolished, altered, added to or rebuilt,
• take proceedings for an order or injunction requiring the building to be demolished, altered, added to or rebuilt,
• take proceedings in relation to any encroachment by the building onto land vested in or under the control of the Council, or
• there is such a matter but, in the circumstances, the Council does not propose to make any such order or take any such proceedings.

A Council Building Information Certificate, therefore, operates to prevent Council from:

• making an order (and taking proceedings for the making of an order or injunction) requiring the building to be repaired, demolished, altered, added to or rebuilt, and
• taking proceedings in relation to any encroachment by the building on to land vested in or under the control of the Council,
  in relation to matters:
• existing or occurring before the date of issue of the Certificate, or
• arising only from the deterioration of the building as a result solely of fair wear and tear for a period of seven (7) years.

Structural Engineer’s Report

Without limitation, a Structural Engineer’s Report should be obtained if recommended in a Building Inspect Report or if you intend to carry out renovations to the property. The Report should evaluate areas such as walls, roof, frames, concrete, retaining walls etc and comment on defects, the likely cause of the defects and recommendations in relation to how to eliminate or fix any problems.

A Contract for the Sale of Land is the legal agreement that governs the rights and obligations of a Seller and Buyer in connection with the transfer of Land. The Contract will describe the structures and inclusions (such as curtains, dishwashers etc) included in the sale and will typically contain a set of standard conditions as well as numerous Special Conditions. Every Contract must also obtain the required Prescribed Documents (see Step 2).

Once we receive the Contract for the Sale of Land from the Seller’s Solicitors we will review the Contract with you, provide you with advice and obtain your instructions in relation to required or recommended amendments to the Contract or Special Conditions. For example, Special Conditions may be required in relation to:

• payment of a deposit of less than 10%,
• the permitting of the provision of a Deposit Bond in lieu of a cash deposit,
• the inclusion of a subject to finance clause, if necessary,
• preserve your rights if Council refuses to issue a Building Information Certificate after exchange of Contracts,
• ensure that completion of your purchase is conditional upon, or will coincide, with completion of the sale of your current property,
• obtain early access to the property or to carry out works prior to completion, or
• including appropriate warranties from the Seller to reduce the risk of a third party obtaining a superior interest in the property after exchange (see Step 16: Black v Garnock [2007] HCA 31 case).

Statutory Conditions & Warranties

Section 52(A) of the Conveyancing Act 1919 provides that a Contract for the Sale of Land shall be deemed to include certain prescribed terms and warranties as well as the remedies and relief available to a Buyer where there is a breach of an implied term or warranty.

Every Contract for the Sale of Land in NSW, therefore, includes a warranty by the Seller that, as at the date of the Contract, except as disclosed in the Contract:

• the land is not subject to any adverse affectation, which are essentially government proposals that might affect the land, such as proposed road widening, compulsory acquisition, heritage orders, fencing notices and demolition orders,
• the land does not contain any part of a sewer belonging to a recognised sewerage authority,
• the Section 10.7 Certificate from Council attached to the Contract specifies the true status of the land the subject of the Contract in relation to the matters set out in Schedule 4 to the Environmental Planning and Assessment Regulation 2000 (NSW), and
• there is no matter in relation to any building or structure on the Land that would justify the making of any upgrading or demolition order by the local Council (or if there is such a matter, a Building Information Certificate (see page 18) has been issued in relation to the building or structure).

As part of your Conveyancing transaction, we are required to verify your identity in accordance with the Registrar General’s Conveyancing Rules, the purpose being to verify that you are a real person and you have the right to enter into the transaction. We are required to keep a certified copy of your verification of identity for seven (7) years to support the dealing.

There are a number of categories available which specify the documents you can use to verify your identity, but in particular, we would ask you to satisfy one of the categories below:

Category 1:

1. Australian Passport or foreign passport, and
2. Australian Drivers Licence or Photo Card, and
3. Change of name or marriage certificate (if necessary)

Category 2:

1. Australian Passport or foreign passport, and
2. Full Birth Certificate or Citizenship Certificate or Descent Certificate, and
3. Medicare or Centrelink or Department of Veterans’ Affairs card, and
4. Change of name or marriage certificate (if necessary)

Category 3:

1. Australian Drivers Licence or Photo Card, and
2. Full Birth Certificate or Citizenship Certificate or Descent Certificate, and
3. Medicare or Centrelink or Department of Veterans’ Affairs card, and
4. Change of name or marriage certificate (if necessary).

A Digital Drivers Licence cannot be used to verify identity for Conveyancing transactions so we will still need to take a copy of your physical card licence if you provide it to us.

More information on the categories of documents required for verification of identity can be found on the Registrar-General’s website.

When the Contract is in terms acceptable to you, we will ask you to sign a counterpart Contract.

If at the time of signing you have already obtained and approved all relevant Pre-Purchase Inspection Reports and have received Unconditional Finance Approval (or are otherwise satisfied that you will obtain the required finance, if any) we will seek your instructions to send the signed counterpart Contract for the Sale of Land to the Seller’s Solicitors to initiate exchange of Contracts. Otherwise, we will hold the signed counterpart Contract pending your further instructions following your receipt of relevant Pre-Purchase Inspection Reports and unconditional finance approval.

Contracts are not binding on a Buyer or Seller until exchange of Contracts has been effected. Exchange of Contracts is normally affected by the Seller’s Solicitor once they are in receipt of identical counterpart Contracts signed by the Seller and Buyer at which time they will insert the date of the contract and send the original Contract signed by the Seller to us on your behalf.

Once Contracts are exchanged you will be bound to complete the purchase of the property subject to any rights in relation to the Cooling Off Period (see Step 14 below) or any other Special Conditions (for example, if there is a subject to finance clause).

Normally the deposit is payable on the date that Contracts are exchanged. Unless the Contract specifies otherwise, the deposit is held by the Seller’s Agent in a Trust Account. If both the Seller and the Buyer provide their Tax File Number to the Agent the Agent will invest the deposit in an interest bearing account. If the deposit is invested the interest is normally shared equally between the Buyer and the Seller on settlement.

In most cases the deposit is paid by delivering a cheque to the Agent or by direct deposit to the Agent’s Trust Account.

If the Contract permits you to provide a Deposit Bond or bank guarantee in lieu of a monetary deposit, that Deposit Bond or bank guarantee must be provided to the Seller’s Solicitors on or before the date of exchange.

Every Contract for the sale of residential premises in NSW includes a statutory five (5) business day Cooling Off Period. During this period a Buyer may change their mind and cancel the Contract for any reason, however, the Buyer will forfeit 0.25% of the purchase price to the Seller if they cool off (e.g. on a price of $500,000 you would forfeit $1,250).

Whilst it is preferable to obtain Pre-Purchase Inspection Reports and unconditional finance approval prior to exchange of contracts this is not always possible. In these circumstances a decision will need to be made within the Cooling Off Period about whether you are satisfied with the Pre-Purchase Inspection Reports and eligibility for finance to purchase the particular property.

There is no Cooling Off Period if:

• you instruct your Solicitor to sign a Section 66W Certificate which waives your cooling off rights,
• you have purchased a property at an auction,
• the Contract is made on the same day as the property was offered for sale by public auction but passed in (which means, the reserve price wasn’t met and the property failed to sell at the auction), or
• the Contract does not relate to a residential property.

After exchange of Contracts we will advise your Lender that you have secured the property. The Lender will then issue formal Loan Agreement and Mortgage documents to you for signing. You should already have a full understanding of terms of the loan and, therefore, the review of the loan documents should be a matter of confirming that the terms are consistent with the terms of your application.

If you have any questions or have not previously had a Mortgage you should carefully review the Loan Agreement and Mortgage documents and obtain further advice from us.

Provided that you approve of the Loan Agreement and Mortgage documents the documents should be promptly signed and returned to your Lender or delivered to us. If the documents are returned to your Lender directly, please let us know that this has been attended to by you.

The decision of the High Court in the case of Black v Garnock [2007] HCA 31 illustrated a risk faced by Buyers that had not previously been fully appreciated. Typically, your Solicitor will conduct a Final Search (see Step 28 on page 28) of the Torrens Title Register on the morning of the day of settlement to ensure that there has been no prior dealings with the property or third party claims recorded against the title, and will only proceed to settle the Contract if the Final Search does not reveal any such dealings or interests. This is because a Buyer would be at risk of having handed over their money and not receiving the benefit of clear title to the property if there had already been some prior dealing or earlier interest noted. Such dealings or interests might include:

• a second or third Mortgage being registered in relation to the property,
• a creditor of the Seller with an interest in the land registering a Caveat over the property as security for its rights, or
• a Judgment Creditor of the Seller obtaining a Writ for the sale of the property and registering that Writ against the title to the property.

In the case of Black v Garnock, the Solicitors for the Buyer obtained a Final Search which did not reveal any prior dealings or third party interests. The Buyer’s Solicitors proceeded to complete the purchase and handed over the balance of the purchase price (funded by an incoming Mortgagee) in exchange for the Certificate of Title. The majority of the purchase price was received by the Seller’s outgoing Mortgagee to discharge the Mortgage. Consistent with usual practice, the Buyer’s Mortgagee received the Certificate of Title and signed Transfer on settlement and promptly lodged the Transfer with NSW Land Registry Services for registration. Typically the receipt and registration of a Transfer by NSW Land Registry Services following a settlement may take between one (1) and three (3) days.

In the case of Black v Garnock, unbeknownst to the Buyer or their Solicitors, after the Final Search had been obtained and prior to registration of the Transfer, a third party Judgment Creditor of the Seller had registered a Writ for the sale of the land on the Torrens Title Register. The effect of the Writ was that the Buyer’s Mortgagee could not register the Transfer or their Mortgage.

The Buyer, the Garnocks, sought an order from the New South Wales Supreme Court to have the Writ removed so that they could register their Transfer. The case was appealed to the High Court where it was ultimately determined that the Writ entitled the third party Judgment Creditor to cause the property to be sold and receive payment of the debt due to it from the sale proceeds despite the Garnocks having obtained a Final Search and paid the purchase price. In effect, this meant that the Garnocks had borrowed and paid $1,000,000.00 for a property that they were not entitled to receive the Title to.

As the Lender’s Mortgage could not be registered it would be expected that the Lender would demand that the Garnocks repay the $1,000,000.00 loaned forthwith. However, the Garnocks no longer had an asset that could be sold in order to pay that money. Instead, their only remedy was to bring a claim against the Seller, the Blacks, for compensation for breach of contract. However, in this case the Blacks no longer retained the majority of the sale proceeds as they had been used to pay out a Mortgage over the property and were already in a poor financial situation.

In this case the High Court noted that whilst the Buyer’s Solicitor had obtained a Final Search, the Buyer could have registered a Caveat over the property to protect their unregistered interests in the land pursuant to the exchanged Contract which Caveat, if registered prior to the Writ, would have entitled the Garnocks to the property in priority to the third party Judgment Creditor.

Whilst the risk of a third party registering an interest in relation to a property, after a Final Search is obtained and before registration of a Transfer, may be relatively low in most cases, the consequences of such an interest being recorded can be significant. As a result of the decision in Black v Garnock all Buyers should carefully consider the potential implications of a third party registering an interest in the property in these circumstances and, if they wish to avoid any such risk, instruct their Solicitor to register a Caveat over the property to protect their interests.

Caveats should especially be considered if there is an extended settlement period or if the Buyer is aware of the Seller’s poor financial position.

If you are unsure of whether or not to register a Caveat you should obtain legal advice from your Solicitor or contact us and speak to one of our Property Lawyers.

Once any Cooling Off Period has lapsed, we will order appropriate searches and enquiries on your behalf. The purpose of these searches and enquiries is to:

• identify amounts owing by the Seller in relation to the property on account of Council Rates, Water Rates, Land Tax and Strata Levies (if applicable) so that appropriate adjustments can be made on settlement,
• identify whether the property is adversely affected by a proposal of any Government authority, for example:
  • a proposal by the Roads & Traffic Authority to acquire part of the land for road widening purposes, or
  • a proposal by a relevant electrical authority to acquire an easement over the land for high voltage transmission wires, and
• to identify whether the structures on the land have been approved by Council and/or the Mines Subsidence Board (where applicable).

Whilst not all searches and enquiries that are available are necessary for all properties it is important to carefully consider and obtain those searches and enquiries that are relevant to the property you are buying.

The existence of a proposal which adversely affects a property may mean that the real value of the property is substantially less than the price that you have agreed to pay.

You should, therefore, be wary of choosing a Solicitor or Conveyancer based on cost alone especially where the lesser cost will mean that not all appropriate searches and enquiries will be ordered for the property. If inadequate investigations are undertaken in relation to a property you may be exposed to considerable risk or suffer substantial loss if the property is adversely affected by something that would have otherwise been discoverable prior to settlement.

Significantly, a Buyer is entitled to raise objections and/or claim compensation from a Seller if an adverse affectation is discovered prior to settlement. If such an objection is not satisfied or claim for compensation conceded, the Buyer will typically be entitled to rescind the Contract. However, a Buyer has no right to compensation against a Seller in relation to any adverse affectations discovered after the Contract has been settled.

Following exchange of Contracts it is the usual practice for a Buyer’s Solicitors to serve Requisitions on the Seller’s Solicitors, though it is becoming more common that a Vendor will insist on a standard form of Requisitions by including it in the Contract. These Requisitions usually comprise:

• a list of formal questions about the title to the property and the structures on the land, and
• a series of reminders of the Seller’s obligations and Buyer’s requirements for completing the Contract.

Generally speaking, the purpose of making Requisitions is for the Buyer to investigate the title of the property so that if there is any defect in the Seller’s title the Buyer can request that such defect be cured prior to completion. A Seller who fails to respond to a proper requisition will not be able to terminate a Contract if the Buyer refuses to settle. If the Seller provides a misleading or incorrect reply to a requisition the Buyer may be entitled to claim compensation from the Seller after settlement.

Some examples of common Requisitions include the following:

• When and where may the title documents be inspected?
• On completion the Seller should be registered as the sole proprietor(s) of the property free from all encumbrances. Any Mortgage or Caveat over the property must be discharged or withdrawn or an executed discharge or withdrawal handed over on settlement.
• Vacant possession of the property must be given on settlement unless the Contract provides otherwise.
• Is there any matter that could justify the making of an upgrading or demolition order in respect of any building or structure?
• Has any residential building work been carried out in the last seven (7) years? If so, ….
• If there is a swimming pool, has it been approved under the Local Government Act 1993, please provide details.
• Is the Seller aware of any dispute regarding the boundary or dividing fences or party walls?
• Is the Seller aware of any rights, licences, easements, covenants or restrictions as to use other than those disclosed in the Contract?

The Transfer is the document that results in the Torrens Title Register being altered to reflect that land under the Torrens Title system has been transferred from one person to another.

A Transfer is a prescribed form that is prepared by a Buyer’s representative by completing the particulars of the title of the property and names of the parties to the Contract. The Transfer must be signed by or on behalf of the parties and endorsed to the effect that Transfer Duty has been paid or that the Contract is exempt from Transfer Duty. A Transfer will only be accepted by NSW Land Registry Services if it has been duly signed by or on behalf of the parties and endorsed by or on behalf of Revenue NSW (i.e. stamped).

As a result of the implementation of electronic conveyancing, the Transfer is now normally created and signed electronically by the Buyer’s and Seller’s respective representatives via an Electronic Lodgement Network (see Electronic Conveyancing chapter).

In the ordinary course of a paper transaction (if applicable), the Transfer is usually signed on behalf of the Buyer by their representative.

All Contracts for the Sale of Land must be endorsed or stamped to the effect that the Contract is either exempt from Transfer Duty or that Transfer Duty has been paid in relation to the Contract. You should have obtained advice in relation to the amount of Transfer Duty payable, if any, at an early stage of the purchase to ensure that you have sufficient monies to complete the purchase.

Unless an exemption or concession from Transfer Duty is available (see page Ways to Buy chapter or visit our website for details of Transfer Duty exemptions and concessions currently available and eligibility criteria), the Transfer Duty payable in respect of the purchase of land depends on the value of the property. Therefore, if you are buying a property at a price under market value, for example from a related person, the Transfer Duty will still be payable based on the market value irrespective of the price.

You can use the table below to calculate the Transfer Duty payable on purchases of land in New South Wales:

Note: this table is current as at 1 July 2022. Rates of Transfer Duty may change in future. You should obtain advice in relation to Transfer Duty payable before signing a Contract or bidding at an auction.

You may also be subject to surcharge purchaser duty if you are classified as a ‘foreign person’ within the meaning of the Foreign Acquisitions and Takeovers Act 1975 (Cth) and Section 104J of the Duties Act 1997 (NSW). As at 1 July 2022, an eight (8) per cent surcharge is payable on the value of property purchased by a foreign person.

Transfer Duty is payable within three (3) months of the date of exchange of a Contract for the Sale of Land. However, in most cases Transfer Duty will need to be paid within that period and usually by the settlement date at the latest. This is because all financial institutions advancing monies to fund a purchase price will insist on receiving a stamped Transfer on settlement.

Before stamping the Contract and Transfer, you will need to complete a Purchaser Declaration Form and provide supporting documents so it can be determined if surcharge purchaser duty will be payable on your purchase. We highly recommend you seek advice on whether you may be liable for surcharge purchaser duty and/or surcharge land tax with your Solicitor or Accountant prior to exchange of Contracts.

As most Conveyancing transactions are conducted electronically, the Transfer and other associated documents such as a Discharge of Mortgage and Mortgage are prepared in the electronic workspace, and are lodged automatically with NSW Land Registry Services once the scheduled time for settlement arrives.

If there will be a paper settlement, and unless you intend to use money being advanced by a Lender to pay Transfer Duty on the Contract, your Solicitor will sign the Transfer on your behalf and give it to the Seller’s Solicitor for signing by the Seller. The Transfer signed by the Seller is then returned on settlement simultaneously with payment of the balance of the purchase price.

Where it is proposed that Transfer Duty be paid on settlement, it is customary to request that the Transfer be returned, once signed by the Seller, to the Buyer’s Solicitor to hold on loan strictly for the purpose of attending to stamping only and otherwise returnable to the Seller on demand.

As well as Transfer Duty requirements, there are also other tax obligations which need to be considered.

Land Tax Clearance Certificate

Land tax is an annual levy paid at the end of the year to Revenue NSW, which is calculated on the combined taxable value of all land you own that is above the land tax threshold ($822,000.00 as of 1 January 2022). Generally, land tax is not payable on your principal place of residence, any land you own below the land tax threshold, or on your farm (‘primary production land’).

The Seller must provide you with a ‘Clearance Certificate’, either by including it in the Contract for Sale of Land or prior to settlement, which will indicate if there is any land tax payable on the property you are purchasing. The Certificate should not be less than three (3) months old.

If land tax is payable, your Contract may provide for this to be adjusted as part of the usual settlement adjustments (see Step 23 below). If land tax is not adjustable under your Contract, the Seller will be required to pay any land tax owing prior to or on settlement and provide you with another Clearance Certificate which shows that no land tax is payable for that calendar year.

Foreign Resident Capital Gains Withholding & Clearance Certificate

Foreign resident capital gains withholding legislation imposes an obligation on Purchasers to withhold up to 12.5% of the purchase price on settlement and pay it directly to the ATO when:

1. the property has a market value of $750,000.00 or more, and
2. a Seller or one of the Sellers is a foreign resident.

If applicable, the Seller is required to provide you with a Clearance Certificate at least five (5) days before settlement which will confirm whether you are obligated to make a withholding payment.

If you are obligated to make a withholding payment, you need to complete an online form called the ‘Foreign resident capital gains withholding Purchaser Payment Notification form’, or alternatively, you can authorise your Solicitor to complete this form on your behalf. Once completed, you will obtain a Payment Reference Number (PRN) and payment slip, and payment of the withholding amount needs to be made prior to or on settlement.

GST Residential Withholding

As of 1 July 2018, a Purchaser is obligated to pay any applicable GST directly to the ATO on settlement, rather than to the Seller, in relation to the purchase of any ‘new residential premises’ or land that could be used to build new residential property. ‘New residential premises’ includes:

• premises that have never been previously sold as residential premises,
• premises that have undergone substantial renovations, and
• new buildings built to replace demolished buildings on the same land.

If GST is applicable to your purchase, it should be noted on the 2nd page of the Contract, and the Seller will also provide a written notice before settlement to advise whether you have a withholding obligation.

If you do have a withholding obligation, you will be required to complete two (2) forms through the ATO website, or alternatively, you can authorise your Solicitor to complete these forms on your behalf:

1. ‘Form one: GST property settlement withholding notification’ – this lets the ATO know that you have a withholding obligation, and needs to be completed after exchange but prior to settlement. Upon completion of the form, you will obtain a Lodgement Reference Number (LRN) and Payment Reference Number (PRN) which are required to lodge the second form and make your payment on settlement.
2. ‘Form two: GST property settlement date confirmation’ – this confirms the settlement date with the ATO, and in a standard transaction, needs to be completed within two (2) business days of settlement, on the day of settlement, or one (1) business day after settlement.

If you do not comply with your withholding obligations, you can incur administrative penalties up to $21,000.00.

During the week prior to the settlement date we will prepare a Settlement Adjustment Sheet. This is a table setting out the balance of the purchase price payable on settlement and adjustments to be made between the Buyer and Seller in relation to Council rates, water rates, water usage charges and where applicable, land tax, strata levies and rent.

Risk of damage to the property will pass to the Buyer on the earlier of the settlement date and the date on which the Buyer takes possession of the property (for example, where the Buyer moves into the property prior to settlement with the consent of the Seller). You should obtain appropriate building, contents and public liability insurance in relation to the property prior to risk in the property passing to you.

If you are borrowing monies to fund the purchase price your Lender will usually insist on being provided with a Certificate of Currency in relation to building insurance prior to settlement. This condition is typically satisfied by the Buyer providing a Certificate of Currency to us to pass on to the Lender’s Solicitor at the same time as cheque directions are provided to the Lender.

Once the Settlement Adjustment Sheet has been approved by the Seller’s Solicitor, the Seller’s Solicitor will provide us with directions as to how the amount payable on settlement is to be paid for both electronic and paper settlements. We will then provide you with a copy of the approved Settlement Adjustment Sheet and for what funds need to be made available (if any) for settlement. Alternatively, we can accept payment of monies required for settlement by direct transfer to our Trust Account on the day prior to settlement so that we are then in a position to pay the necessary funds for settlement on your behalf.

Most Lenders require directions in relation to how the monies to be advanced are to be paid at least a few days prior to the settlement date. These directions depend on the directions from the Seller and the payout figure in relation to the Seller’s Mortgage over the property, if any. If a paper settlement, we will also provide a written cheque direction to your Lender, if any, in relation to how the loan amount is to be paid on settlement on your behalf.

As most transactions are now occur electronically, preparation for settlement will involve making sure all necessary funds are available (either from the Buyer and/or their Lender), all proper authorities have been obtained, and directions have been entered into the electronic workspace to directs funds where they need to go.

If a paper transaction and settlement is not proposed to take place within the reasonable locality of your Solicitor they will usually engage a Settlement Agent in the relevant locality to attend the settlement on your behalf. In this case, detailed instructions will typically be prepared for the Settlement Agent to follow at the settlement. Like all professional service providers, Settlement Agents (who are usually other Legal or Conveyancing firms) owe a duty of care when attending the settlement.

You should carry out a final inspection of the property on the morning of the settlement day. You will need to pre-arrange this inspection with the Real Estate Agent. The purpose of the inspection is primarily to ensure that:

• except where the property is being sold subject to an existing Residential Tenancy Agreements, that all occupants have vacated the property and removed all their possessions that were not marked as inclusions in the Contract, and
• no damage has been caused to the property since the Contract date in excess of fair wear and tear.

You should contact your Solicitor immediately following the completion of your inspection to provide your instructions to either proceed with settlement or to delay settlement (for example, because the property has not been fully vacated or unacceptable damage has occurred to the property since the contract date).

On the day of settlement your Solicitor should obtain a Final Search of the Torrens Title Register in relation to the property. The purpose of the Final Search is to ensure that there are no unexpected or additional third party interests recorded in relation to the property which are not to be discharged or withdrawn on settlement. Such interests include:

• a second or third Mortgage being registered in relation to the property,
• a creditor of the Seller with an interest in the land registering a Caveat over the property as security for its rights, or
• a Judgment Creditor of the Seller obtaining a Writ for the sale of the property and registering that Writ against the title to the property.

If any unexpected third party interests are found in a Final Search then your Solicitor should contact you immediately and it is likely that settlement would be delayed unless urgent arrangements can be made to have the interest withdrawn prior to settlement being affected.

In an electronic transaction, settlement occurs when the designated date and time arrives, all parties who have an interest in the transaction have signed all relevant electronic documents, and the financial settlement schedule is balanced and funds authorised to be transferred. Typically, the parties involved will be the Solicitors for the Buyer and Seller, the Buyer’s incoming Mortgagee and the Seller’s discharging Mortgagee.

The electronic workspace becomes ‘locked’ so nobody can make changes to the documents or financial settlement schedule. Upon locking, funds will be moved from their source accounts and reserved with the Reserve Bank of Australia. This step usually takes about 20 minutes, though can be longer depending on where the source accounts are held. The documents are then automatically sent to NSW Land Registry Services, which usually takes less than 10 minutes. The status of the electronic workspace will move to ‘Settled’ after all funds have been accounted for and reserved, and the funds are then electronically disbursed according to the directions given in the financial settlement schedule. The electronic workspace will hit ‘Completed’ status after the documents have been successfully registered, which can take up to 72 hours depending on the documents being lodged (e.g. if a Withdrawal of Caveat is lodged with settlement).

In the event settlement does not occur at the designated time, the workspace will automatically arrange for settlement to occur every half hour thereafter until settlement does occur.

In a paper settlement, all the parties who have an interest in the transaction meet to exchange relevant documents and monies necessary to perform the parties’ respective obligations under the Contract. Again, settlement is typically attended by representatives of the Buyer, Seller, Buyer’s financier (incoming Mortgagee) and the Seller’s financier (discharging Mortgagee).

Settlement typically consists of the following events occurring simultaneously:

• the discharging Mortgagee providing a signed Discharge of Mortgage corresponding to the Mortgage registered against the title to the property,
• the Seller handing over a signed and stamped Transfer in relation to the property,
• the incoming Mortgagee providing cheques as directed by the Seller equal to the loan amount (less Lenders’ fees),
• the Buyer’s Solicitors handing over cheques for any difference between the amount payable to the Seller and the amount advanced by the incoming Mortgagee,
• the Buyer’s Solicitor handing over an Authority addressed to the Agent authorising them to release the Deposit to the Seller (‘the Order on the Agent’), and
• the incoming Mortgagee receiving the discharge of Mortgage and signed and stamped Transfer.

If all parties do not receive what they require for the settlement to complete then all cheques or documents will be returned to the party who had bought them to the settlement until a new time or date for settlement can be arranged.

As soon as practicable after settlement the incoming Mortgagee, or the Buyer’s Solicitor (where there is no finance required), will attend to registration of the Transfer and any Discharge of Mortgage and incoming Mortgage.

Once settlement has been affected the Seller’s Solicitor will email the Order on the Agent to the Seller’s Agent. This act serves as confirmation to the Agent that the Contract has been completed. Upon receipt of the Order on the Agent the Real Estate Agent will make the keys to the property available to you for collection.

Therefore, once your Solicitor has confirmed that settlement has been effected, you should contact the Real Estate Agent to enquire as to when you will be able to collect the keys.

Unless you have previously arranged to have early possession or prior access to the property you will not be able to move any furniture into the property until after settlement.

Getting the timing right and arranging to move furniture can be tricky where you have a tight time frame to move from your existing property to your new property. This is because often the settlement date would not be confirmed until about seven (7) days prior and will still be subject to change on short notice.

It is preferable to plan to move furniture in the days following settlement so you do not waste your time and money in the event that settlement does not take place on the scheduled settlement date. If, however, your circumstances do require that you move on a particular date then you should contact your Solicitor and endeavour to arrange early access to the property.

This notification of relevant authorities of your new ownership of a property is not an actual step and occurs automatically following registration of the Transfer.

In an electronic settlement, a Notice of Sale is prepared and lodged with the Transfer with NSW Land Registry Services. Once the Transfer is registered, NSW Land Registry Services will use the information contained in the eNOS to notify the local Council, Water Supply Authority and relevant Rating Authorities of changes in ownership of properties.

It may, however, take around six (6) weeks for the eNOS to be received and processed by the relevant local Council, Water Supply Authority and Rating Authorities. This should, therefore, be kept in mind if you receive reminder notices for overdue rates instalments that you were not previously aware. If this occurs it is likely because the settlement date occurred close to the end of a rating period and/or the Settlement Adjustment Sheet provided for a reduction of the purchase price for rates unpaid by the Seller.

If the Contract is not completed on the settlement date either party may, provided that they are ready, willing and able to complete their obligations under the Contract, issue a Notice to Complete. The most common reasons why a Contract would not complete on the settlement date would be:

• the Buyer’s Financier requires more time to arrange for the necessary monies to be available,
• the Buyer has been unable to obtain the necessary finance in time and/or is still endeavouring to arrange finance,
• the Lender has not made arrangements within sufficient time with the discharging Mortgagee to a provide a Discharge of Mortgage on settlement,
• the Seller’s discharging Mortgagee has refused to discharge the Mortgage due to the proceeds of sale not being sufficient to pay out a loan amount secured by the property,
• the Buyer has identified damage to the property at the final inspection that is in access of fair wear and tear and wishes to claim compensation, or
• the Seller or their tenants has not vacated the property.

A Notice to Complete must allow the other party a reasonable period (usually 14 days) to complete the Contract on a new settlement date.

It is common for Special Conditions to be included in the Contract that will require a Buyer to pay an amount on account of the Seller’s legal costs if the Seller is required to issue a Notice to Complete.

Warning: an invalid Notice to Complete may result in you breaching or repudiating the Contract. If you have decided to use a Conveyancer it is recommended that you seek legal advice from a Solicitor prior to serving a Notice to Complete. See also Why Use a Solicitor and Not a Conveyancer chapter.

If a Contract is not completed by the date nominated in a Notice to Complete then the party who served the Notice to Complete may terminate the Contract provided that they are still ready, willing and able to complete the Contract themselves.

Alternatively, the party may instead choose to apply to the Court for an order for specific performance against the other party requiring them to perform their obligations under the Contract.

Normally, where a Notice to Complete has been issued by a Seller and the Buyer fails to complete the purchase within the allowed time, the Seller will elect to terminate the Contract. Where the Contract is terminated the deposit will be forfeited to the Seller on termination. In addition, if the Seller, provided that they have done all things reasonably necessary to resell the property at market value, can only then sell the property at a price that is less than the original sale price (less the forfeited deposit), the Seller will be entitled to compensation from the Buyer for the difference between the original sale price (less the forfeited deposit) and the eventual resale price.

Where a Notice to Complete has been issued by a Buyer and the Seller has not completed the Contract by the nominated date then in most cases the Buyer will either:

• Terminate the Contract and purchase another property, or
• Apply to the Court for an order for specific performance against the Seller requiring them to vacate the property and transfer the Title to the Buyer in consideration for the purchase price.

Warning: an invalid Notice of Termination may result in you breaching or repudiating a Contract. If you have decided to use a Conveyancer it is recommended that you seek legal advice from a Solicitor prior to serving a Notice to Complete.

Torrens Title is the name of a system of recording ownership of land in New South Wales created under the Real Property Act 1900. Most land in New South Wales has a Torrens Title. Torrens Title land is the least expensive title to investigate and transfer. The person registered as the owner of Torrens Title land has an indefeasible title to the land in the absence of fraud or error in the register. Prior to 11 October 2021, NSW Land Registry Services used to issue one (1) Certificate of Title for each lot registered under the Torrens system. NSWLRS have now abolished the production of paper Certificates of Title and any title information relevant to a lot is kept and found on the Torrens Title Register, which is maintained and stored by NSWLRS and the Office of the Registrar General.

Old System Title relates to the Title to land that has not been brought under the Torrens system. Title to land under the old system is constituted by the possession of a chain of documents beginning with the Conveyance or other document by which the Seller became the owner and all prior documents relating to the Title going back at least 30 years to what is referred to as a “good root of Title”.

Old System Title is only sound if every document in the chain of Title is found to be sound on investigation. When investigating Old System Title each Deed that forms a link in the chain of Title needs to be examined to establish that it was effective for its purpose. The expense of investigating an Old System Title is, therefore, greater than Torrens Title because the thorough investigation of the documents forming part of the chain of Title is often complex and time consuming and typically requires the engagement of third party legal searches to physically investigate the General Register of Deeds relating to the old system dealings maintained at the Land & Property Information Authority in Sydney.

On settlement of a purchase of Old System Title land all original documents forming part of the chain of Title are handed over or sent to the Buyer.

Qualified Title refers to the Title to old system land that has been brought under the Torrens Title System within the last 12 years. A Title certificate under the Torrens Title system exists for qualified Title land, however, the Certificate includes a caution noting that the Title is qualified. This is because NSW Land Registry Services does not investigate the Old System Title before issuing the qualified Title certificate.

Where land is qualified Title it remains necessary to investigate the Title in the same way as it is necessary to investigate Old System Title.

The warning on a Title certificate that land has a qualified Title will lapse upon:

• the first transfer of the land for valuable consideration after six (6) years from when the Title was brought under the Torrens Title system, or
• where ownership has not changed, 12 years has lapsed since the Title was brought under the Torrens Title system.

When Old System land is brought under the Torrens Title system the boundaries of the land are not investigated by NSW Land Registry Services. Therefore, unless an adequate survey was lodged at the time of conversion, the Title certificate in relation to the land it will include a warning that the Title is Limited Title.

The limitation or warning relating to the boundaries will continue to be recorded on Title until such time as a plan of delimitation is lodged with NSW Land Registry Services certified by a registered surveyor to the effect that the boundaries in the plan of delimitation correspond with the lands described in the Old System title documents.

Strata Title is a form of Torrens Title that arises under the Strata Schemes Development Act 2015 (NSW). Strata Title is the most common Title applying to unit or high density developments. Strata Title makes possible the subdivision of the airspace above the surface of the land and the creation of separate titles to a part or parts of a building. The individual owners of units in a strata title development must form an Owners Corporation. Usually the building and any surrounding common areas are common property owned by the Owners Corporation. The Owners Corporation is responsible for the general administration and maintenance of the common property. As such Strata Title owners are typically required to pay strata levies to the Owners Corporation on account of the costs associated with the maintenance, keeping and insurance of the common property.

The Owners Corporation may also make and amend by-laws that the Strata Title owners must abide by. These by-laws can relate to a range of matters including restrictions on creating noise, parking of vehicles, damage to common property, keeping of animals and should be carefully reviewed by any prospective Buyer of a Strata Title property.

Community Title arises where a subdivision of land registered under the Community Land Development Act 2021 (NSW) creates separate Torrens Title lots and a common property for the use and enjoyment of the owners of those Torrens Title lots. On creation of the community plan, an association is established which is responsible for the Community Title land, similar to an Owners Corporation for Strata Title properties. Buyers of Torrens Title lots that form part of a community scheme also share ownership of the common property and facilities and will be required to contribute to the costs associated with the maintenance, keeping an insurance of the common property.

Company Title refers to land that is owned by one entity or a company, where the rights attaching to shares in the company entitles the owners of those shares to reside on one part of the land and to make use of other common areas in common with other company shareholders.

Income protection insurance can provide you with a replacement income stream in the event that you are unable to work for an extended period of time due to an accident or injury. That income stream can be invaluable and can ensure that you are able to continue to afford repayments on your home, car or investments loans and meet day-to-day expenses while off work.

TPD insurance will provide a lump sum payment to cover loans and/or to invest to fund future living expenses in the event that you become permanently incapacitated and unable to earn an income.

Trauma insurance will provide a lump sum usually within 14 days after diagnosis of a serious or terminal condition such as stroke, cancer, heart attack or other specified conditions. Such moneys are ideal for paying out loans, medical expenses and household expenses, or even rehabilitation and renovation costs.

Life insurance will provide a lump sum to the beneficiary of the policy on your death. Life insurance is ideal for ensuring that loans in respect of your family home are paid out on your death and that your family will therefore be entitled to remain in your home without the financial strains of funding Mortgage repayments without your help. Life insurances can also provide funds to invest so that the income of the investment will be a source of income for your family.

The following warranties are implied into every Contract for residential building work in NSW:

1. A warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the Contract to which the works relate.
2. A warranty that all materials supplied by the builder will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the Contract, those materials will be new.
3. A warranty that the work will be done in accordance with, and will comply with, the Home Building Act or any other law.
4. A warranty that the work will be done with due diligence and within the time stipulated in the Contract, or if no time is stipulated, within a reasonable time.
5. A warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling.
6. A warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the builder, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the builder, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the builder’s skill and judgment.

Where residential building works valued at $20,000.00 ($12,000.00 prior to 1 February 2012) or more have been carried out in the six (6) years prior to a sale a Certificate of Home Warranty Insurance must be annexed to the Contact for Sale of Land.

The limitation periods in relation to claims for breach of statutory warranties changed on 1 February 2012.

Generally, in relation to work carried out under a Contract entered into on or after 1 February 2012 the warranty period is

• six (6) years for a breach that results in a major defect in residential building work, or
• two (2) years in any other case.

The warranty period starts on the date of completion of the work to which it relates (but this does not prevent proceedings from being commenced before completion of the work).

If the works to which the claim relates was not completed, the warranty period commences on:

• the date the Contract was terminated or,
• if the Contract was not terminated, the date on which work ceased under the Contract, or
• if the Contract is not terminated and work under the Contract did not commence, the date of the Contract.

You should speak to one of our Building & Construction Lawyers if you require advice in relation to a claim against a builder or owner-builder for breach of a statutory warranty or otherwise.