Step 1: Preparing a contract for sale
When selling your property, before you can offer the property for sale you must have a Contract for Sale of Land prepared. The law says that neither you nor your real estate agent can offer the property for sale unless and until the contract is available to give to any prospective buyer.
By law, the contract has to contain various mandatory disclosure documents. In order to prepare your contract, Craddock Murray Neumann will obtain all of these “prescribed documents” such as a council zoning certificate, a copy of the title and other title documents, strata plans and sewer diagram.
The contract should also disclose any information that could leave it open to a buyer to rescind (cancel) the contract or make a claim against you if that information is omitted. For example:
- You would need to include a boundary identification survey if there are any encroachments by or onto the land.
- You would also need to disclose any unapproved or illegal building works or any dilapidation that could be the subject of a Council upgrading or demolition order.
- In a strata property, you would need to disclose any renovations done without the approval of the owners corporation.
Failure to disclose these things could leave you open to disputes with the purchaser and possibly losing the sale, so we ensure that the contract protects you against such things arising.
If the property is being sold with a tenant in occupation, the sale may be made subject to the existing tenancy and a copy of the lease must then be attached to the contract. This will be the case if the lease is for a fixed term that will still be continuing until after the sale is complete.
We will also prepare a set of contract clauses to better protect your interests as the seller. These clauses are in addition to a standard set of contract provisions used in all transactions.
The contract can be prepared in around 2-5 business days, depending on the turnaround time on the prescribed documents and the speed with which you provide us with information we request from you.
We will then liaise with you and your real estate agent to facilitate the marketing of your property can go ahead.
Step 2: Making a sale
Offer and Acceptance
Your real estate agent will either arrange with you for an auction sale or a sale by “private treaty”, whereby the agent and you will negotiate with individual buyers to secure a sale.
We will assist you by advising on and responding to any requests to negotiate amendments to the contract. This can happen in the run up to an auction as well as during the bargaining process for private treaty sales. Contract amendments agreed to before an auction are addressed by the agent after the fall of the hammer and before contracts are signed and exchanged.
In a private treaty sale, the agent will contact you with any offers from prospective purchasers. Once you have accepted an offer, the agent will issue a sales advice to all parties with details of the agreed price and any agreed additional terms. The contract is binding when contracts are exchanged and a deposit is paid and is then legally binding.
Cooling off
Unless the property is sold by auction, you might be asked by a purchaser to agree to a cooling off period. Under the law, the purchaser is entitled to at least a five (5) business day cooling off period, unless the purchaser agrees to waive it.
If a cooling off period is agreed, the purchaser pays 0.25% of the agreed price when the contract is entered into. If the purchaser does not rescind, the balance of the deposit must be paid before the cooling off period expires. If the purchaser does rescind, the 0.25% cooling off deposit is forfeited to the seller.
With a cooling off period, the purchaser can enter into the contract with you but can then rescind (cancel) it before the cooling off period expires. The cooling off period is to prevent the purchase offer being “gazumped” by another buyer if the purchaser needs time to arrange finance or conduct due diligence before committing unconditionally to the purchase.
For you as the seller, once the contract is entered into under a cooling off period, you are bound by it unless or until the purchaser pulls out. The property cannot be sold to anyone else during the cooling off period.
In busy high-demand markets, sellers most often require buyers to waive their cooling off rights if the purchaser wants to buy their property. If that happens, the purchaser must provide a “cooling off certificate” known as a Section 66W certificate, which is signed by their solicitor or conveyancer.
Deposit
Typically, 10% of the purchase price is the deposit paid on exchange of contracts. Often (particularly in Sydney) a 5% deposit is accepted on exchange of contracts. The deposit is usually held in the agent’s trust account and can be invested in an interest bearing account for longer settlements in which case the interest earned is split 50/50 between the purchaser and vendor after settlement.
If there is no agent involved, the deposit is held in the trust account of Craddock Murray Neumann Lawyers.
It is also possible for the contract to require that some or all of the deposit money must be released to the seller to assist with the payment of a deposit or stamp duty needed to purchase another property.
Step 3: Entering into the contracts
To enter into the contract to sell the property, there is an exchange of identical counterparts of the contract for sale, one signed by you as seller and the other signed by the purchaser. The contract date is the date when this exchange of contracts takes place.
Once the cooling off period has expired, or upon exchange of contracts if the cooling off period is waived, the contract becomes unconditional and binding upon both you as seller and on the purchaser.
Contract period
After the contract has been entered into, there follows a period during which arrangements are made for settlement (e.g. with outgoing and incoming mortgagee banks), the purchaser makes further statutory inquiries about the property and the seller prepares to vacate the property (unless there is a tenant remaining in the property after settlement).
During this period, the purchaser’s representative will also send us a set of “requisitions”, which are questions about the property that must be answered accurately. We will prepare a response to them with your assistance.
The contract period is usually 6 weeks, although this period is also negotiable.
We will liaise with the purchaser’s representative to ensure that arrangements for settlement are made successfully. If you have to pay out a loan or refinance, we will also liaise with your bank to arrange the discharge of mortgage.
Step 4: Settlement
Settlement is the final step in the conveyancing transaction. This is when the title is transferred to the purchaser and the balance of the sale proceeds are paid to you as directed.
PEXA
Settlements generally have to take place using an electronic platform known as PEXA. We must obtain your express authorisation to complete the sale for you on PEXA and we will have to obtain verification of your identity as part of that process.
The electronic conveyancing process involves the use of electronic forms and signatures for property dealings for mortgages, caveats and transfers. It also enables payments to be processed electronically from and to the various participants in the settlement.
Typically settlement takes place in the early afternoon and will take approximately 45 minutes. You do not need to be present at settlement as this is now a secure online process.
Immediately after settlement the Valuer General, local council, water authority (and strata manager if applicable) will be notified of the change of ownership.
We will notify you of completion of settlement and the agent will release the balance of the deposit less their commission to you.
How Craddock Murray Neumann Lawyers can help you
Over the years, the property team at Craddock Murray Neumann has assisted many clients in relation to buying and selling residential, strata, company title, commercial, industrial and rural properties.
For more information on how our property lawyers can help you with buying a property, please contact our team at craddock@craddock.com.au