Essential Legal Know-How for Property Sellers and Buyers

Purchasing a property is often the biggest financial decision you will make. Understanding some of the legal aspects is a paramount concern for both sellers and buyers. It’s crucial to decipher the mazes of legal requirements that govern your actions, be it dealing with property contracts, ensuring lawful inspections and disclosures, or enforcing the legalities surrounding the deal’s closure. While there are minor changes in each State and Territory the mechanics of purchasing property are fundamentally similar.

The Sales Contract and Its Conditions

The most important document will be the sales contract; these contracts are often mandated to have essential terms and conditions. It is strongly recommended that you use the ‘standard’ form within your state; each conveyancer/solicitor will be familiar with these terms and conditions. Even if you are presented with a standard form contract, there may still be special conditions attached to the back of the contract. It is very important that you get legal advice before signing the contract so that you understand what the contract says and whether the contract does accurately reflect the deal that you have negotiated.

Most contracts will give the purchaser the option to make the contract subject to a number of conditions, namely:

• subject to finance;
• subject to building and pest;
• subject to inspection of body corporate records; and
• subject to sale of another property, just to name a few.

There may be special conditions also inserted into the contract by the Seller.

Most standard form contracts will set out the names of the parties, the property address, the period of time for settlement (e.g. 30 days or 45 days), the name of the agent, the deposit to be paid etc in the front schedule. The following pages will set out the detailed terms and conditions that dictate the terms of the deal.

Engaging a Conveyancer and Carrying Out Searches

If you are the purchaser, it is important that you contact a solicitor/conveyancer swiftly upon signing the contract (ideally before signing) as time starts ticking from the time of signature. If you are the Seller, you will also need a conveyancer/solicitor to act on your behalf.

If you are purchasing then your solicitor/conveyancer will likely give you a list of searches that can be carried out on the property; these searches may include title search, local council searches, roads and transport searches and building records searches. Most of these searches will come at a cost and it is important that you speak to your conveyancer/solicitor about the searches that are to be carried out.

Inspections, Finance and Going Unconditional

If the contract has been made ‘subject to’ building and pest or finance then the purchaser will need to arrange for a building inspector to carry out their inspection and also arrange for finance from a financial institution. It is important that a qualified and experienced building inspector be engaged to carry out the inspection so that any issues with the property can be highlighted. If the purchaser is happy with the results of the searches and obtains finance then the contract will likely go ‘unconditional’ which means that the transaction is going to proceed to settlement.

Settlement and Taking Possession

Most settlements in Australia are now completed electronically; the banks and both the seller and purchaser’s solicitors correspond on a separate platform that deals with stamp duty and the purchase monies. It is important to note that there may be other factors such as land tax, stamp duty payable by the purchaser and also adjustments to local council rates and water. This means that the final amount payable at settlement may be slightly different from what is stated on the contract; this is to be expected in a complex transaction.

Once settlement has been completed, the agent will be instructed to release the keys to the purchaser and the purchaser will then take possession of the property. The importance of getting legal advice for a property transaction cannot be understated. This is not a transaction you want to do yourself and it is not a transaction where you should be shopping solely on price; you need a solicitor who you feel comfortable with and who has experience in the area of property transactions.