Buying or selling a residential or commercial property is a big decision and a significant matter for most people. Badgery & Rafferty offers quality property law and conveyancing services in Canberra delivered by a team of experienced professionals.
Buying and selling residential property
Conveyancing involves the transfer of real estate ownership from a seller to a buyer. Entering a contract to buy or sell residential property creates binding legal obligations so it is important to ensure contracts are correctly prepared and all due diligence is carried out before proceeding with the transaction. Small mistakes or oversights can have significant financial repercussions.
Transferring a property can also trigger financial considerations such as capital gains tax, land tax and transfer duty. These matters should be discussed with an experienced conveyancing and property lawyer.
The Civil Law (Sale of Residential Property) Act 2003 sets out the standard rules and practices that apply to residential conveyancing transactions in the ACT. Vendors must have a draft contract containing certain required documents available for prospective purchasers of residential property. This helps buyers make an informed decision regarding the suitability of the property. Required documents generally include a copy of the certificate of title and any encumbrances on the title; council planning and information certificate; asbestos assessment report; a copy of the deposited plan; drainage plan; energy efficiency rating statement; building and compliance inspection report and pest inspection report. If you are selling, your lawyer will confirm the relevant documents required in your circumstances.
Exchange of contracts
Once a buyer is found, a real estate agent usually provides relevant details to the seller’s legal representative. The parties are not bound to the transaction until contracts have been signed and exchanged.
The buyer and seller will consult their respective lawyers and discuss the negotiated aspects of the contract before moving forward. The buyer will need to ensure that formal finance approval is in place and that the agreed deposit (usually 10% of the purchase price) is paid.
Subject to any cooling-off rights, contracts are binding at the time they are exchanged. Buyers should have insurance in place when contracts are exchanged.
Settling your residential conveyancing transaction
The period between exchange and settlement of a property is generally between 30 to 90 days, however, the parties may negotiate a longer or shorter period.
Before settlement, a settlement statement is prepared which sets out adjustments for recurrent outgoings for the property and shows the balance of the purchase funds required on completion. This will take into account the deposit paid, allowances for pest and building reports, and any other adjustments.
The buyer has the right to a pre-settlement inspection of the property before the settlement date, usually either the day before or on the morning of settlement. This is arranged through the agent. The seller should ensure that the property is left in a clean and tidy state and in the same condition as at the time of exchange of contracts. All items (unless otherwise noted in the contract) must be removed in time for settlement.
Ownership interests in property
The way in which a legal interest is held in property is an important consideration when dealing with real estate. If you are purchasing property with somebody else, you will need to choose whether your interest is to be held as a joint tenant or tenant in common.
If you own property as a joint tenant, then the arrangement is subject to the rules of survivorship. This means that when one co-owner dies, their share automatically passes to the surviving tenant or tenants. The survivorship provisions prevail irrespective of any terms in a Will that state otherwise.
Property held as tenants in common can specify the individual shares held by each owner (for example 50/50 or 30/70). In such cases a co-owner can transfer or sell his or her share in the property or leave it as he or she wishes to a beneficiary by Will.
Joint tenancies are often considered suitable for spouses and domestic partners however this may not always be the case. It is important to obtain legal advice regarding property co-ownership to prevent unintended outcomes in estate planning, protect interests and minimise potential disputes down the track.
Getting a mortgage
Most people will need a loan from a bank, building society or other entity to finance their property purchase. In such cases, the property will be used as security for the loan by the granting of a mortgage. A mortgage is essentially a ‘statutory charge’ over a property in favour of a lender. The mortgage secures the repayment of the money loaned and is registered on the property’s title. The loan contract gives the lender the right to sell the property in the event of a default.
By signing loan documents and granting a mortgage you are liable for regular payments of principal and interest as well as other charges in accordance with the loan contract. It is important to understand these obligations which usually also include maintaining the property and taking out adequate insurance cover.
We have helped numerous clients navigate routine and complex property matters.
If you need assistance, contact us at or call 02 6245 6000 for expert legal advice.