Property and Development Lawyers

Complete Conveyancing Guide - Part 2

June 15, 2016 Joseph Taouk

Following on from our previous article, where we explained some of the preliminary steps involved in your property search, we continue with a more detailed assessment regarding some typical considerations involved in reviewing a contract for the purchase of property and other important considerations and investigations that need to be made in the conveyancing process when buying property.


The Contract


You may recall in our previous article, we discussed that properties bought and sold in NSW are done so under a written contract.  That contract is usually prepared by the solicitor for the person selling the property (the vendor).  That contract will contain a great deal of important information relating to the property and the sale.

There are some relevant things to look out for in any such contract and ideally, you will have a solicitor review it for you and discuss it with you in some detail, to ensure you completely understand its contents.

While we cannot go through every aspect of the contract, as they do vary depending on the requirements of an individual seller, the type of property and other variables, but generally, some typical and more important clauses that need to be considered will include:

Property address - often overlooked and not as trivial as it sounds, confirmation that the correct address and title reference is included in the contract is usually the first step.  You hardly want to be buying a different property than the one you inspected and made an offer on.

Inclusions - the contract will identify what is included with the sale.  Will it include any car spaces or lock-up storage spaces?  Will the blinds currently fixed in the property and the light fittings installed be included in the sale? Will the sale include the TV antenna, any pool equipment (where relevant) or any other furnishings observed when inspecting the property?  You will need to ensure that what you understood was being included is confirmed in the contract.

Price - the contract will contain the price and deposit required to be paid.  Generally, the contract will identify that 10% of the purchase price is to be paid as a deposit.  Often though, this can be negotiated and many sellers will accept only 5% be paid instead.

Alternatively, a Deposit Bond or Bank Guarantee can be arranged. This is effectively an insurance bond or guarantee that covers the seller in case you do not proceed with the purchase.

Where a less than 10% deposit is accepted by the seller, it is common for the contract to include a clause which says that: “the deposit is 10% which is payable instalments of 5% on exchange and 5% on settlement”; and if you do not proceed to settlement, the seller will be entitled to recover the remaining 5% from you.

Release of Deposit - this is the subject of a separate blog post, which you can find here, but for ease of reference, we have reiterated the relevant discussion below.

Usually, when a deposit is paid under a Contract for Sale of Land, the deposit is held by either the seller’s agent or solicitor in their trust account.  Where the deposit is held by the agent, the deposit is usually invested in an interest bearing account, with any interest earned shared equally between the parties.

It is not uncommon, when purchasing a property for the seller to require the release of your deposit to them prior to settlement. In most cases the purpose of the release is to assist them in paying a deposit or stamp duty on a purchase that they have made.

From a seller’s perspective, this is a practical and necessary request.  Purchaser’s may however, be reluctant to release their deposit as there is further assurance in their money being held in trust in the event the matter does not proceed to settlement for any reason.

The Contract for Sale of Land does contain provisions which provide that should the Purchaser release all or part of a deposit paid prior to completion, then the seller grants a charge to the Purchase over the land, effectively securing the monies released. Such a charge may give rise to a right to lodge a caveat over the land as further security for the deposit monies released.  Such a charge and caveat however, would be subject to existing charges (including any mortgages registered on title).

So, while a Purchaser may have some comfort in knowing that some security has been granted for the monies released, their rights of recovery may be limited by the rights of those who have previously registered any charge (including mortgages) on the title. Practically, this means that there may simply be no money remaining for the Purchaser after all other debts are satisfied including to any mortgagees.

The other inherent difficulty is that while a caveat may be lodge against the property, this does not in and of itself compel the seller to repay the deposit to the Purchaser. In fact, the Purchaser will in most cased need to commence proceedings against the seller to seek to recover the deposit monies. It goes without saying that this can be an expensive and protracted exercise.

Ultimately, on a commercial level, sometimes it is simply critical that a deposit is released early so that a seller can purchase another property before selling his/her own, but perhaps to limit any purchaser’s risk, make the deposit available only at settlement, or alternatively undertake due diligence to determine what other charges may exist on title to assess whether a purchaser is likely to be refunded their money in the event of default.

Renovations - it is important to discover what, if any renovations may have been undertaken at the property and when.  Usually, there may be some applicable insurances that need to be attached to a contract, or else, certain warnings need to be displayed advising you that the property was built under an owner builder permit.  This may influence any decision you make regarding the property.

Encroachments - Normally, a seller will need to inform the purchaser of any relevant factors affecting the property.  One such thing may be where the property encroaches or is encroached by another property.  There should be a survey report or other information attached to the contract in such an example, clearly disclosing the existence of an encroachment.

Dealings - a dealing is something that is on the title of that property, like a mortgage, an easement or covenant or even caveat.  These things are registered on the title of that property and affect the land your are purchasing.  Careful assessment of any such dealings should be made to determine how and if they affect your intended use of that property.

Council Certificate - there will be attached to any contract a certificate known as a Section 149 Certificate.  This will outline many things, such as the permitted use of the property and surrounding properties, whether it is affected by any bush fire or flood controls and a host of other important considerations which should always be discussed with you.

These are just some examples of things to look out for and consider in your review of any contract.  Again, your solicitor will assess and consider all relevant aspects of the contract and provide you with meaningful and clear advice, but just in case, at least ensure the above are considered.

Enquiries with Local Council

It is best practice to make enquiries with the Local Council in relation to the property you are interested in purchasing.  The nature of those enquiries might be about, for example:

(a)   if there is a vacant block of land next to or near the property, whether there are any applications or approvals for construction on that land including of apartments, a large or multi-level house which will allow your neighbour to look into your house or back-yard;

(b)   any zoning or building restrictions in relation to the property you are buying;

(c)   any plans for the development of a shopping centre in the area;

(d)   whether the property is zoned for your intended use; and

(e)   whether any works or buildings on the land were constructed or done without council approval.

Such important queries and the answers to those queries may make the difference between purchasing the property or passing.  It is an incredibly useful and important exercise.


Have You  Chosen a Solicitor?

Often times the primary choice in choosing a solicitor (or conveyancer) is price. To some extent this consideration is important. However, it is also very important that you choose a solicitor/conveyancer based on the quality of service and advice that is offered and level of experience and expertise.

You want to make sure that no corners are being cut by solicitors/conveyancers to make up for their competitive prices. While you might save one or two hundred dollars on your conveyancing fees by choosing the cheaper option, these types of shortcuts can often end up causing mistakes that cost you thousands (even many many thousands). After all, the investment you are making in the property is generally many hundreds of thousands of dollars and such an investment should be protected.  Choose wisely!

Refer to our previous article regarding the differences between a solicitor and conveyancer.


Once your solicitor has been engaged and you have found the property which you intend to purchase, you will need to provide them with the following instructions (among other things):

  • what is the address of the property?
  • In which name/s will the property be purchased?
  • If the property is being purchased in more than one (1) name, will the purchasers own the property as joint tenants or tenants in common?
  • What is the agreed purchase price?
  • What deposit is to be paid upon exchange?
  • Will you be waiving your cooling off rights?
  • Do you agree to adjust on land tax?
  • What is your intended use of the property?
  • What inclusions form part of the property?
  • Are there any items excluded from the property?
  • Have you carried out a building report, pest inspections, strata report?
  • Do you have loan approval from your lender?
  • Were there any specific issues which were agreed between you and the seller or has the seller said anything that you have relied upon which your solicitor should know about for inclusion in the contract?
  • If the property is tenanted, do you want the tenant to remain at the property after settlement or do you want the property to be vacant?
  • Do you want to register a caveat on title after exchange to protect your interest in the property?
  • Are you a first home owner?

Your solicitor will negotiate any necessary changes to the contract and attend to exchange of contracts if this has not been done by the agent.

Always notify your solicitor if you are planning to be away during the settlement period at any stage.

Stay tuned to our next article in this series where the discussion continues about the conveyancing process and how you can always stay one step ahead.




We Are Different.

We have moved away from the infamous billable hour as much as professionally possible. We provide competitive but flexible pricing, and we focus on building relationships with our clients, not merely treating them as transactions.

Recent Posts