So far we have discussed the preliminary steps and considerations you need to make when deciding to sell your property, as well as some of the more technical steps and concepts involved in the conveyancing process.
Once you have selected an agent, spoken with your solicitor, dealt with any issues that need to be dealt with and listed the property for sale, the next thing is to get an offer from an interested buyer.
So You Have Found Your Purchaser
Once a purchaser is found, either:
- Your solicitor can exchange contracts based on the Sales Advice provided by the agent; OR
- Your Agent can exchange contracts: you and the purchaser sign the contract with the agent upon acceptance of the offer and the purchaser pays the agreed deposit.
The property remains on the market until the exchange of contracts. We previously discussed some of this terminology here
But how is a purchaser “found”? Any number of things can happen:
- The agent may have a healthy database of people looking to purchase the property and relevant introductions are made;
- There may be a private negotiation between parties who have come across the property on a website or other directory;
- It could go all the way to auction, where the highest bidder wins.
Once contracts are exchanged, the next step is for settlement to occur. When this occurs depends on what has been agreed between the parties, but it is usually a period of six weeks from exchange.
Various calculations and other tasks are carried out in anticipation of settlement. One most frequently asked question in relation to adjustments and payments is:
Who Pays the Rates?
Land, water and council rates are usually adjusted at settlement.
This means that you pay the rates from the beginning of the rate period up to settlement and the purchaser pays the rates from settlement up to the end of the rates period.
For example, assume you are settling on 27 February. For water rates for the quarter from 1 January to 31 March, you would be liable for the rates from 1 January to 27 February and the purchaser would be liable for the rates from 28 February to 31 March. Your solicitor prepares these adjustments for you.
So What Happens Before Settlement?
Make sure that:
- You do not cancel your house insurance policy before settlement – the risk of damage to the property remains with you until settlement;
- You have complied with all your obligations under the contract including any specific obligations about removing or repairing certain things at the property;
- You have removed all rubbish and debris from the property;
- You have made arrangements to vacate the property at least one (1) day before settlement to ensure a smooth settlement – don’t forget to arrange a removalist if you need one;
- You have handed your keys to the agent in readiness for settlement;
- You have reviewed the adjustment settlement sheet prepared on your behalf by your solicitor and given instructions as to how you would like the settlement monies drawn;
- You have disconnected your phone line, any TV cable service and gas service.
How Is the Agent’s Commission Paid?
Usually the agent deducts their commission from the deposit held by the agent once settlement takes place. Where the deposit is released to you before settlement, the agent is still entitled to the commission and it is usual for part of the settlement proceeds to be drawn in favour of the agent for the commission.
What Happens After Settlement?
After settlement, you will receive any cheques for surplus monies drawn as directed by you (after your bank and any other third parties have been paid). This would have been discussed with you beforehand and your instructions will be essential before any such distribution takes place.
You should also receive a letter from your solicitor confirming various issues and providing you with a copy of the Settlement Adjustment Sheet and Cheque Directions for your tax records.
We hope you have found this guide informative and that it has assisted you in organising yourself for an upcoming sale or otherwise managed your expectations and given you clarity about the conveyancing process, so that it is not so overwhelming as can easily be the case.
Getting Legal Advice for Your Property Conveyance in Sydney
It is important for buyers to seek out timely and meaningful advice as to the various terms, risks and pitfalls associated with purchasing off-the-plan. Visit our comprehensive Conveyancing Price Guide For Sydney to find out more information