So you are in the market to buy a new property?  It can be both an exciting and yet daunting prospect, particularly given the many things you will need to consider throughout the process.


What is conveyancing and what is involved?

Put simply, conveyancing is the transfer of ownership of property from one person to another.  That is, when you buy a property, the process involved results in the transfer of ownership of that property to you.


It is easy to become overwhelmed with the conveyancing process; dealing with your bank, obtaining loan approval, dealing with agents, searching for and inspecting properties, speaking with lawyers and then investigating the suitability of that property.

We have developed a multi-part article series that aims to take you through the journey of what to consider and what is involved throughout this process, to help guide you and streamline the process.

The hope is to ease some of that anxiety and uncertainty and provide you with some important considerations and guidance every step of the way to keep you always one step ahead of the game.

So let us start ….

1. Have You Considered How Much You Can Spend / Borrow?

The first thing to do when purchasing a property is to carefully consider and make enquiries about how much you can afford to spend and borrow.

You can do this by talking to a mortgage broker or bank. They will be able to help you set your budget and give you a guide as to how much you can borrow and spend.

It is important to be clear and certain about this from the outset, for a few reasons:

  • Knowing your budget will help narrow in on your property search, rather than wasting your time with properties outside your limitations;
  • It will assist you with any negotiations you might have;
  • It will enable you to obtain the most tailored and suitable advice and recommendations from agents and the like in searching for the most suitable property; and
  • Will provide you with the information you need to manage your expectations and the timing of your decisions.


2. Talking to Agents and Viewing Properties

Once you have determined what amount you can afford to borrow and spend, the next step is to start talking to agents and taking a look at properties that you are interested in and that are within your budget.

You will search online for properties for sale, you may speak with real estate agents and / or buyers agents and make appointments to view properties that fit your criteria.

In doing this, you need to be mindful of a few things to ensure your decision making process remains clear:

  • Don’t try and fit a square peg in a round hole. Just because your budget may be limited, don’t settle if you don’t have to.  Stay realistic and honest about your needs, lifestyle and commitments in determining whether a property is right for you and / or your family.
  • Don’t be swayed by too many opinions. Realise that most people may be providing you advice and highlighting benefits for some other reason and not necessarily your best interest.
  • Consider the condition of the property and whether further work and renovation is likely to be required. Would this additional expense take you outside your budget.
  • Perhaps research the local area of a property you are interested in, is it family and pet friendly, are their convenient amenities, is transport close by, is there ample parking, is it safe, are any major infrastructure works planned for the area?


3. So You Have Found Your Ideal Property…


Once you have decided to purchase a particular property, there are two ways in which you can proceed – exchanging contracts under a cooling off period, or undertaking further investigations before exchange.  This discussion can be technical, we will not assume any knowledge on your part and will break it down for you as simply as possible just to be sure that we are clear.


The Contract

Firstly, a bit of background.  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.  That contract will contain a great deal of important information relating to the property and the sale.

While we discuss the contents of the contract in some detail in our next article, in brief, it will outline things such as:

  • The address of the property;
  • The type of property;
  • What items are included in and excluded from the sale;
  • Whether it is affected by heritage restrictions, bush fire or flood activities;
  • The restrictions associated with its use;
  • The things a seller (otherwise known as the vendor) may require from the buyer;
  • Relevant information concerning recent renovations; and
  • A range of other relevant details you need to consider about the property.

It is important to bear in mind that the terms contained in any contract can be changed.  That is where your lawyer comes in.  Ultimately, you will engage a lawyer to review this contract, who will provide advice and recommendations as to the suitability of its terms and who will negotiate on your behalf to modify any areas of concern.  Again, this is discussed in our next article.


So there is a written contract governing the purchase of the property.

When two parties agree on a price and the terms of the contract and each party signs and dates that contract, the contract is said to be “exchanged”.

An exchanged contract is a binding contract on the parties who entered into it.


Cooling Off

The term cooling off essentially means, you have some time to think.  You can think about whether you definitely want the property and proceed, or whether, for whatever reason, you have changed your mind and want to back out.


So… back to the two options you have when you have found a property and have decided to purchase it….


Exchange Under Cooling Off

When you exchange a contract under a Cooling Off Period, you are usually given a period of five days (unless you negotiate a longer period) to think about it.  What that means practically is that for the period agreed as the cooling off period, the property cannot and will not be sold to anybody else.  You have secured it, with the confidence of knowing that it will still be there should you decide to proceed.

This cooling off period will give you the opportunity to:

–        have pest and building inspections carried out (and if it is a strata unit, to conduct an inspection of the strata records);

–        have a survey report carried out;

–        make enquires as to whether any building works have been carried to the property and when they were carried out,

–        if works have been carried out, by whom they were done and whether they were done by an owner/builder;

–        have your finance formally approved;

–        have your solicitor review the contract, provide you with an advice and request any amendments to the contract that are required.


The Cost of Cooling Off

However, if you exchange under a cooling off period you will be required to pay a deposit of 0.25% of the purchase price at the time of exchange.

While the property is off the market from the time of exchange of the contract, you may choose not to proceed with the purchase during the cooling off period.

Once the cooling off period has expired, you will be required to pay the balance of the deposit. The contract will become unconditional and both parties will be bound by the contract at this time.

If you do not wish to proceed, you may rescind (ie, cancel) the contract prior to the expiry of the cooling off period and you will forfeit the 0.25% deposit that you have paid.




Carry Out Investigations Prior to Exchange

Alternatively, you may elect to carry out the following prior to proceeding to exchange:

–        have pest and building inspections carried out (and if it is a strata unit, to obtain conduct an inspection of the strata records);

–        have your finance formally approved;

–        have your solicitor review the contract, provide you with an advice and request any required amendments to the contract.

Once this has been done and you wish to proceed with the purchase, the contract may be exchanged.

Typically, in situations where the vendor has provided you with the time to carry out the above investigations, the vendor may require you to waive your cooling off rights which means that the contract will become legally binding on both parties at the time of exchange and you will not be entitled to change your mind.

You should note that the property is not off the market until the contract has been exchanged and so it is open to the vendor to sell the property to another buyer while you are conducting your due diligence enquiries.


The Trade-Off

On the one hand you secure a property, but face the risk of losing the 0.25% deposit if you decide to not go ahead, on the other hand, the property is not secured and still able to be sold, but you undertake all of your due diligence prior to deciding on the purchase.


Concluding Remarks

We have provided some preliminary things to consider and some of the technical stuff that is worthwhile knowing.

Ultimately and ideally, you would have notified your lawyer at the start of your search and they will guide and inform you every step in any event.

We will cover this and many other items in our next post.

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


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 have outlined what the conveyancing process involves and some of the more relevant and important considerations and investigations you need to make, to ensure your interests and your investment are protected and to feel comfortable that you are receiving the right advice along the way.

We now continue with some final and more technical considerations and processes that you ought to understand to give you a 360 degree view of the conveyancing life-cycle.


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It is very important that you take out insurance cover (including public risk) in respect of the property following exchange of contracts.  That insurance policy should note your interest as an owner and also the interest of any mortgagee (or bank / financier) you have from that date.  We suggest that the cover be for replacement value of the property.


Have You Contacted Your Mortgagee (Bank)?

It is best practice to inform your bank as soon as you have found the property which you intend to purchase. You should provide them with your solicitor’s contact details.

Your mortgagee will usually contact your solicitor and ask for copies of documents to be sent to them so that they can commence preparing the mortgage documents.

Usually, banks will need approximately twenty-eight (28) days to prepare the relevant documentation. You should never leave this to the last minute.


Are You Selling a Property to Buy This One?

If you are selling an existing property and using the proceeds from that sale to assist with the purchase of this property, you should ensure that you inform your solicitor immediately.

Appropriate arrangements will need to be made to ensure that the funds from the sale are sufficient and available upon settlement of the purchase of the new property.

Otherwise, negotiations may need to be had to accommodate this fact.


Stamp Duty

You should keep in mind that in addition to your pre-purchase inspections, solicitor’s fees and post-exchange government searches, you may also be liable to pay stamp duty on the purchase price.


Stamp duty is determined on the value of the land and can only be assessed on executed documents when they are lodged with the Office of Fair Trading. Stamp duty is generally payable within 3 months from the date of the contract (exceptions apply) however, a mortgagee will usually require you to pay it no later than upon settlement.

A stamp duty calculator is available on the Office of State Revenue’s website. It is helpful to use this when considering how much it will cost you to purchase the property.  A link to that calculator can be found here


Post Exchange Government Searches

Once the contract has been exchanged, the most prudent course is to instruct your solicitor to carry out relevant government searches.  Some examples of the searches that may be obtained and their purpose are set out below:

  • Outstanding Notices – this search is obtained from Council and discloses any notices which have been made by Council in relation to the property and which have not been complied with. Such notices include, but are not limited to, demolition orders and work/rectification/upgrade orders;
  • Section 603 Certificate – this search is also obtained from Council and reveals the rates payable for the current year. This search is required for settlement purposes and must be obtained;
  • Ausgrid – this search reveals whether Ausgrid has any unregistered interests in the property including, for example, easements or rights of way for electricity substations or high voltage lines which may be on or around the property;
  • Department of DefenceUXO Enquiry – this search discloses whether there are any Unexploded Ordnances within the property;
  • East Australian Pipelines – this search reveals whether this government authority has any interest in the property including with respect to the installation of gas pipelines in the property;
  • Heritage Office of NSW – this search discloses whether there are any heritage items located on the land;
  • Jemena Gas Networks – this search reveals whether this government authority has any interest in the property including with respect to the installation of gas pipelines in the property;
  • Office of State RevenueSection 47 Certificate – this search indicates whether any land tax in payable in relation to the property and is essential for settlement purposes;
  • Sydney WaterSection 66 Certificate – this certificate indicates the water rates and usage charges payable for the current quarter and whether those rates are outstanding. This certificate is required for settlement purposes and must be obtained; and
  • TransGrid – this search reveals whether TransGrid has any interest in the property including with respect to any easements required for access to your land to repair and maintain power lines.

While these searches may cost a few hundred dollars, it is very important that you obtain them as they will reveal significant information about the property (that the seller may not have told you) including issues which may affect your intended use and enjoyment of the property and any rights that you may have to therefore get out of the contract.


Who Pays the Rates?

Land, water and council rates are usually adjusted at settlement.

This means that the seller pays the rates from the beginning of the rate period up to settlement and you pay 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, the seller would be liable for the rates from 1 January to 27 February and you would be liable for the rates from 28 February to 31 March. Your solicitor prepares these adjustments for you.


What Happens Before Settlement?

Make sure that:

  • You have insured the property before settlement – the risk of damage to the property transfers to you upon settlement;
  • You have made arrangements to move into the property – don’t forget to arrange a removalist if you need one;
  • Notify relevant authorities/others of your change of address – RMS, medicare, medical funds, electoral roll, bank, etc;
  • You have contacted the relevant authorities and companies to arrange connecting of your phone line, any TV cable service and gas service;
  • Arrange for Australia Post to re-direct your mail;
  • 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 made arrangements to collect the keys from the agent after settlement; and
  • You have inspected the property and requested that any rubbish and debris remaining at the property are removed and any damage caused to the property after exchange is repaired by the seller.


Final Inspection settlement

You should inspect the property just before settlement to ensure all is in order. The property should be in the same condition as at the date of settlement, as it was when you saw it prior to exchange of contracts, fair wear and tear excepted.

If relevant, you should ensure that any tenant and /or the owner has vacated the property.


What Happens After Settlement?

After settlement, should also receive a letter from your solicitor confirming various issues and providing you with a copy of the Settlement Adjustment Sheet and Vendor’s Cheque Directions for your tax records.

On settlement, the Certificate of Title for the property and the Transfer will be handed to your lender (if any) who will in turn arrange for registration of the Transfer at NSW Land and Property Information.  Your lender will hold the Certificate of Title for the term of the mortgage.

We suggest that 1 to 2 months after settlement you contact the NSW Land and Property Information to ensure that registration of the Transfer has taken place and that it is in order.  Your solicitor/conveyancer will only do this if you instruct them to.

Also, a Notice of Sale is provided to your lender to lodge at the NSW Land and Property Information which notifies Council, Sydney Water and the Valuer-General that you are the new owner.  In future, rate assessments and notices of valuation should be sent directly to you.  You should let Council, Sydney Water and your solicitor, if necessary, know if you do not receive any rate assessments after settlement.


We genuinely hope you have enjoyed this brief three part series aimed at providing some useful information regarding the conveyancing process, but also important items you need to consider or action when involved with the process.