Buying a home is an exciting milestone, but the legal jargon in contracts and the conveyancing process can feel overwhelming, especially for first-time buyers. Understanding key conveyancing terms can help you navigate the process with confidence.
This article explains the most important conveyancing terms you’ll likely encounter throughout your property journey. The information is general only and does not constitute legal advice. Conveyancing regulations and processes vary across Australia. You should seek professional advice from an experienced conveyancer or lawyer to make informed decisions about your property purchase.
Conveyancing
Conveyancing is the legal process of transferring ownership (title) of a property from the seller to the buyer. A conveyancer or solicitor handles the necessary legal paperwork and ensures the transaction proceeds correctly. They conduct searches, review contracts, and manage the settlement process.
Contract of Sale
The Contract of Sale is a legally binding agreement between the buyer and seller. It outlines the terms and conditions of the property sale, including the:
- legal description of the property
- parties’ details
- purchase price and deposit requirements
- settlement date
- fixtures and fittings / inclusions and exclusions
- standard conditions and special conditions
Contracts typically use a standard format of terms and conditions. However, sellers often include additional special conditions, such as penalty clauses for late settlement. You should have the contract reviewed by a conveyancer or property lawyer before proceeding with your purchase.
Vendor’s Disclosure
Vendors usually have specific disclosure obligations and must include prescribed documentation in or with the Contract of Sale. The required material and format vary between jurisdictions. Disclosure documents provide important information about the property and help buyers make informed decisions. Your lawyer or conveyancer will check that the relevant disclosure information is included in your purchase.
Fixtures and Fittings
You should understand the distinction between fixtures and fittings so you know which items form part of the property purchase. Generally, fixtures are items permanently attached to the property, such as built-in wardrobes and appliances. Fittings are removable items, such as furniture. The distinction can sometimes be unclear, so the contract should clearly state what is and is not included in the sale.
Due Diligence
Although vendors must meet certain disclosure requirements, they generally do not have to disclose everything about the property. The buyer must ensure the property meets their expectations. Due diligence includes:
- Local council records confirm whether dwellings on the property comply with regulations and zoning laws and whether any outstanding notices exist. Councils also provide details that may affect future use, such as zoning restrictions, flood and bushfire risks, environmental concerns, and heritage listings.
- Pest and building reports prepared by a qualified building professional assess the condition and repair of the property’s dwellings and identify any pest infestation. These reports can flag costly issues before you enter a binding contract.
- Government searches and enquiries uncover potential issues affecting a property. For example, they may reveal a future proposal for road widening or an authority’s interest in acquiring part of the land for infrastructure.
- Strata inspection reports for strata properties provide information about the financial status of the strata scheme. They outline levies, past and planned maintenance, expenditure, building defects, insurance, and recent by-laws. Reviewing past meeting minutes can also reveal disputes or ongoing projects.
Easements
An easement gives one party the right to use part of another party’s land for a specific purpose. Easements may be private, such as a shared driveway that allows neighbouring owners access to their property. They may also be public, such as an easement for maintaining sewage or electricity services.
Easements are usually registered on the property’s title and shown on the deposited plan. They can affect the property’s value and limit how the land can be used or developed.
Cooling-Off Rights
Cooling-off periods give buyers time to conduct further due diligence, seek legal advice, secure finance, and address concerns after signing or exchanging contracts.
During the cooling-off period, buyers can rescind (terminate) the contract by providing written notice to the seller or their representative before the deadline. If a buyer exercises this right, they usually pay a nominal penalty fee to the seller. This fee is typically calculated as a percentage of the purchase price.
Cooling-off rights, timeframes, and penalties vary depending on the property’s location. For example, cooling-off rights are not mandatory for residential properties in Tasmania and Western Australia, although the parties can include them in the contract by agreement.
Parties can waive or vary cooling-off periods by negotiation. These rights also do not apply in certain circumstances, such as when a property is sold at auction.
Joint Tenants or Tenants in Common
If you are buying a property with someone else, your conveyancer or lawyer will ask whether you wish to hold your interests as joint tenants or tenants in common.
Joint tenants hold equal interests in the property as a whole and cannot separately apportion their shares. The owners must deal with the property together. Joint tenancy is also subject to the rules of survivorship. If one co-owner dies, their share automatically passes to the remaining owner or owners.
Tenants in common hold specific individual shares in a property, which may or may not be equal. Each owner can transfer, sell, or leave their share to a beneficiary in a Will.
Settlement/Completion
Settlement, also known as completion, is the final stage of the property transaction. At this stage, the buyer pays the balance of the purchase price to the seller and ownership transfers to the buyer. The relevant authorities receive the new ownership details, and the agent (if applicable) releases the keys to the new owner.
Electronic Conveyancing (e-conveyancing)
Traditionally, settlement required lawyers, conveyancers, and lenders to meet in person to check and exchange documents and bank cheques. Electronic conveyancing streamlines this process through an online platform. It removes the location and time barriers associated with physical settlements.
Conclusion
Conveyancing involves complex legal processes, and entering a contract to buy property creates binding legal obligations. Engaging a conveyancer or lawyer early in your property journey helps you navigate the market with confidence. They can identify potential risks, explain legal terms, and advise you on your rights and obligations so you can make informed decisions.
If you or someone you know wants more information or needs help or advice, please call (02) 4987 3344 or email [email protected].