We understand that buying a house home, whether or not you’re investing or it’s your first home, can be both an exciting and a nerve-wracking time.
Are you bombarded with new contract terms like “Cooling Off Period” and “Encumbrances”? We have created a list of common terms used in Conveyancing to assist you.
If the buyer is seeking a loan to fund the purchase, the contract should be subject to a finance condition. That means, the contract will not become totally binding until the loan is approved.
Building and Pest Inspection condition
In Queensland, the parties first sign a conveyancing contract, then the buyer will inspect the property for its condition.
“Condition” includes the property’s (a) building condition and (b) pest condition. The buyer should engage a reliable inspection company to inspect the property.
If the contract is subject to this condition, then the contract won’t become fully binding until the buyer is satisfied with the building and pest condition of the property.
The adjustments are the calculation of outstanding outgoings of the property (i.e. water bills, and rates) between the buyer and seller.
One example is water consumption, where the buyer would not want to pay for the seller’s water consumption and therefore it needs to be adjusted.
Certificate of Title (Replaced by “Title Searches”)
The is a formal legal document that provides details of the land title, lot number and the name of the owners.
We no longer issue any paper title certificate in Australia. They are always lost or damaged which creates lots of problems, so we decided to switch to an electronic system.
We can now simply do a “title search” which reveals the same information electronically on the computer screen.
Contract of Sale
This is a legally document signed by the Buyer and the Seller to sell/purchase the property. It details the specific terms and conditions upon which the Seller will sell the property to the Buyer.
You should always seek your lawyer’s advice before signing the contract.
Cooling Off Period
A legal term that determines the official time by which the Buyer can withdraw from the Contract of Sale at a cost of 0.25% of the Contract Price.
In Queensland this time period is 5 days from when the Buyer receives a copy of the Contract (signed by both parties).
Without mentioning specifically, all things that are fixed and attached to the property are included in the sale. These are called “fixtures” Examples are build-in wardrobes and stoves.
“Excluded Fixtures” are the fixtures which are specially recorded to be excluded from the purchase.
It is arguable whether items such as dishwashers and wall-mounted televisions are fixtures, and it depends on the circumstances. Therefore, it is the best to negotiate whether these items are included and record them in the contract.
Without mentioning, all things that are not attached to the property are excluded from the contract. These are called “chattels”. Examples are sofas and dining tables.
“Included Chattels” are the chattels which are specifically negotiated to be included in the contract.
Sometimes, sofas and outdoor tables are bolted to the ground and it is arguable whether they are chattels or fixtures. Blinds and curtains are also common items to be disputed.
Again, it is the best to record them in the contract to avoid arguments.
The amount the Buyer must pay as an initial payment in order to secure the property purchase.
This money is commonly kept in the real estate agent’s trust account. Sometimes, it can be kept by a law firm’s trust account.
A right to use and access part of land on the property. An easement is typically used when access is required for wires and pipes for maintenance to sewage, drainage and electricity. This can also refer to shared driveways and paths on a property.
The process whereby the property is formally transferred to the Buyer from the Seller. The Buyer pays the official Purchase Price or the balance after the initial deposit to the Seller and in exchange the Seller hands over the relevant legal documents to transfer the property to the Buyer.
Transfer Duty (Stamp Duty)
Buyers are responsible to pay transfer duty whenever this is a “dutiable transaction”. A conveyancing purchase is a typical dutiable transaction and is subject to transfer duty.
You should check with your lawyer whether you are eligible for a “transfer duty concession“.
Extra clauses or conditions included in a contract for the sale of land. Examples of these include the sale of property being subject to cleaning of the Property or the vacation of an existing tenant.