Buying : Selling : Conveyancing : Property : Wollondilly and the NSW Conveyancing Centre

Wollondilly and the NSW Conveyancing Centre

Selling

THE SALE PROCESS

Prior to advertising a residential property for sale it is necessary that a Contract for Sale is prepared.

You may have enlisted a Real Estate Agent or you may have one in mind to use, but they cannot proceed to market the property for sale until they have been provided with a Contract for Sale from us.

The Law provides that before anyone, estate agent or owner, can place a property on the market they must have a proposed contract prepared so that a prospective buyer can inspect the contract. There are hefty fines imposed on anyone caught promoting the sale of a property in anyway whatsoever before a contract is prepared.

On the day we receive your instructions to prepare a Contract for Sale we will order the necessary documents legally required to be attached to the Contract for Sale. We will then forward to you a questionnaire which, when returned to us completed, enables us to identify whether there are any matters individual to your property that need to be disclosed in the Contract for Sale. It also enables us to identify items that are included in the sale and any items that you may wish to be excluded.

How long does it take to prepare a contract for sale?

Many documents required to be attached to the Contract for Sale are able to be obtained on line via the internet and as such they are available to us the day that we receive your instructions. The zoning certificate from Council (the 149(2) certificate) is ordered by us the day we receive your instructions to prepare a Contract for the sale of your property. It can take up to 14 days for the local council to issue a certificate under section 149(2). This Certificate is required by us to us to enable us to finalise the Contract for Sale. We will issue the Contract for Sale to yourself or the Real Estate Agent of your choice the day we receive all documents legally required to be annexed to the Contract for Sale.

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ESTATE AGENTS AND AGENCY AGREEMENTS

An Estate Agent must have an agency agreement signed before s/he can list your property for sale. If you are not sure of the terms of the agency agreement we are happy to discuss the contents of the agreement with you.

There are several types of agency agreements:

Exclusive agency agreement is most commonly used to sell residential real estate, you are giving the agent the exclusive right to sell your property. While the exclusive agency agreement is current, if someone else sells the property (including yourself) the agent is entitled to be paid the agreed commission. Sole agency agreement is very similar to the exclusive agency except that it gives you the right to sell the property yourself without being liable to the agent for a commission. Multiple listing agreement allows the agent who may be part of a network of agents working together to sell the property. You only pay a commission to the agent who you have signed the listing agreement with. Auction agency agreement is used when the property is to be sold by auction. It is similar to an exclusive agency in that you give exclusive right to the agent to sell the property by auction. Open agency agreement will allow you to list with any number of agents you wish.

Agency agreements are usually for a fixed period of time and cannot be ended prior to the end of that period unless both seller and agent agree. The period of the agreement is negotiated with the agent, it is usually 90 days but can be for any period agreed to. Make sure you only have one agreement at a time and do not commit yourself to payment of a commission to more than one agent. Make sure any agreement is properly ended before entering into another agreement with another agent.

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DEPOSIT BOND

A Deposit Bond is a guarantee that while the deposit is not paid at the exchange of contracts it will be paid on completion . If the buyer is in default the underwriter guarantees payment to the vendor of the amount equal to the amount of the guarantee (being an amount of no more than 10% of the purchase price). A deposit bond is usually used when the buyer is selling and all proceeds are coming from their sale or the buyer is borrowing 100% of the purchase price or for some other reason the buyer does not have a cash deposit.

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COOLING-OFF PERIOD

Occasionally you will be asked to enter into a Contract for Sale under a “cooling off period”. Although occasionally this is done in our office, it is a practice normally carried out by your real estate agent.

When you exchange on a cooling off period, the purchaser will have a set number of business days (normally five or ten days) in which to obtain their pre purchase inspections and unconditional loan approval. At the time of exchange the purchasers are required to pay a deposit of 0.25% of the agreed purchase price to the deposit holder (normally the real estate agent). Such deposit will be forfeited to yourself as property owner should the purchaser pull out of the Contract during the cooling off period. If the purchaser elects not to pull out of the Contract during the cooling off period, they will be bound to the terms and conditions of the Contract.

As vendor, you will be bound to the Contract from the time of exchange and you will not have the benefit of a cooling off period. There is no cooling off period in a sale at auction.

Until such time as the cooling off period expires the purchaser only can withdraw from the transaction. If it only once the cooling off period has expired that the parties are bound to the terms and conditions of the Contract.

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AFTER EXCHANGE

Once the Contracts for Sale have exchanged, there are a number of matters that we will attend to on your behalf including arranging for the discharge of mortgage from your existing lender and making suitable arrangements for settlement with the purchasers conveyancer and your lender.

If the property has been sold with vacant possession, you will be asked to ensure that you have vacated the property prior to settlement taking place and you will be asked to hand the keys to the real estate agent (if applicable) to be handed to the purchasers following settlement.

You must ensure that the property is left in the same condition and state of repair as it was at the time of exchange. Any work that you have agreed to carry out must be completed prior to settlement, and all items noted as inclusions on the Contract must remain in the property.

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DISCHARGE OF MORTGAGE

If you owe money to a lender who has a mortgage registered against the property, then you will need to have the mortgage discharged at settlement. We will communicate with your mortgagee requesting they have a discharge of mortgage prepared in readiness for settlement, however most lenders will not do anything until they have your written authority to prepare the discharge. This authority also authorises the lender to communicate with us, in particular regarding the amount required to payout your loan.

As settlement approaches, we will be advised by the lender of the amount required to discharge your mortgage. Once we have confirmed this amount with you, the required amount will be paid from the sale proceeds on settlement.

You should ensure that there will be sufficient funds from the sale to repay your debt prior to signing the Contract for Sale.

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BUILDING INSURANCE

All buildings on the property are at the sellers risk until settlement. It is therefore essential that all building insurances be maintained and not allowed to lapse before settlement.

If the buildings are damaged by fire or flood or some other catastrophe the buyer is not bound by the contract to proceed with the purchase. Depending on the amount of damage a buyer may proceed with the purchase after negotiating the price down to cover the cost of repairs but it is in the sellers best interest to keep the buildings insured until settlement has been effected.

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SOLD WITH VACANT POSSESSION BUT TENANT IN POSSESSION

A tenant is not bound to move out of the property until the term of the lease has expired, and a notice to vacate has been served.

If selling a property that is tenanted you should be sure that the term of the lease has or will expire before the settlement is due if vacant possession is required on settlement.

We will work with you to ensure that the necessary notice to vacate is given to the tenants.

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SOLD WITH AN EXISTING TENANT

If there is a tenant in the property who is staying after settlement, an adjustment of the rent will be made at settlement.

If the rent is paid in advance then you will make an allowance in the settlement figures to credit the new owner with that part of the rent that applies after the settlement date. If the rents are in arrears no adjustment in your favour is made as the new owner is not expected to take over a debt that is owed to you.

Quite often the managing agent may be holding rent in trust as they may collect rent weekly but account to the owner monthly. If this is the case the adjustment of rent will be made by the managing agent. We will determine how and what adjustments are to be made.

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COUNCIL, WATER RATES AND STRATA LEVIES

Council Rates

The Contract provides that council rates be adjusted between the vendor(the seller) and purchaser as at the settlement date. Council rates are levied for the financial year. Rates will be adjusted so that the vendor pays the rates up until the day of settlement and the purchaser will be liable from then until the end of the rating period. They are adjusted as if the rates are paid in full regardless of whether they are in fact paid or not. Any outstanding rates are paid from the sale proceeds (being the vendor’s money).

Council rates may be paid by instalments but are an annual levy and so it is normal practice to adjust the rates for the next full year not according to what instalment may be due next.

The rates are a charge on the land and any outstanding rates become the liability of the purchaser, so it is essential that they are paid up to date at settlement. One of the inquiry certificates the purchaser’s conveyancer will obtain is from council and sets out the amount of the annual rates, what payments have been made and what is outstanding.

Water Rates

In some country areas the water rates are paid to council and may be incorporated within the council rates. In other areas were a separate water authority (such as Sydney Water) supplies the water and/or sewer, an adjustment of these rates must be made at settlement.

Water rates are usually quarterly rates and the adjustment made will only be for the current quarter. The same principals apply to water rates as they do for council rates.

A water usage charge may have to be paid by the vendor. To asses whether a charge is payable or not can be done in one of two ways.

  1. A meter reading can be organised, this will cost whoever organises it whatever the authority charges for a meter reading
  2. estimate can be done, by using the last quarter’s water usage charge

It is usual to use the estimate system to calculate the usage charge because quite often the cost of having the meter read is more than the charge itself. The seller will make an allowance to the purchaser for the usage charge so that when the actual bill for water usage is received the whole bill becomes the purchaser’s responsibility.

Strata Levies – Unit, Townhouse, Villa

If you are purchasing a lot in a strata scheme the quarterly strata levy will need to be adjusted. This levy is adjusted in the same manner as council rates except that they are adjusted on the quarterly not annual rate. The quarter for strata levies may begin at any time, they are not necessarily the quarters of the calendar year. Because the levies commenced on a date determined at the first annual general meeting held by the Owners Corporation the quarterly levies can commence at any date but for convenience it is usually (but not necessarily) from the beginning of a month.

There may also be special levies to take into consideration. A special levy is struck when, and if, there are not enough funds held by the owners corporation to cover either the normal running expenses or a special job has to be carried out and there are not enough funds held to cover the cost of that job.

Normally a special levy struck before the date of the contract has to be paid in full by the seller. Some times the special levy may be paid by instalments, if this is the case all instalments must be paid by the seller. If however a special levy is struck after the date of the contract then that levy is adjusted between seller and buyer.

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AFTER SETTLEMENT

When settlement has been completed we will account to you for any of the proceeds of sale that are to be paid to you after all adjustments are made and any loan repaid. Prior to settlement, we will give you the option as to whether or not you would like to collect the cheque, have the cheque posted to you, or deposited into a nominated account.

The change of ownership details will be notified to Council, Water Authority and Valuer General when documents are lodged for registration at the Land Titles Office following settlement. This may not happen for a couple of weeks depending on the transaction and if you receive either council or water assessments for the property you should redirect them back to the new owners or forward them to our office to deal with on your behalf. Please do not throw them away as the new owner may then have interest to pay on late payments of rates they never received.

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ABN: 59 520 587 360 - Licensee: Nicole Garner - License No: 1102080

DISCLAIMER: The contents of this web site are for informative purposes only and should not be relied upon or construed as legal advice.