Frequently Asked Questions

What Is Conveyancing?

Conveyancing is the process of transferring the legal ownership of real estate from one person to another and when you’re buying or selling property, it’s the last thing you want to worry about.

Based in South Melbourne, we act for clients purchasing and selling property in all areas of Melbourne and Victoria and we’re keen to help.

So if you’re considering selling or buying a property, feel free to contact us before or after seeing your Real Estate Agent to make the process as easy as turning a key.

What is a Section 32 or Vendor disclosure statement?

All Vendors must provide certain details relating to the property to prospective Purchasers. This document is known as a Vendor Statement and is a requirement of Section 32 of the Sale of Land Act. A Vendor’s Statement typically includes:

  • The Vendor’s details
  • Title details
  • Information regarding building permits issued in the past 7 years
  • Particulars of owner-builder warranty insurance
  • If the Vendor is the owner-builder who completed building works there should be a written inspection report
  • Information regarding covenants, easements and any other restrictions on Title
  • Planning information, particularly where zoning restricts land use
  • Information regarding outgoings payable by the owner of the property
  • Disclosure of any notices or orders issued by the authorities, regarding fencing, road-widening, etc.
  • If there is access to the property by road
  • Information on services connected to the property

Just because the Vendor Statement appears to disclose everything does not mean that it has. Please feel free to send us a PDF of any property you are considering purchasing, as we know what to look out for.

Where a Vendor has failed to comply with the provisions of Section 32, a Purchaser may be enTitled to end the contract at any time up until the day of settlement. However, mere technical breaches, which do not have a material impact, may not result in cancellation of the contract.

What information is contained in the contract of sale?

The contract is a legally binding document, which records the terms of your agreement with the Vendor regarding the purchase of the property. It sets out your obligations regarding the price you must pay, the date you must pay it (settlement date), goods to be included and the consequences of a breach.

What happens if I breach my contract of sale?

Breaches of contracts of sale can have potentially devastating legal consequences including forfeiting the deposit and being liable to pay penalty interest. We assist you to make sure that you comply with your contractual obligations and can step into negotiate extensions on finance dates and so on.

The agent promised that I can have access to the property prior to settlement, is this enforceable?

As the contract is designed to record your whole agreement with the Vendor anything, which was agreed orally, does not form part of the contract and you should not rely on any such agreements. If you are concerned that aspects of your agreement with the Vendor are not in the contract of sale then you should advise our office so that we can draft the appropriate special condition.

What items stay when I buy or sell a property?

Arguments about chattels and fixtures can be one of the most aggravating problems that can arise. The general rule is that the land is sold including all improvements, fixtures and fittings of a permanent nature. Chattels are excluded.

What is a fixture?

A ‘fixture’ is something attached to land or a building in such a way that it is regarded as an irremovable part of the property you are considering buying. Some typical ‘fixtures’ in a home include the hot water system, range top, wall oven, fixed floor coverings, light fittings, and a built-in (under bench) dishwasher. Garden plants, including bushes and trees are also ‘fixtures’.

What is a chattel?

A chattel is any movable item, which is neither land, nor permanently attached to the property, or any buildings, such as a detached fridge or washing machine.

Can I keep the wall-mounted TV?

A common question is whether the wall-mounted TV is a fixture and the answer is it depends on the degree of annexation. Generally speaking if the TV is hung on brackets attached to the wall the TV is a chattel and the brackets are fixtures. If however the TV was actually built into the wall and attached to the wall it would be a fixture. The best and safest course of action to take is to make sure the contract of sale is checked to see what items are being sold with the property. If there is a discrepancy between what you think you are buying and what is recorded, have it corrected to your satisfaction before you sign.

When should I take out insurance?

The standard contract provides that the property remains at the risk of the Vendor until final settlement. However, Purchasers have an insurable interest from the day of sale. It is recommended that Purchasers obtain a cover note early in the transaction. A lender will insist that the property be insured and it is better to have too much insurance than not enough.

Do I have to pay GST when I buy a property?

Most residential transactions do not attract GST, but the purchase of industrial land or a vacant lot does attract GST in most circumstances. It’s best to speak with us before you sign anything.

What fees will I have to pay to complete my purchase? Do I have to pay stamp duty?

All property purchases in Victoria attract stamp duty. Stamp duty is a state government tax levied against a Purchaser when they purchase a property. Generally speaking, the amount of duty payable depends on the value of the property, with more duty being levied the more expensive a property is.

The state government, through the Land Titles Office, also charges a fee to have a Title registered into the name of a new Purchaser. This fee is generally much less than stamp duty, between $500 and $1,500, depending on the value of the property.

Where you borrow money from a financial institution to fund your purchase, that financial institution will be responsible for paying the stamp duty and Titles office fees on your behalf. These fees, together with any fees charged by the financial institution for their services, will generally be deducted from the amount the bank lends you. For example, if you borrow $300,000 and your stamp duty, Titles office fees and other fees total $15,000, the bank will only provide $285,000 at the settlement. If more money is required for the settlement we will then need to obtain it from you.

Various exemptions and concessions are available, such as the principal place of residence concession (up to $550,000), pensioner exemption and off the plan concession. We are able to assist you in applying for these concessions.

What are the risks with buying off the plan?

Many agents do not understand the off-the-plan concession and often over-estimate the savings. The earlier in the construction process that you buy, the greater the duty saving, however duty is calculated on the FULL PRICE less the value of building work AFTER contract. It is NOT calculated on the value of the land on the contract date and any information in the contract relating to that value is often misleading.

Duty can only be calculated when the builder provides a statutory declaration relating to the cost of works after contract. This is governed by a strict formula and the declaration required to calculate the concession will not be available until all works have been completed.

Accordingly, the builder cannot provide this declaration until very late in the conveyancing process and this often leads to uncertainty. This is because the financier will want to be sure that sufficient funds are available to pay duty at the FULL rate if the builder’s declaration does not support a reduction. Unfortunately the process is flawed and we simply need to do the best we can to achieve the best possible outcome for you.

What about paying rates?

The Vendor is obliged to pay the rates on the property until settlement and the Purchaser thereafter. Therefore rates are adjusted at settlement to ensure that this happens. This is done by deducting from the money paid to the Vendor any amount outstanding for rates and then adjusting those rates as paid so that the Purchaser pays back to the Vendor the rates paid by the Vendor for the period after settlement. A cheque is then forwarded to the rating authority for any amount owing and rates are therefore paid until the end of the rating year. We also notify the rating authorities of the change in ownership.

What happens at the final inspection before settlement?

You are entitled to conduct a final inspection of the property in the week before settlement and the agent will arrange this. The purpose of the inspection is to establish that the property is in the same condition it was on the day of sale, fair wear and tear excepted.

You must accept minor deterioration, such as an overgrown garden, but may be entitled to complain in relation to more serious deterioration in the property, such as a tree falling on the house.

Buyer beware The standard contract of sale of real estate in widespread use in Victoria does not allow you to delay settlement because the property is not in the same condition they were in when you signed the contract. The only possible remedy is for both the Purchaser and Vendor to nominate an amount of money to be deposited into trust pending resolution of the dispute. Oftentimes this clause is modified by special condition removing this right entirely. This term can be negotiated but only before the contract is signed.

Take photos Nowadays it is simple to take pictures of the condition of the property on the day you bought it and store them electronically. If you create a photographic record, you can refer to it when you conduct your final inspection during the week preceding the settlement of your purchase. This way any discrepancies will be immediately apparent.

What is settlement?

Settlement is the time when Purchasers (and their lenders) pay the balance of purchase price to the Vendor. Settlement takes place at the place where the Title to the property is held. As most Vendors have a mortgage, their Titles are held at their bank’s head office in the Melbourne CBD.

At settlement the Purchaser’s representatives hand over the money due to the Vendor and in exchange the Vendor’s representatives hand over the relevant documents to enable the Purchaser to become registered as the owner of the property. This process normally takes between five and twenty minutes, depending on the complexity of the transaction. Your attendance at settlement is not required.

What happens at settlement? Do I need to be there?

Settlement takes place where the Title to the property is held. As most homeowners have a mortgage, their banks hold their Titles, generally at head offices in the Melbourne CBD. We organise a settlement agent to attend settlement on your behalf and it is not necessary for you to attend. At settlement the Purchaser’s representative hands over the money due to the Vendor and in exchange the Vendor’s representative hands over the relevant documents to enable the Purchaser to become registered as the owner of the property. This process normally takes between 5 and 20 minutes, depending on the complexity of the transaction.

Proceeds of sale are usually paid into an offset account as directed by you to your bank, alternatively if we are collecting cheques on your behalf we can arrange for the cheques to be paid directly into your bank account on the next business day after settlement.

When can I collect the keys?

The Purchaser usually collects keys from the agent after settlement. The agent will only hand over keys upon receipt of written authorisation from the Vendor, which will be faxed to the agent after settlement has taken place. Other keys will normally be left in the property, along with instruction books and household information.

How long before the ownership of the property is registered in my name?

When the Title is handed over at settlement it is still in the Vendor’s name. If you are not borrowing from a lender, we will attend to payment of stamp duty and registration of your ownership and the transfer will usually be registered within a week.

When a Purchaser borrows money from a financier the Title will be handed over to that financier’s agent. The agent will then take the Title to the State Revenue Office to pay the stamp duty and then to the Land Titles Office for registration.

Given that most financial institutions have thousands of clients and hundreds of settlements every day, the lodging process can take anywhere between one and eight weeks depending on the workload of the institution at the time. The institution will write to you following settlement and registration to confirm that the Title is in your name and to set out the relevant information regarding settlement.

What happens at completion?

We will provide you with full financial details relating to the settlement and we will also advise the local council, water authority and Land Tax department of your purchase. It is your responsibility to arrange for connection of electricity, gas and telephone services and steps should be taken in advance of settlement, as there are sometimes waiting periods. If you have borrowed money to assist you with the purchase, your financier will also report to you after settlement.

I haven’t got my finance yet, can the Vendor withdraw from the Contract?

In most cases, the vendor will be just as keen to continue with the sale, as you are to purchase. So long as you comply with the conditions of the Finance Approval Section of the Contract, you can request an extension. If the Vendor will not grant this extension, it is the Purchaser who has the option to withdraw from the Contract. If the Purchaser does not wish to withdraw, then the Contract of Sale will fall unconditional and the purchase will proceed to settlement.

My property has just settled, when do I get my money?

If the settlement is occurring within the Melbourne CBD or locally, you will receive a Bank Cheque (for the balance of funds after discharging of mortgage and other fees etc.) on the same day as settlement. If the settlement is to take place interstate or in an area where an agent is to be instructed, we can either have the Bank Cheques forwarded to this office (this is usually received within 2 clear business days after settlement) or the balance of funds can be directly deposited into an account for you.

What are Rate Adjustments?

Prior to Settlement, Victorian Property Settlements will undertake an adjustment of rates and outgoings to the property from the date of settlement.

The adjustment of rates will ensure that the Vendors pay all rates and taxes due on the property up until settlement date, and Purchaser pays from the settlement date.

Most Councils will require all rates for the current rating year to be paid at settlement even though they may not be due until a later date; this will be reflected in the adjustments.

The adjustments will also allow the vendor to pay any arrears and/or outstanding interest on the rates and charges together with fees pertaining to the discharge of any mortgage or caveat.

(PURCHASERS PLEASE NOTE in the cases of some land settlements, the adjustment will be required to be undertaken as at the day of sale).

Do I qualify for Stamp Duty Benefits?

A good question and one all purchasers should look into. Generally speaking whether or not you qualify for either Stamp Duty benefits or total exemption depends on the circumstances of your Purchase. Depending on the value of the property, benefits can be available to Home Buyers with Concession Cards and First Home Buyers with Families. To check whether or not you qualify for these benefits, you should contact this office, or the State Revenue Office through our Links Page.

When do I pay the Stamp Duty and Registration fees?

If you are purchasing a property and are borrowing funds from a bank or similar lending institution, the bank will usually retain the Stamp Duty and Registration Fees, together with any application fee etc. from the sum borrowed and advance the net amount at settlement. If you are paying cash for the property, Victorian Property Settlements must attend to the Stamping and Lodging of your security documents within 60 days of the date of settlement.

What is Title Insurance?

Property risk insurance (also known as title insurance) protects you against legal risks that can threaten the ownership of your property, or affect your right to occupy and use your land. These risks include:

  • illegal building works
  • boundary issues
  • fraud and forgery against your certificate of title
  • unpaid rates and taxes
  • unregistered rights of way and easements
  • adverse possession
  • zoning non-compliance.

Why do I need Title Insurance?

Buyers—Property risk insurance covers a range of risks you are exposed to as a property buyer. There are two types of risk – those that are identified during the conveyancing process (known risks), and those that remain undiscovered during this process (unknown risks). Even the most thorough conveyancing process cannot discover all the potential risks against your property. That’s where property risk insurance comes in.

Owners—Even if you already own your home, your property is still exposed to unknown risks from issues such as encroachments, unregistered rights of way and easements, zoning non-compliance and the biggest risk of all – fraud and forgery. Fraud, forgery and other criminal acts can affect your ownership of a property. For example, a third party could forge documents and use them to claim an interest in your land, or a land title authority could make an error that puts your home in jeopardy.

TurnKey Conveyancing recommends First Title Insurance for property risk insurance – FirstTitle.com.au

What Is A Covenant?

A covenant is a restriction placed over land. It limits the way a property owner can utilise their land. An example may be that you cannot subdivide the land or build more than one dwelling.

What Is An Easement?

An easement is an interest in land that allows one person to make use of land owned by another person for a specific reason. A typical example is an easement created in favour of a water board, whereby at the rear of the land they have their drainage and sewerage pipes underneath the surface level.

What Does Vacant Possession Mean?

Most contracts entitle the purchaser to vacant possession of the property upon payment of the balance due under the contract. This means that the vendor must have vacated the property and left it in a condition that will allow the purchaser to take possession of the property.

What Does Receipt Of Rents And Profits Mean?

This term is used when there is a Tenant in the Property and the Tenant will remain after settlement. Once the settlement takes place you as the purchaser become entitled to receive the Tenant’s rent.

What Is A Deposit Bond?

A deposit bond is a guarantee by an insurer that a purchaser will pay the deposit when it falls due, at settlement or upon rescission. The purchaser pays an insurance premium and a certificate of guarantee is given to the vendor or agent. No money is paid until settlement, so the vendor is unable to obtain release of the deposit prior to settlement and the agent must await settlement for payment of commission and expenses.

If you have any questions at all or unsure about the process of buying or selling a property, get in touch with us. We’ll be happy to help.