If you are selling a residential property in the ACT there are a number of matters you should be aware of before offering your property for sale.
An outline of the general process of selling residential property in the ACT is set out below. The process of selling vacant land or property in NSW may differ slightly.
Engaging a Real Estate Agent
After you have selected your selling agent you will be asked to sign a written sales or agency agreement. This is a legally binding agreement that appoints the agent to sell your property.
The agency agreement will set out the details of your agreement with the agent, including the:
- Estimated selling price;
- Negotiated commission;
- Negotiated marketing expenses;
- Whether the agreement is exclusive; and
- Duration of the agreement.
Agency agreements can be complex as there are different types of agency arrangements. It may be sensible to discuss your agency agreement with us before signing to avoid any confusion about the arrangement with your agent.
The process of transferring the legal title of real property from one person to another is called the conveyancing process.
The conveyancing process is designed to ensure that the Buyer obtains a good and marketable title to the property together with all the rights that run with the property and is notified of any restrictions or rights in advance of purchase.
To ensure that this happens the Seller has an obligation to disclose certain things to a potential Buyer so they can make an informed decision.
Tetlow Legal can help you navigate this process and will ensure that you comply with your legal obligations and can safely offer your property for sale
A contract for the sale of residential property must be prepared before the property is offered for sale either through an estate agent or privately. It is an offence under the Civil (Sale of Residential Property) Act not to have a contract available, and any contravention, can carry with it heavy penalties. The contract must contain certain specified conditions and be available for Buyers to consider before they make an offer to purchase the property.
The documents attached to the contract give the Buyer the details they need to know about your property before they make an offer to buy. The exact documents required vary depending on the type of property being sold, but may include:
- Title Searches;
- A Deposited Plan;
- A copy of the Crown Lease conditions;
- A Lease Conveyancing Enquiry;
- A building, pest and compliance report (unless it is an excluded unit);
- An Energy Efficiency Rating report; and
- details of any non-compliance issues attached to the property.
We will make sure that you comply with your legal obligations to include all documents and conditions in the sales contract and will also include any other special conditions that are required.
Building, Pest & Compliance Inspections
Unless the property for sale is a unit which is excluded from the requirement, a licensed Building Consultant must be engaged to carry out the Building, Pest and Compliance inspections and will prepare the reports to be included in the Contract for Sale. The Building Consultant should also be able to prepare the required Energy Efficiency Rating for the property.
The selling agent will usually arrange these inspections, if there is no selling agent, we can assist you.
The person who eventually buys the property will pay or reimburse you for the cost of the reports as part of the settlement process (excluding the Energy Efficiency Rating).
Offers to Buy
When your property has been put up for sale any offers will usually be made through your agent.
No offer is legally binding until contracts are signed and exchanged. This may happen in the agent’s office but is more likely to occur after the Buyer has consulted their conveyancer.
A holding deposit might be paid at the time of an offer, although this is not always the case. A holding deposit must be returned to the Buyer if the offer is not accepted or is withdrawn by the Buyer.
After an offer has been accepted the agent will forward Sales Instructions to our office.
The Sales Instructions contain details of the sale such as the:
- Buyers name and address;
- Purchase price;
- Property inclusions (such as fixed floor coverings (carpets), window treatments, light fittings etc);
- Settlement time frame; and
- Contact details for the Buyer’s conveyancer.
We will then insert/alter any negotiated terms in the contract for sale and send a copy of the contract to the Buyer’s conveyancer for the Buyer’s review and signature.
Exchange of Contracts
The Seller and the Buyer separately consult their conveyancers and discuss the negotiated aspects of the contract and sign. Exchange will not usually take place until the Buyer’s finance has been approved in writing.
The conveyancers then date and exchange the copies separately signed by the Seller and the Buyer, ensuring that each contract is identical.
The Buyer’s conveyancer will also usually provide the Seller’s lawyer with a Certificate waiving the Buyer’s right to any ‘cooling off’ period.
Once the contracts have been exchanged the contract becomes binding on the parties. The agreed deposit (usually 10% of the price) is paid on exchange, usually into the selling agent’s Trust Account.
In the ACT the insurance risk passes to the Buyer at exchange. It is however a good idea that the Seller keeps all insurances in place until settlement has been effected.
After exchange the Seller must contact the bank/lender who has a mortgage on the property to advise them of the sale and advise the proposed settlement date. We will liaise with the bank/lender to discharge the mortgage at settlement.
As the Seller of the property, you will be required to sign a Transfer which is handed over on settlement to the Buyer’s conveyancer used to register the change of ownership at Access Canberra.
The Buyer has the right to carry out a pre-settlement inspection of the property before the settlement date, usually either the day before settlement or on the morning of settlement. This inspection is usually set up with the agent who has the keys to the property.
When a Seller vacates the property (unless the property has been sold subject to tenancy) it should be left in a clean and tidy state and in the same state as at the time of the exchange of contracts.
There is a possibility that settlement will be delayed by the Buyer if the pre-settlement inspection is unsatisfactory (or funds may be retained from the deposit pending resolution).
We prepare a Settlement Statement setting out adjustments for rates, deposit paid, allowances for pest & building reports, payout figures, legal fees and any other expenses.
Settlement usually takes place in Canberra between 2.30pm-4.30pm Monday to Thursday and 1.00pm-4.30pm on Friday at the ACT Law Society Settlement Rooms. It is not necessary for the Seller or the Buyer to physically attend the settlement.
Before settlement, keys must be provided for handing over at the settlement. Alternatively the agent can hand over the keys to the Buyer.
The proceeds of the sale will be distributed on settlement.
The Seller can elect to pay all of the sale proceeds to the bank/lender so that they can pay out the mortgage and place the balance onto one of the Seller’s bank accounts. Specific instructions must be given to the bank by the Seller in order for this to occur.
On settlement, the Buyer’s conveyancer will provide an ‘Order on the Agent’ addressed to the agent confirming that settlement has occurred and authorising the agent to release the deposit held in its trust account. The agent will usually deduct the agreed commission from the deposit held and pay the balance of the deposit to the Seller.
Electricity, Gas and Telephone Connections
The cancellation of these services is the Seller’s responsibility.
Rates and Water
ACT Revenue Office (rates & land tax) and Icon Water (formerly ACTEW Water) (water & sewerage) are notified of the change in ownership of the property by Access Canberra following registration of the Transfer. Once this occurs, rates notices will issue directly to the new owner.
We do a considerable amount of property work and have experienced staff to assist you in this process. As you can see from the steps involved it can be complex and complicated, however, Tetlow Legal are familiar with the traps and are able to assist you through the process.