Selling Property In NSW? This Is What You Need To Know.

Do I need a contract of sale before listing my property?

Yes, you must have a Contract for the sale and purchase of land (“Contract”) which can be prepared for you by a lawyer or licensed conveyancer and must, in the case of residential land, be prepared before your property can be advertised or otherwise marketed by a real estate agent. We can prepare the Contract for you as well as advising on legal risks, ensuring the transaction complies with NSW property and conveyancing laws, arrange for exchange of Contracts signed by you and your purchaser and coordinate completion of the sale pursuant to the terms of the Contract. As lawyers we can also advise on broader legal issues such as disputes, complex ownership structures, tax implications and off-the plan or commercial transactions.

What documents must be included in the Contract?

A Contract must include prescribed documents, namely:

• current copy of a certificate of title search and copies of registered plans and dealings shown on it
• strata plan and by laws (if applicable)
• zoning certificate (section 10.7) from the local council
• drainage diagram
• sewerage service diagram
• swimming pool compliance or non-compliance certificate and report (if applicable)
• Home Owners Warranty Insurance Certificate for homebuilding works carried out in the past 7 years (is applicable)

Other searches that must be provided to purchasers before completion of the sale are:

• Revenue NSW land tax clearance certificate
• ATO Foreign Capital Gains Tax Clerance Certificate

What is the difference between selling by auction or selling by private treaty?

Both are common in NSW.

• Auction: The highest bidder signs the Contract immediately and there is no cooling-off period. Any sale immediately after the auction if the property is passed in is not subject to a cooling off period. Negotiations can occur prior to the auction as to pre-agreed changes to the Contract should that purchaser be the successful bidder at the auction.
• Private treaty: Allows negotiation, the purchaser pays a holding deposit (usually 0.25%) and may benefit from a five business day cooling off period after exchange of Contracts. Where a cooling off period is in place, if the purchaser decides within that cooling off period not to proceed with the purchase, the purchaser will forfeit the 0.25% holding deposit to the vendor. If the purchaser does not exercise their cooling off right to withdraw from the purchase, the purchaser must pay the balance of the deposit before the cooling off period ends.

Do I have to disclose property defects or issues?

Yes, vendors are required to disclose certain adverse information and defects in the Contract known to them including:

• potential development proposals at adjoining properties and in the surrounding areas
• unapproved renovations and structures
• encroachments by or upon the property
• registered and unregistered easements, covenants or restrictions
• outstanding council notices including swimming pool notices
• material facts including violent crimes or recent traumatic deaths at the property including by murder or manslaughter which occurred within the past 5 years
• flood or bushfire risk
• building work orders or strata building defects

Failure to disclose any of these can give the purchaser a right to end the Contract and have their deposit refunded to them, and may expose the vendor to a claim for compensation.

Unapproved Building Works

This is one of the biggest legal traps. If you have added a deck, garage, extension or internal wall or carried out other Home Building Work without local council approval (where such approval is required) or in the absence of complying development permissions then a purchaser may end the Contract, require a refund of the deposit and seek damages and legal costs. Local councils can also issue fines or orders to demolish non-compliant works.

Can I sell a tenanted property?

Yes, selling a property with tenants introduces legal obligations under the Residential Tenancies Act 2010 (NSW). You can either sell with the tenant in place when the lease continues, or with vacant possession, but you must give proper notice to the tenant (usually 30-90 days depending on the lease type). Incorrect handling of any tenancy can delay settlement or lead to disputes that are litigated in the NSW Civil and Administrative Tribunal.

What happens after exchange of Contracts and on completion?

After exchange of Contracts, both the vendor and the purchaser are legally bound to complete the sale. The standard settlement period is 42 days after exchange of Contracts, although this can be negotiated. During this time your lawyer or conveyancer will liaise with the purchaser’s representative and your lender to ensure that on completion your registered mortgage is discharged and will set up on the settlement platform (PEXA) all arrangements in readiness for the completion of the sale to perfect the transferring of ownership of the property from the vendor to the purchaser.

On the PEXA platform on completion, the purchaser and any purchaser’s lender will authorise settlement monies to be transferred to pay out your mortgage, if any, to discharge any mortgage and to pay surplus monies to you simultaneously with the property being transferred to the purchaser.