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What does a property lawyer or licensed conveyancer do and why I should use one to buy property in NSW?
A property lawyer or licensed conveyancer (collectively “Property Law Specialist”) assists with buying and transferring property in NSW. This includes reviewing contracts for sale of land (“Contract”), advising on legal risks, co-ordinating settlement including with any mortgage for the buyer and ensuring the purchase complies with NSW property and conveyancing laws. A Property Law Specialist can also advise on broader legal issues such as development and planning issues, contract disputes, complex ownership structures, federal and state tax implications (including implications for foreign persons) and off-the plan or commercial transactions.
Ideally you should engage a Property Law Specialist before you sign a Contract to buy property to ensure you understand your rights and obligations before you are legally bound.
What does ‘exchange of Contracts’ mean?
Exchange of Contracts is the point at which a purchaser and vendor sign identical Contracts and they are formally swapped, dated and the deposit is paid to the selling agent’s trust account or, in the absence of a selling agent, into the trust account of the vendor’s lawyer. Once exchange occurs, the Contract becomes legally binding (subject to any cooling-off rights) and neither the vendor nor the purchaser can end the Contract without consequences. Cooling off rights can be waived by a purchaser at this time by providing the vendor with a signed valid section 66W certificate signed by their Property Law Specialist.
What is the purchaser’s cooling-off right?
In most private treaty sales of residential property, purchasers have a five business day cooling off period after exchange of Contracts. If a purchaser ends the Contract during this period they forfeit 0.25% of the purchase price. Cooling-off does not apply to a successful bidder on auction day.
What obligations does a purchaser have after exchange of Contracts?
After exchange of the Contract, a purchaser is legally obliged to:
- pay the balance of the purchase price and any necessary adjustments of statutory expenses on completion of the Contract;
- comply with all Contract conditions and statutory requirements; and
- complete the Contract by the completion date.
When does completion take place?
Completion is the final stage of the transaction when the balance of the purchase price is paid, including any adjustments for statutory expenses, and ownership of the property transfers to the purchaser. Completion usually occurs 6 weeks after exchange unless the Contract specifies a different period.
What happens if a purchaser fails to complete on time?
The vendor may serve a Notice to Complete making time essential under the Contract by requiring that completion occurs within 14 days of the issue of the Notice to Complete. If a purchaser does not settle within the Notice to Complete period, the vendor may terminate the Contract, retain the deposit and potentially claim damages.
Are there extra rules for buying strata property (units and apartments).
Yes. Buying strata properties involves additional considerations including adjusting strata levies at completion, reviewing by-laws, due diligence on upcoming actual and potential special levies and the financial health of the owners’ corporation. A strata inspection report is essential to understand your ongoing obligations and any potential issues. These reports are prepared by independent third parties, and a Property Law Specialist can guide you as to who to use to obtain that report.
Do foreign persons purchasing property in NSW have additional legal obligations when buying property?
Some foreign persons are subject to additional requirements, including requiring in some cases FIRB approval, ATO notification obligations after completion and payment of foreign persons surcharge stamp duty. Some foreign persons who buy residential properties are required to pay surcharge land tax including land tax on their principal place of residence. Failure to comply can result in penalties and additional tax liabilities.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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