Conveyancing Dictionary: All The Words + Phrases You Need To Understand
Written by: Nancy Robertson | Legal Team
Conveyancing is defined in the dictionary as:
“The transfer of property from one person to another.”
This is a very simplified explanation of what this word means, and a transfer of property can involve a number of different types of entities, not just individual persons. These entities could also be company names and trusts.
What Does A Conveyancer Do For You?
A conveyancer’s role is to assist a person with their sale or purchase of property from the commencement of the matter, right through to the settlement of the property and encompasses a wide range of tasks to complete a transaction. Some of these tasks are:
- Looking over and/or preparing a Contract of Sale and Vendor Statement;
- Negotiations with the other parties’ conveyancer or solicitor;
- Attending a client to sign documents;
- Liaising with your bank in relation to discharging the mortgage or provision of funds for a purchase;
- Preparing adjustments of rates for settlement;
- Creation of the electronic workspace in readiness for settlement; and
- Ensuring all tasks have been completed and the electronic workspace is ready to go on settlement day.
Upon settlement of your conveyance, your legal representative will confirm to you by telephone and in writing, that the property transfer has gone through, whether it be your sale or your purchase. In the case of a sale, your selling agent will also be notified so they are able to release the keys to the new owner.
Your conveyance will also forward a Notice of Acquisition to the relevant rating authorities so ownership details can be amended on their records so as future notices will be forwarded to the new owners of the property.
As a guide for persons interested in selling or purchasing property here are some of the most used key phrases and words that you will encounter during your conveyancing process:
- Contract of Sale – Special Conditions
- Contract of Sale – General Conditions
- Cooling Off Period
- Vendor Statement
- GST Withholding
- Loan + Finance Date
- Easements + Covenants
- Land Tax
- FRCGW
- Recession
Let’s break those down for you!
Conveyancing + Property Law Dictionary
Contract of Sale – Special Conditions
It is in your best interests to have a conveyance look over a Contract of Sale before you enter into a contract to purchase property as all contracts contain special conditions and general conditions of which you should be aware.
These conditions cover all sorts of things including agreements made between the Vendor and Purchaser including a license agreement to allow a purchaser to occupy or store items at the property prior to settlement, and an agreement for the Vendor to attend to particular works prior to settling, to document certain goods remaining with the property that is not specified in the usual goods sold with the property, and other conditions which could relate to default interest and damage payable by the purchaser in the event settlement does not occur on the due date.
Contract of Sale – General Conditions
General Conditions are contained in every Contract of Sale and can range from the purchaser acknowledging any encumbrances on title, identity of the land and defects with the title (if any), discrepancies in the description of the land, Vendor Warranties, connection of services, rules regarding electronic settlement, Builder warranty insurance, Payment of Deposit, whether GST is applicable to the transaction, Loan Finance Clauses, Building Report or Pest Report Clauses, adjustment of rates, nominee of substitute or additional purchaser, loss or damage before settlement, default/interest, and recession notices.
Cooling Off Period
All contracts contain a three business day cooling-off period however there are some exceptions which include if the property is used primarily for industrial or commercial purposes, if the property has been purchased at or within 3 clear business days before or after a publicly advertised auction, and if you are an estate agent or a corporate body.
Vendor Statement
This statement is prepared by the Vendor’s representative for the purposes of disclosing all relevant information about a property to a prospective purchaser so they can make an informed decision as to making an offer and buying the property.
The Vendor Statement must contain a current title search, plan of the property, copies of any covenants/restrictions over the title, and building information including copies of building permits, inspections, certificates of occupancy and owner building defects report. Other attachments are copies of current rates notices, planning information, owner corporation certificate (if applicable), and the Due Diligence Checklist.
GST Withholding
All Contracts of Sale will show whether GST Withholding is applicable to the transaction. Generally, there is no GST if the property is an existing residential premises, however on occasions and after consulting with their accountant a Vendor may instruct that there is GST applicable i.e. they may wish to use the “Margin Scheme” whereby the purchaser is to withhold an amount applicable to 7% of the purchase price. This amount is then withheld from Vendor’s funds at settlement and forwarded to the Australian Taxation Office.
Loan + Finance Date
If a purchaser is using a lender to purchase a property, there will most likely be a finance clause/date in the contract which means that the contract is subject to the purchaser obtaining finance by no later than this date.
If the financier cannot meet this date the purchaser will need to request their conveyancer seek to have this date extended, otherwise the Contract of Sale will be unconditional and the purchaser will be required to complete the purchase without having funding. If they are unable to complete the purchase they will then be in breach of the contract, will lose the deposit paid and are open to being sued by the Vendor for non-completion of the contract.
Easements + Covenants
A lot of properties have an easement running along the side or rear of the land and the most common easement is a water/sewerage easement.
This easement cannot be built over unless permission has been obtained from the relevant authority to be able to do so. Your conveyancer will check as to whether there is an easement on the block and ask whether there are any structures that have been built at the rear of a property and possibly over this area.
In the event that there is a covenant registered over the title to the property you are purchasing, your conveyancer will confirm this to you and explain the nature of the covenant and the wording to ensure that the purchaser is aware of whatever the restriction(s) is/are. A covenant can be a restriction on what you can or cannot build on the land and the building materials allowed to be used, or it could be that you are not allowed to store a caravan on the block or even a restriction on having pets.
Land Tax
The State Revenue Office is the authority that levies land tax against a property and this charge is payable by the Vendor.
When a property is sold any land tax owing is required to be cleared at settlement and will be deducted from the Vendor’s sale funds. You are no longer allowed to adjust the land tac between a Vendor and the Purchaser at settlement. There are some expectations to this law and if you are purchasing subdivisional land from a developer there may be an adjustment whereby you pay a proportion of the Vendor’s land tax paid at settlement.
FRCGW
This term stands for Foreign Resident Capital Gains Withholding and applies to Vendors (individual and non-individuals) selling or disposing of certain taxable property.
When selling property in Australia valued at $750,000 or more, you must have a clearance certificate from the Australian Taxation Office to avoid the requirement of purchasers withholding an amount from the sale. If the Vendor provides no clearance certificate at or before the settlement, the purchaser must withhold an amount of FRCGW and pay it to the ATO. The clearance certificates are valid for 12 months from the date of their issue (as long the Vendor’s residence status doesn’t change during that time). The current rate which is based on their market value/sale price is currently 15%.
Recession of Contract
Should a purchaser breach the terms of the Contract of Sale, by being unable to complete the purchase by the due date in the contract, then the Vendor has the right to rescind the contract.
Before the Vendor can do this, he must serve a Notice of Rescission on the purchaser giving them 7 days to remedy the breach and if not remedied the contract is rescinded, any deposit paid is forfeited and the Vendor also has the right to commence legal action against the purchaser should the Vendor not be able to achieve a sale of the property for the equivalent price.
There are many steps to buying and selling property, that it can get overwhelming very quickly. Check out this previously we put together: Buying + Selling Property: What Happens On Settlement Day?
Canny Legal + Your Conveyancing Needs
If you would like to contact Canny Legal to discuss conveyancing matters, we are happy to assist with your queries and to act for you in your sale or purchase of property.
At Canny Legal, we understand that conveyancing can be a complex and sometimes overwhelming experience, especially if you’re selling a buying something that’s intended to be your home.
Get in touch and see how we’re compassionate and professional, taking time to answer any questions you might have and to help you understand the conveyancing process.
