FAQ

• What is conveyancing?

  
  Put simply, conveyancing is the legal process of transferring the title of a property from one person to another.
   

• Why should I use a law firm that specialises in property transactions?

  
  Buying or selling property is one of the biggest financial transactions or your life. Due to the financial and legal aspects of transferring property, the consequences of making a mistake can be both costly and heartbreaking.

  By having a Solicitor take care of your property transfer, their qualifications and experience can help protect your assets.

  A Solicitor who specialises in property has an in-depth understanding of the law concerning property transactions, is required by law to carry professional indemnity insurance.  
   

• When should I insure the property?

  
  The property is at your risk from 5:00pm on the first business day after the Contract Date.
  
  Despite this, the seller has an obligation until settlement to take reasonable care of the property.
  
  If the property is damaged between the Contract Date and settlement (for example, due to fire or vandalism) you will be required to settle in accordance with the contract despite the damage (unless a residence is so destroyed or damaged as to be unfit for occupation).
  
  If damage occurs, you may in some circumstances be able to gain the benefit of the seller’s insurance.  We do not recommend that you rely upon this right as:

  • the seller may not take out insurance;
  • the seller may choose to cancel its insurance;
  • the event that causes the damage may not be covered; or
  • other factors may preclude recovery.

  
  We recommend that you take out insurance.
  
  You can arrange insurance by contacting an insurance broker or home insurance company directly.
   

• What is the cooling off period and how does it affect me?

  
  A cooling off period is the right of a buyer of property to cancel the agreement within 5 working days. It offers some protection to purchasers that may have rushed into a contract to purchase property and can be used to finalise financial arrangements or perform title searches. Cancelling the agreement (or rescinding, as it is known) will cost the purchaser 0.25% of the total purchase price.

  The cooling off period does not always apply (at auction, for example) and can be waived.
   

• What is a disbursement?

  
  A disbursement is one of the expenses incurred during the process of searching and obtaining a certificate from local government authorities or local councils etc.
   

• What does every buyer need to know about tenancy (not the rental kind)?

  
  If there is more than one buyer, you will have to decide on the legal relationship you will use when buying the property.  There are two choices:

  • As joint tenants or
  • As tenants in common

  
  The effect of  joint tenancy  ownership is that on the death of one owner their share in the land passes to the surviving joint tenants despite any provision in a will.
  
  If you purchase as tenants in common then on the death of a co-owner the share in the property of that co-owner will pass in accordance with the will of that co-owner or in accordance with the laws of intestacy if the co-owner does not have a valid will.
  
  Joint tenants can at any time give a notice to their co-owners which severs their interest from the joint tenancy.  A joint tenant who gives such a notice will then hold their share as a tenant in common with any other co-owners remaining as joint tenants between them (if more than one).
  
  If you are purchasing the property for investment purposes and the contract has not yet been entered into we recommend that you seek advice from an accountant or financial advisor on the best purchasing and borrowing entity for you taking into account your financial circumstances and financial planning requirements.
   

• What is transfer duty?

  
  Transfer duty is a state tax which is payable on dutiable transactions in Queensland. Transfer duty is calculated on the dutiable value of the property which is generally the higher of the consideration payable under the contract and the unencumbered market value of the property.
  
  As transfer duty is applicable to each transaction, you must ensure that the buyer named in the contract is the person or entity that you intend to own the property.  Otherwise you risk two or more assessments of transfer duty, which can increase the transfer duty payable.
  
  If you are seeking to purchase property for your Self Managed Super Fund (“SMSF”) and are planning to buy the property using a bare trustee as purchaser with a loan then you run the risk of having to pay transfer duty again when the property is transferred to your SMSF on repayment of the loan. It is outside our normal retainer to advise you on strategy to avoid that additional duty.
  
  You also need to carefully consider your current and ongoing eligibility for any concession or exemption that you obtain.
  
  If you do not fulfil obligations regarding the payment of duty or advising the Office of State Revenue of changes to your eligibility for concessions or exemptions then they may identify this (as they actively cross-check data held by other government agencies) and can seek to recover any shortfall directly from you including penalties and interest.  Recovery of incorrect or unpaid duty may occur years after settlement and could compound into substantial amounts.
  
  Please see our link to the Office of State Revenue for calculation of the transfer duty.
   

• What is registration?

  
  Registration is the act of supplying the transfer documents to the Titles office to cause their records to be updated.  There is a charge for this service and it is calculated depending on the purchase price.
  
  You might also have a release of mortgage fee (this will be allowed for in the Settlement Adjustments) and registration of a new mortgage fee payable.
  
  If you have a financier involved, they will lodge the transfer for registration along with the mortgage you grant in favour of the financier.  The financier will either seek payment of these fees from you directly or charge them to your loan account.  If you do not have a financier involved, you will be responsible for the payment of the registration fees when settlement occurs.
  
  Please see our link to the Department of Natural Resources for calculation of the registration duty.
   

• What happens if either party cannot settle on the due date?

  
  The seller can issue a 'Notice to Complete' which means the vendor or seller has 14 days (including weekends and public holidays) to settle the matter. If left unsettled, the purchaser has the right to terminate the contract and is eligible to receive their deposit back. The buyer may also apply to the Court to have the seller complete the agreement and hand over possession.

  The seller is entitled to charge the purchaser interest for the number of days settlement is delayed. The contract usually stipulates the applicable interest rate. When a 'Notice to Complete' is issued, the seller may terminate the contract and keep the deposit, and can legally place the property back on the market to sell.
   

• What happens at settlement time?

  
  Settlement is the finalisation of the sale or purchase process. There are usually four parties involved - the buyer and sellers' conveyancers and the banks for the seller and buyer.

  On settlement, the buyer's bank will exchange cheques as per the instructions of the buyer's conveyancer and in return, receive the Transfer and Release of Mortgage (if applicable) from the seller's bank.

  If prior to settlement the property in question has been damaged, there is a sufficient amount of time to take care of discrepancies prior to settlement.

  Once the settlement date arrives, the keys can be handed over to the buyer and the deposit is released (from trust) to the seller. At this stage, the buyer's bank registers the change of title and mortgage, and notifies authorities (such as the water company) of the change.
  

• Who notifies the authorities that I have purchased a property?

  
  When your transfer papers are lodged for registration after settlement, the council, electricity company, water and telephone line providers are automatically notified of the new purchase. Other providers, however, will need to be notified.
   

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