Understanding the process of buying a property can help address some of the stress of making such a significant financial transaction.
For many buyers, conveyancing and settlement are black boxes of complexity that happen after the drama of finding a property has been achieved. Most of us are very happy to leave it to solicitors or conveyancers, but what happens if things go wrong? Knowing your rights, potential remedial actions and possible penalties can help you make better decisions from the start.
Let’s address the purpose of conveyancing. In its simplest form, think of it as getting the paperwork done once you’ve decided on your property. While that’s a bit boring, this process exists to protect you.
For example, when you make an offer on a property, do you know that the seller actually owns it? Have you any idea whether the fences accurately mark the boundaries? Do you even know whether there is a third-party loan for which your future dream home is collateral?
Of course not. How could you?
This is where conveyancing comes in. You will employ a conveyancer or ask your solicitor to check all the relevant documents relating to the property to ensure that it is precisely as it was presented and truly yours to keep when you purchase the property.
Your conveyancer will have to check state documents, such as the land title, to get this job done right for you.
If everything’s in order, then it won’t be long until settlement looms. This is where you and the seller exchange contracts, and the relevant banks move money based on your purchase.
It doesn’t matter who you are or how many times you’ve done this, there’s always an edge of tension when you’re dealing with your own home. So, to help explain the process, here is a short list of potential problems and fixes.
1. Always know your rights – The terms and conditions of your purchase will be specified in the contracts you sign. These will provide a roadmap of action for any unforeseen issue. So yes, you should definitely read the contract!
2. It’s with the bank – Issues relating to finance are the most common cause of settlement delays. Your deadline or moving date isn’t necessarily the schedule they work toward. Filing inaccurate paperwork is your enemy here. In boom markets, a backlog can develop on the bank’s side so make sure to coordinate this carefully. You cannot be given the keys or move into the property until settlement occurs.
3. Last-minute issues – You should always conduct a final inspection of the property before settlement. You must make sure it is left as you had expected. If the seller has removed all the garden plants or the light fittings, or there’s been some damage caused, you might signal a problem and delay settlement to sort the issue.
4. A weak link in the chain – For most transactions, there’s more than one home involved. You might be trying to sell yours, and the seller will have a new property lined up. Your new dream home will be the meat in the sandwich if either of those transactions run into trouble. Inevitably, whoever has the problem will seek a delay. Talk to your lawyer or conveyancer about how to apply the contract conditions if this happens.
5. The fine print – You or the seller may ask for specific conditions in the contract in the event of a delay. This could be a financial penalty. Make sure you know what these are and if you’re not happy with them, negotiate early. Always try to find an amicable solution before pulling out the contract.
6. Grace period – Ask your solicitor or conveyancer what grace period exists under state law if there’s a problem.
7. Termination – This is the worst-case scenario: If you’re having trouble settling and time has run out, the seller can terminate the contract and keep your deposit. That’s a rare event, and there are legal hoops through which the seller must jump before they have the right to do that but you want to avoid it at all costs.