What is conveyancing?

Conveyancing is commonly defined as the legal process of transferring ownership of title and property rights from one party to another. However, conveyancing also includes creating, varying or extinguishing a legal or equitable interest in real or personal property, such as the creation or removal of an easement, caveat, covenant or mortgage, as well as the giving of legal advice in respect of those matters.

 

Whether you are buying or selling, a conveyancer’s principal role is to protect your equitable interest in the property and ensure the property rights are correctly transferred. This goes far beyond the act of preparing and lodging a transfer of land and exchanging funds.

For a seller, a conveyancer will:

• Provide legal advice as to what documents may be required in order to sell the property, such as warranty insurance under the Building Act for any improvements undertaken to the property.

• Prepare the contract of sale and section 32 to enable the sale of the property.

• Negotiate the wording of any additional terms and conditions requested by a prospective purchaser.

• Represent the seller in respect of any requests to and by the purchaser.

• Arrange for the discharge of mortgage with the seller’s bank.

• Arrange for the release of deposit funds to the seller before settlement.

• Calculate the pro rata adjustment of rates and taxes to be apportioned between the purchaser and seller.

• Complete and lodge any additional legal documents required, including the transfer of land and notice of disposition.

For a purchaser, a conveyancer will:

• Review and provide advice on the contract and section 32 documents.

• Undertake searches and inquiries to ensure the seller has not lied or omitted any information from the section 32 disclosure statement.

• Negotiate the conditions of the contract of sale.

• Represent the purchaser in respect of all requests to and by the seller.

• Arrange for the handing over of loan proceeds with the purchaser’s bank.

• Ensure the title is in good standing before such time the seller becomes entitled to the release of deposit funds.

• Calculate the pro rata adjustment of rates and taxes to be apportioned between the purchaser and seller.

• Complete and lodge any additional legal documents required, including the transfer of land and notice of disposition.

If you choose not to use a conveyancer, you can represent yourself. In Victoria, settlements conducted by conveyancers and solicitors must be completed electronically. However, for unrepresented parties, they will be required to book a paper settlement with the representative on the other side of the transaction and any mortgagee involved. A guide to completing paper settlements can be found on the website of the Department of Environment, Land, Water and Planning.

The risks associated with undertaking your own conveyancing as a seller is that if you omit or overlook any document or disclosure that is required to given the purchaser may avoid the contract and you may still be liable to pay the estate agent’s commission.

As a purchaser, it is important to note that it is not uncommon for documents and disclosures to be omitted from a section 32 and accordingly you must have regard to what documents the section 32 should contain, as much as what documents is does contain, which something that generally only experience will allow you to do. In addition to assuming responsibility for a defective property, you may also become liable for the vendor’s capital gains tax, GST liabilities, backdated land tax and other charges if you are not aware of all the certificates you need to obtain before settlement.

Both conveyancers and solicitors have formal qualifications to give legal advice and prepare legal documents in respect of property matters. While a solicitor has a broader knowledge of legal matters, having spent a long time studying other areas of law such as criminal law, tax law and copyright law, a conveyancer specifically studies property law and generally has a more in-depth knowledge on conveyancing matters given that they’ve studied that area of law for longer.

The licensing requirement for conveyancers however, is very minimal, requiring them to only undertake one (1) year of supervised training in addition to their formal qualification before being able to apply for their own conveyancing licence. Accordingly, there are a lot of licenced conveyancers who have perhaps opened their own practices while inexperienced and tend to give incorrect advice to their clients.

Similarly, when purchasers and sellers engage a solicitor, the file is commonly handled by a legal executive, paralegal or an employee with no formal qualification, who also tend to give incorrect advice to their clients.

When selecting a conveyancer or solicitor to represent you in your property dealings, the most important factor is the amount of experience and knowledge the individual file manager has.

The first stage in the conveyancing process whether you’ve decided to buy or sell a property is to contact a conveyancer to either review and provide advice on the sale documents for the property you’re interested in, or to prepare the sale documents on the property in which you are selling.

Once the sale documents are in order and the purchaser and seller have agreed upon the terms of sale, the conditions are reflected in the contract which is exchanged and signed by both parties, and sent to their respective conveyancers.

If a purchaser is reliant upon finance to complete the purchase or there are any special conditions such as building and pest inspections which need to be satisfied, they will then arrange for the appropriate inspection or bank valuation to be undertaken.

As part of the conveyancer role in arranging for settlement, they will contact their client’s bank to provide copies of any documents required by them or organise the discharge of mortgage, and book a time for settlement.

Prior to settlement, a good conveyancer acting on behalf of a purchaser will make a wide range of enquiries and searches to ensure their client is receiving good, clear title and that nothing has been omitted from the section 32. The extend of enquiries will vary from conveyancer to conveyancer, with more experienced conveyancers having a better understanding of what additional enquiries need to be made.

At settlement, the vendor will exchange the certificate of title, transfer of land and any discharge of mortgage in exchange for the balance of the purchase money. The transfer and new mortgage will be registered, and the conveyancer will attend to notifying the relevant authorities of the change of ownership.  

 

Conveyancing fees are usually made up three (3) components:

• The professional fees your conveyancer charges you to provide advice, prepare legal documents and undertake the conveyancing process.

• Disbursements which are the costs incurred and paid for by the conveyancer to undertake the conveyancing process such as a search of title, copy of plan of subdivision, or obtaining property certificates.

• Taxes, Registration and lodgement costs charged by Land Registry or other bodies such as stamp duty, registration fees on the transfer of land or mortgage, and lodgement costs on submitting the transfer and mortgage to Land Registry.

Both the buyer and seller will need to engage their own conveyancer to represent their respective interests in the transfer, and each party will be responsible for their conveyancer’s costs.

However, we do see many contracts with conditions and stipulations that a purchaser must pay the vendor’s conveyancing costs on any requests for finance extensions, nominations, and changes to the settlement date. Such conditions would appear to be a breach of section 42(3) of the Property Law Act 1958 which provides that no contract of the sale of land shall contain a condition stipulating for the payment by the purchaser to the vendor or their conveyancer of any costs except by reason of default.

Thanks to the automation and electronic delivery of many certificates, and electronic conveyancing, it is possible to complete a settlement the same week that the contracts are executed.

However, where a mortgagee is involved on either side of the transaction, they will usually require a minimum of 14-21 days to prepare the discharge of mortgage or mortgage contract, arrange for the purchaser’s execution and verify the returned documents before advancing any funds.  

Preferably, the settlement period should be no less than 28 days, and where a purchaser is obtaining finance and bank valuations will be required, the settlement period should ideally be no less than 45 days.