Conveyancing FAQ
Welcome to our conveyancing Frequently Asked Questions (FAQ) section. We have attempted to categorise FAQ according to various topics, so that you can access your area of interest quickly. See the list of topics down the left hand side of this page. General FAQ can be found on this page.
We welcome feedback from our clients and visitors, so if you can suggest any further topics or questions for this section, please send your suggestion to us by email.
What is the first thing I need to know about conveyancing?
Conveyancing is a legal and adversarial process
First, real estate sales and the conveyancing transaction are legal processes, and legal processes in Australia are generally adversarial – in other words, it’s you versus everyone else who is involved in the transaction. Here are some examples:
- Vendor vs Purchaser – Vendors and purchasers are adversaries in property transactions. Each party is also bound by rules that they have agreed upon, namely, the conditions of the contract they have both signed. If everything proceeds according to the law and according to the conditions contained in the contract, then the adversarial nature of the transaction is not obvious.
However, if one of the parties breaks the law, or fails to honour any of the conditions of the contract, then the parties may become involved in a legal contest as adversaries. - Real Estate Agent vs Vendor – When a vendor signs an Exclusive Sale Authority the real estate agent effectively becomes a part owner of the vendor’s property for the exclusive sale period. This is because the real estate agent will win a percentage of the value of the vendor’s property if it is sold during the exclusive sale period. The real estate agent’s self-interest in having the property sold (at any price in order to win a commission and to recoup any losses in terms of costs and time), as against the vendor’s desire for the best price, places the real estate agent in a position of conflicting interests. Conflicting interests often lead to desperate, improper and even illegal behaviour by real estate agents. In these circumstances the real estate agent becomes an adversary.
- Real Estate Agent vs Purchaser – Many first home buyers believe that the real estate has a role in assisting and protecting them. In fact, real estate agents have a well-deserved reputation for deceiving purchasers, first home buyers in particular. Sometimes, the behaviour of the real estate agent can even allow the purchaser to cancel a contract. However, if the vendor of the property is an innocent party, the purchaser may not be permitted to cancel the contract, and may have to sue the real estate agent. In these circumstances the real estate agent becomes an adversary.
- Lender vs Borrower – Lenders, including the largest banks, have been known to be unscrupulous when dealing with purchasers. It is for this reason that the Consumer Credit Code (CCC) applies to non-commercial residential home loans. The CCC contains a set of rules which lenders must obey when dealing with a purchaser of residential real estate, but these rules are regularly breached. In addition, there are standards of banking practice that have been adopted by most lenders. If your lender breaks the law or the standards of banking practice, you are entitled to complain or to enforce your legal rights. This will make your lender an adversary.
The role of your lawyer
Your lawyer is your adviser, and is the ONLY person in the transaction whose role it is to protect your legal interests and to keep you safe.
As your lawyer, it is our role to represent you during the conveyancing transaction. This role requires us to examine a situation, determine whether you are in dispute with a party to the transaction, decide which party (there may be more than one) is involved, and to determine your rights or responsibilities in relation to that party. We must then provide you with legal advice, obtain your instructions, and do what is necessary to properly fulfil your instructions.
Sometimes a potential adversary may attempt to convince you that it is in your interests to do things their way. For example, the real estate agent may claim to be assisting you by writing a condition into the contract on your behalf. Or your finance broker may tell you to do something that is contrary to our advice. To use your lawyer effectively you must never accept advice, information or guidance from any potential adversary without checking with us first.
You should always trust your lawyer above all other parties to the transaction.
Sometimes, we have clients who, after being given conflicting information from numerous parties to their transaction, complain, “I don’t know what to believe or who to believe, because everyone’s telling me something different.” This indicates to us that the client has failed to understand that all other parties to the transaction are adversaries, and have their own interests to consider. (See an example of this under “My broker says that your firm is being difficult – what’s going on?” in our Bank and Finance FAQ.)
We cannot properly represent a client unless the client puts their trust in us, and accepts the advice we give. Remember, no other party to the transaction is being paid specifically to advise, assist and protect you. “Free” advice offered by others is worth what it costs!
Complaints about your lawyer
It is all very well for us to say that you should trust us only, trust us completely, and rely on our advice. But what happens if you feel that you have good reasons to doubt that what we are advising is truly in your best interests? You should let us know immediately!
If a member of our conveyancing staff is unable to explain the situation to your satisfaction, you should ask to speak with the Legal Practitioner Director (LPD). No-one will be offended if you ask to speak with the LPD, as it is the first step in resolving what could otherwise become a major misunderstanding. It is also the first step in our formal complaints procedure.
Having a formal complaints procedure in place allows us to demonstrate that you are safe in putting your complete trust in us; it shows that we have the backup to ensure that a failure to honour that trust is dealt with by way of a proper, formal procedure.
What is conveyancing?
Basically, conveyancing is the legal process by which ownership of real estate is transferred from one person to another. However, most people understand conveyancing to involve the preparation of the Section 32 Statement, the sale contract and the giving of legal advice as falling within the definition of “conveyancing”. [More]
What is the difference between a lawyer and a conveyancer?
A lawyer is a person who is trained to advise clients on their legal rights and obligations in a variety of circumstances, including the buying and selling of real estate and the conveyancing process.
A conveyancer is a person who is licensed to assist buyers and sellers of real estate through the conveyancing process, but cannot advise on areas of law that are beyond “conveyancing work” as defined in the Conveyancers Act 2006.
While a lawyer can assist the client with all legal matters associated with the sale or purchase of real estate, a conveyancer must cease to act for the client as soon as the matter moves beyond “conveyancing work“, or the client requires legal advice on areas of law which are outside of the “conveyancing work” but related to their sale or purchase. When this happens the conveyancer must refer the client to a qualified lawyer. [More]
What is the role of the real estate agent?
Real estate agents are not really agents at all. In legal terms, an “agent” is someone who represents another (known as the principal) and does things on behalf of the principal.
An agent does not really represent anyone. The seller of real estate is represented by their lawyer, and the buyer of real estate is represented by their lawyer. The agent is really a broker, whose role it is to introduce potential purchasers to a client’s property in return for a fee.
Unfortunately, the real estate industry is commission-driven , and this drives agents to assume more control over the sale transaction than they should. [More]
What is “gazumping”, and does it still occur?
Gazumping occurs when a vendor refuses to formalise a firm agreement to sell to the purchaser at the last minute in order to accept a higher offer. It is not uncommon for a vendor to tell a purchaser that their offer will be accepted, and then to sell to someone else for a higher price. This can occur at real estate auctions as well (the auctioneer calls “sold”, but the vendor refuses to sign the contract and later sells to another person for a higher price).
In Australia it is assumed that a purchaser understands that a sale has not taken place until the contract has been fully executed (signed by both parties), and that a purchaser who claims to have been “gazumped” has failed to understand the law as it applies to real estate sales.
If you are gazumped, neither the agent nor the vendor is obliged to compensate you for any money you may have spent on legal advice, inspection reports, finance application costs or inquiries. However, your “expression of interest” payment (if you have paid one) must be refunded to you in full.
A second form of gazumping occurs where the real estate agent adds a special condition to the contract, which allows the vendor to cancel the sale and to sell the property to someone else. This is usually done without the knowledge of the purchaser. Such clauses are regarded as unfair and unethical, and in many cases the insertion of such a clause by a real estate agent may constitute a criminal offence. [More]
What is “cooling off”, and who can cool off?
Cooling off is a term used to describe the right of a purchaser of real estate to cancel the contract and walk away from the purchase on a “no questions asked” basis within a specified period of time.
In the state of Victoria a purchaser has 3 clear business days, from the day on which they sign an offer to purchase, to “cool off”. However, there are certain exceptions to the right to cool off, and the right must be exercised in accordance the procedure set down in Section 32 of the Sale of Land Act 1962. [More]
What is an “offer”, and why do real estate agents always want written offers?
A formal offer is more than an indication of the amount a purchaser is willing to pay for a property. It is a written confirmation that the purchaser wants to buy the property, and be legally bound to proceed with the purchase.
Purchasers usually want some indication from the real estate agent as to whether the vendor will accept the amount the purchaser is prepared to pay for the property, before they commit themselves in writing. Instead of giving the purchaser a direct answer, most real estate agents will request a “written offer”. Extreme caution should be exercised before submitting anything in written form, including letters, notes or even emails and SMS’s, as they could result in a binding contract. [More]
What is an “off-the-plan” purchase, and how does it differ from a standard purchase?
Buying “off-the-plan” means buying land or an apartment that does not yet exist other than as a drawing on a proposed plan.
Imagine a large paddock surrounded by a single fence. The owner would like to divide the land into small lots and sell them off, but he may not have enough money to do this, and he may not be sure that people will want to buy them.
To minimise his risk, the landowner can “sell” the blocks first, and then divide them up later. This is done by entering into contracts with potential buyers on the basis that the landowner (vendor) will do his best to sub-divide the land, and if he is successful the sale will be completed. Usually, the vendor has a limited time (from 18 months to 3 years) to have the land sub-divided. If the land cannot be sub-divided within the time specified in the contracts, the contracts can be cancelled, and the purchasers will get their money back.
The vendor has plans prepared, showing the paddock divided into smaller lots. Potential purchasers select lots as depicted in the plans, and if everything goes well the purchasers will eventually receive individual titles for the blocks of land they have chosen.
The situation is the same with unit developments. Building works may not have commenced, but purchasers can enter into contracts to purchase units, chosen by reference to plans of the proposed buildings. [More]
What do I need to know about buying at an auction?
Real estate auctions are a risk for vendors and purchasers alike. Vendors risk losing money on useless advertising and being forced to accept a low price, while purchasers risk wasting money on inspections and “due diligence” investigations.
Real estate agents love auctions because “auction day” is regarded as “pay day”, so long as a sale can be made. The need to make a sale is what drives agents to resort to underhanded, unethical and downright illegal conduct. [More]
Should I have the Contract and Section 32 checked before I buy?
Yes, and we have developed our pre-purchase legal advice service specifically for this purpose.
Conveyancing begins AFTER you have purchased real estate. Too many consumers fail to obtain legal advice from a qualified lawyer before they buy, and this can lead to enormous problems after the sale has taken place.
The problem with ad hoc pre-purchase legal advice is that it can be expensive if legal advice must be paid for on an hourly basis, particularly if the client is advised against buying the property.
Purchasers can access free information on the basics of dealing with real estate agents and buying real estate with our automatic email.
We also provide a fixed-fee pre-purchase legal advice service which has become extremely popular with purchasers, and particularly with first home buyers. Our pre-purchase advice clients even include lawyers from large corporate law firms, some of whom have returned numerous times, and most of whom have referred others. For a fee of $250 one of our qualified property lawyers will read through the sale documents (the contract and section 32 vendor’s statement, and any attachments), and provide a comprehensive written legal advice report (over 20 pages of information about the purchase of real estate and legal advice specific to the particular property under consideration).
What do I need to know about real estate contracts?
The most important thing a consumer, whether vendor or purchaser, should know about real estate contacts is that real estate agents should NEVER be permitted to touch them.
Sure, agents like to portray themselves as having a role in the preparation and finalisation of contracts, but much of what agents do with contracts is illegal. For example, it is a criminal offence for an agent to draft contract conditions and to advise vendors or purchasers as to the contract condition’s legal effect, but agents do this on a regular basis.
Before a purchaser signs any written documents associated with the purchase of real estate, and before a vendor signs any written document to accept an offer to purchase a property, they should obtain legal advice from a qualified lawyer. [More]
