Be familiar with the legal / conveyancing process and associated costs to stay on track
When selling property in Queensland, there are usually fourteen stages that you need to be aware of. Each stage may have its own costs associated with it or be grouped into a final payment.
Let’s take a closer look.
1. Preparing the contract of sale
The Real Estate Institute of Queensland Contract for Houses and Residential Land and Real Estate Institute of Queensland Contract for Residential Lots in a Community Title Scheme need to be done.
Both these contracts should have a Warning Statement attached in accordance with the provisions of PADMA.
The seller’s real estate agent is responsible for the preparation of the contracts.
A word of caution:
If the seller fails to comply with PADMA, then the purchaser may not be bound by the contract and could terminate the contract at any point in time.
2. Make an offer
Now this is when the purchaser puts in an offer to buy the property.
The offer may or may not be accepted by the seller and they may choose to enter negotiations over the terms of sale and price instead.
3. Paying a holding deposit
Highly motivated purchasers may sometimes pay an initial deposit called a holding deposit to the seller. This can show genuine interest in buying the property. The amount payable is usually around $1,000 or $2,000, having been defined by the seller or the seller’s agent.
The holding deposit is usually non-refundable.
4. Buying at auction
Selling your property at auction can attract further costs for the purpose of:
- other fees
What happens next?
The seller sets a reserve price, which is the lowest amount they will accept. If bids do not reach this, the agent can negotiate a higher price with interested parties or put the home back on the market.
Before your property is auctioned, your solicitor or conveyancer should make sure that everything is in order by examining the sale contract.
The purchaser also needs to have completed any property inspections and sorted out their finances.
5. Exchange of contracts & paying a deposit
This stage is all about exchanging contracts and paying a deposit.
Stay with me:
In Queensland, as soon as both parties sign the contract of sale and the purchaser receives their copy, both the seller and purchaser are bound by the terms of the contract.
The real estate agent usually arranges and delivers the copies to both the seller’s and purchaser’s solicitors or conveyancers. The deposit is usually around 10% of the purchase price less the initial holding deposit.
6. Insuring property before settlement
Many purchasers decide to take out their own insurance before settlement.
This is to lower their risk if any damage happens to the property and the seller does not have a current insurance policy. Insurance policies will vary in cost depending on each property’s individual circumstances.
7. Cooling off period
Let me explain:
The cooling off period is where the purchaser has the right to cancel the contract.
Keep in mind:
In Queensland, the cooling off period is 5 business days from exchange unless waived by the purchaser who has received PAMDA Form 32a from a lawyer. The cooling off period will only commence if the seller complies with PAMDA. If revoked, the purchaser forfeits 0.25% of the purchase price.
8. Transfer of property title
Who is responsible?
The purchaser’s solicitor or conveyancer is responsible for:
- preparing the transfer document
- getting the purchaser to sign it
- paying any stamp duty to register the document
The purchaser’s solicitor or conveyancer ensures that the transfer is sent to the seller’s solicitor or conveyancer for the seller to sign.
The stamp duty varies depending on the property value.
9. Time for completion
How long should it take?
In Queensland, the time for completion is usually 30 days unless otherwise specified. A breach of contract occurs when there is a failure to complete on the agreed upon date.
Remember, time is of the essence.
Let’s see exactly how this stage works.
At this point in time, the purchaser’s solicitor or conveyancer needs to send out a list of formal questions about the property. This is known as the requisitions on title.
This is sent to the seller’s solicitor or conveyancer who will reply to these questions.
Why go to all this bother?
These questions are asked to help determine various factors such as:
- whether there have been general defects in the title
- if there has been construction on the land
- if the property is spoiled
The answers to these questions may include information, which may not have been disclosed or even discovered during the inspection of the property.
If the answers are not satisfactorily disclosed in the sales contract, then the buyer can:
- cancel the contract
- ask for a lower sale price
- sue for damages.
Costs are usually included in the final settlement.
11. Outgoing mortgage
During the eleventh stage, if the seller has a mortgage over the property, they need to contact their mortgagee to get a payout figure.
That means that during the settlement stage, the mortgagee needs to attend to and hand over a discharge of mortgage as well as the certificate of title or title deed.
This is very important.
During settlement time, adjustments are made on the property.
What does this mean?
At this stage of the game, the purchaser needs to reimburse the seller for advance payments or bills, which have been paid.
The normal adjustments are for:
- water rates
- strata body corporate contributions
- land tax
- rent if property is tenanted
- council rates.
The day of settlement is when the solicitors, mortgagees and/or conveyancers meet and hand over the title documents in exchange for payment.
The sale is only final when the full amount of owed money is paid, including any adjustments.
On settlement day, a final search of the title is also obtained, to make sure that there is no new interest that has been lodged on it since the date of exchange.
Then you’re good to go!
14. After Settlement
The Land Titles Offices will advise the relevant authorities that the property has a new owner when the purchaser or purchaser’s mortgagee registers the transfer documents with the Land Titles Office.
What happens next?
- The mortgage will be discharged if needed
- A withdrawal of any caveat(s)
- The transfer of title from the seller to the buyer
- Transfer of mortgage from the purchaser to the new mortgagee.
Use these online Queensland Property Resources to speed up the process
Two websites where you can find out more information on the buying and selling process in Queensland are:
REIQ are advocates for real estate agents in Queensland, but their site does have information on the nine selling steps a vendor needs to know, as well as information on the latest market trends.
The Office of Fair Trading can help you with tips on:
- what to do before you sell
- what happens when you get an offer
how to prepare for the final settlement of your property