Firstly, what is a Contract of Sale?

An agreement produced by a lawyer to formalise the sale of real estate. This includes all the information on the subject property, conditions tied to the sale, who represents the buyer/seller and all of the buyer & seller information.

You can sign a paper contract or an online contract. How do they both work?

Your contract can usually be signed in paper form, or online. Online is becoming more common. The contract can be signed on your behalf by someone who you have appointed as your power of attorney.

How Do Online Contracts Work?

To sign online, you have to provide a separate email address for each person signing. You have to check that the contract has been filled in fully and correctly before you sign.

Will signing an online contract hold up in court?

Yes. The Australian Electronic Transactions Act of 1999 (ETA) says that electronic executions of contracts are valid under common law as long as the signing party has authority and has been identified properly.

How do they know it’s me who signed?

To prove it’s your signature, different services have different criteria. This can come in the form of identification apps, SMS verification and utilising your personal email.

What is the main service used?

The majority of services use ‘DocuSign’ technology. DocuSign uses a mathematical algorithm that acts like a cypher (secret code), creating data matching the signed document, called a ‘hash’, encrypting that data. The resulting encrypted data is the digital signature. The signature is also marked with the time that the document was signed, and says what computer/device it was signed on.

Simply put, their technology prevents fraud and can confirm a legal signing.

Has it been proven in court?

Yes, e-signing has been proven to be legally valid both here in Australia and abroad.

Will anyone have a problem using online contracts?

Rarely, since the introduction of PEXA, the majority of the property market has adopted it.

Typically, how would it work?

• Provide your details to the real estate agent, including:
• Full Names, Address, contact information and Conveyancer information.
• The real estate agent produces the contract.
• You receive an email with a secure link to review and sign the contract.
• At the same time, your conveyancer receives a copy.
• If satisfied, the service will walk you through where to sign with digital ‘tabs’.
• Once all parties have signed, you will receive a copy of the executed (signed) contract for your records.
• You will then be expected to pay the deposit immediately.

How does Paper Contracting work?

The process is very similar, just more manual.

The agent will present you with a paper copy of the contract of sale.

• All parties entering into the agreement will be added to the contract of sale.
• You sign your offer; the agent presents this to the vendor.
• The vendor countersigns the offer, and the contract is now ‘executed’ (complete).
• The agent typically provides you with:
• A copy of your signed version for your records
• A copy of the executed contract

Explaining the Contract of Sale

To keep this simple, there are a few main components that we’ll cover; anything too specific is best explained by your Conveyancer.

The first few pages – ‘Contract of Sale of Real Estate’

Both the people/entity purchasing the property and the seller sign this initial page
This confirms that the vendor agrees to sell the property and the purchaser agrees to buy the property.
This confirms that the agreement is legally binding and that both parties agree to the terms of the contract.
These initial pages also note the cooling-off period.

What is the Cooling-Off Period?

Even though you have signed the contract, you have three clear business days (VIC) to change your mind and end the contract. But you must notify the Vendor or its agent in writing within that time.

There are exceptions to this:

• You bought the property at or within three clear business days before or after a publicly advertised auction.
• The property is used primarily for industrial or commercial purposes.
• The property is more than 20 hectares in size and is used primarily for farming.
• You and the vendor have previously signed a contract for the sale of the same land in substantially the same terms.
• You are an estate agent or a corporate body.

Other states and territories have different cooling-off periods.

• VIC – 3 clear business days
• NSW 10 clear business days
• QLD – 5 clear business days
• WA – No cooling-off period
• NT – 4 clear business days
• SA – 2 clear business days – buyer only (Depending on when the buyer receives Form 1.)
• TAS – 3 clear business days (This is an optional box that you must tick ‘applies’)
• Australian Capital Territory (ACT) – In the ACT, there is a cooling-off period of five business days.

It’s important to note that these regulations can change, and there might be exceptions based on specific circumstances or contract terms. Buyers and sellers should consult with legal professionals or conveyancers to fully understand their respective states’ cooling-off periods and other contractual obligations.

Is my deposit refunded if I cancel the contract during the cooling period?

• VIC – You are entitled to a refund with only $100 or 0.2% of the purchase price deducted, whichever is greater .
• NSW –  YES – 0.25% of the purchase price
• QLD – YES – 0.25% of the purchase price
• NT – No penalty
• WA – Doesn’t apply.
• SA – YES – $100 fee.
• TAS – Nil (if selected).
• ACT – YES – 0.25% of the purchase price.

What are the Particulars of Sale?

The particulars of sale in a contract in Australia are the specific details and terms that outline the agreement between the buyer and the seller when purchasing a property. These particulars, which are close to the front of the contract, provide clarity and legal protection for both parties involved in the transaction.

What is a Vendor’s Statement?

The term ‘Section 32’ is specific to Victoria. The Vendor’s Statement is a legal document provided by the seller of a property to the potential buyer before the sale of the property. The purpose of the Vendor’s Statement is to provide important information about the property, its title, and other relevant details to help the buyer make an informed decision.

The Vendor’s Statement typically includes information such as property details, encumbrances/restrictions, zoning/planning information, outgoings, ownership, title and more.

The ‘Vendor’s Statement’ Must be Signed by the Vendor First

The vendor must sign the Vendor’s Statement to confirm the details within the document are correct. The copy you review should already be signed; if it isn’t, ask for it to be.

Why do I have to sign the Vendor’s Statement?

It mainly protects the agent. It confirms that the real estate agent delivered a copy of the vendor’s statement BEFORE signing the contract of sale.

Does every state/territory need one?

No. Only vendor’s in Vic, NSW, and ACT are obligated to obtain and disclose certain information, as per state government legislation.

• VIC – Required. Also known as ‘Section 32’
• SA – A similar document known as the “Form 1” disclosure is typically provided by the agent.
• TAS – Not required.
• NSW – Required.
• QLD – Not required.
• ACT – Required.
• WA – not required, but typically, the agent will provide a ‘Sellers Disclosure Statement’
• NT – Not Required.

https://wlegalgroup.com.au/property-coach/2022/05/16/property-sales-disclosures/

What is a Sunset Clause?

A timeframe for certain conditions to be met for the contract to proceed. If the conditions are not met by the specified date, the contract may be terminated (VIC). Usually this relates to completing the roads etc for a subdivision, and having the plan of subdivision registered.

Can the vendor cancel under the Sunset Clause?

No, only the purchaser can (VIC).

Why? If the vendor (developer) sold the land in 2019 and by 2020, it went up by 25%, it prevents them from purposefully delaying development in order to cancel the contract under the sunset clause and re-listing the property for a higher price.

What is a common situation where a ‘Sunset Clause’ would be used?

You signed a contract in 2019, and the developer still hasn’t titled the land. Typically, your contract will have a ‘sunset period’; once this is reached, you can either cancel the contract and receive your deposit back or sign an extension.

How Long is the Sunset Period?

It is different for every contract. You will typically see 36-48 months.

Does a sunset clause exist in all states/territories?

• VIC – Yes, required by law and only the purchaser can cancel (although Vendors can give themselves rights to not proceed if conditions such as sales, finance etc are not met by a certain date).
• SA – Yes, either party can terminate.
• TAS – Yes, either party can terminate.
• NSW – Yes, required by law and only the purchaser can cancel (although Vendors can give themselves rights to not proceed if conditions such as sales, finance etc are not met by a certain date).
• QLD – At present either Vendor or Purchaser can avoid the contract, but there is a bill before Parliament restricting the Vendor’s rights to do so.
• ACT – Yes, required by law and only the purchaser can cancel (although Vendors can give themselves rights to not proceed if conditions such as sales, finance etc are not met by a certain date).
• WA – Yes, either party can terminate.

What is a ‘Special Condition’?

A special condition is a clause added to the contract specific to your agreement and usually addresses unique circumstances.

Example: A new special condition is added, allowing you to make the contract subject to the sale of your existing property. So, unless you sell your property, the contract remains conditional to suit your circumstances.

What are ‘Definitions’ in a Contract used for?

The explanation of what certain words mean in a contract. This further clarifies what a statement means when reading through it. It’s very important to understand what the exact definition of a word is so you understand what you’re agreeing to.

How does the Deposit work in a Contract?

• Under the deposit section, the price for the block of land will be listed.
• The ‘Deposit’ field will then show the total deposit amount. They can only ask for up to 10%. This section will also mention when the deposit is due.
• It should also stipulate what has already been paid (i.e. a $1,000 holding deposit)
• And then show the remaining amount you owe.
• The Deposit has to be held in a trust account, until all conditions have been satisfied (such as completing the roads and registering the plan of subdivision).

In this example, you would owe $29,000 by 05/05/2023 because you’ve paid a $1,000 holding deposit. At settlement, you must pay $270,000 to settle the land.

What does Exchanging a Contract mean?

An exchanged contract means that all parties agree and have signed the contract.

It typically works in the following way:

• You sign your contract, and it is sent as an offer to the vendor (developer/owner)
• The vendor agrees to the offer and signs the contract.
• You receive a fully signed version, meaning all parties agree, and the contract terms are now in effect.
• This will often be signed, and copies provided, electronically.

Land & Build

In this article, we’ll cover the following topics, as quickly and simply as possible.

• Main responsibilities of a conveyancer
• Expectations YOU should have
• What is a trust account and how is my deposit used?
• Use of deposit explanation (funding, term deposit use)
• Legal protections of a trust
• Deposit transfer from agent/developer to solicitor
• PEXA & Settlement

Key differences in conveyancing to note in states/territories other than NSW, VIC, TAS & NT.

Western Australia

• A conveyancer is also known as a ‘Settlement Agent’.
• They require a ‘settlement agents’ license.
• Their license is issued by the Western Australian Government
• You will need to sign a ‘Form 1 Appointment’ in order for a ‘Settlement Agent’ to represent you.

Queensland

• Solicitors must handle conveyancing transactions. Conveyancers work under solicitors in law firms. You won’t find a conveyancing practice without a solicitor.

Looking to buy land or engage in a build? You’ll need to know what a conveyancer does.

Example, you’re at the point where you’ve decided to purchase a block of land or house and land package. You’ll need a representative who can read the contract, translate any legal wording and manage the contract and settlement process for you.

Firstly, what exactly is a Conveyancer?
Conveyancing can be performed by a registered conveyancer or solicitor. A registered conveyancer is typically more common for basic property buying and selling.

Conveyancing covers all the legal aspects of buying your land (or house & land) and transferring it out of the developer’s ownership and into your own.

Do I have to?
The role of a conveyancer is diverse and is not a legal requirement, however without the experience, doing it yourself may prove to be problematic and is typically not advisable. Especially because in most states this is done online, you must use a person who has a licence to do that.

When should I hire a Conveyancer?
It’s one of the first things you should do and advisable before you sign a contract.

In land sales, you’ll be able to place a refundable deposit to hold the land while your conveyancer reviews the contract, just ask the sales consultant. This way, you can hold the land and do your due diligence without formally committing.

It will also allow you to communicate any special conditions that you’d like added into the contract of sale with the vendor.

Example special condition – subject to finance.

What will the Conveyancer do?

Review your contract of sale (land) and/or HIA contract (build)

They will review the contract and terms proposed by the developer (vendor). Their role here is very simple:

• Review the special conditions, looking out for your best interests.
• Query any irregularities that may not be favourable TO YOU.
• Ensure the Vendors Statement includes all the certificates and required documentation (vendors statement is towards the back of the contract).
• Translate any of the legal terminology into easily explained terms so you understand what they mean.

This is all done to clearly inform you on what you’re agreeing to and most importantly, what is expected of you in the agreement. That way, you can sign the contract with a clear understanding of what it all means.

Is that all?
No, they’re also:

The direct link to the vendors legal representative. They will ask any questions you have for you. If you need an extension; your conveyancer asks for you.

This is an extremely important part of the process, as the conveyancer typically knows how to speak with other representatives and has a higher chance of favourable approval on your behalf.

They prepare and lodge legal documents, including the contract, transfer documents and deal with any government incentives/requirements.

Calculate the adjustments for rates and taxes which is essentially paying any portion of water bills, council rates and any other services associated with the land. This is an adjustment at settlement and will typically be a small amount reimbursed to the vendor (developer).
Settle your property by ensuring your funds are available and attending settlement by the set date. They work with your broker and/or bank on this. Settlement is an on-line process.
Now that we understand the basics of what a conveyancer does when buying a property, what should I do before engaging one? It’s important to shortlist a few conveyancers when doing your research. Once you have your list together, there are some key things you should consider doing.

1. Price
   How much does the service cost and what is included? Just like anything in life, if it’s too good to be true, it just might be, always question very low pricing. If a conveyancer works off low pricing and higher client numbers you may notice worse service, delays in communication and mistakes.
2. Reviews
   It’s always a good idea to search for the company on Google and read through the reviews. This provides valuable insight into how a company operates and treats their clients.
3. Ask your friends and family.
   Their experiences matter and they may be able to refer someone.
4. Experience
   Do they have experience with land and build contracts? You want someone familiar with off the plan transactions.
5. Does the conveyancer have a license?
   Are they a member of the Australian Institute of Conveyancing? NOTE: Lawyers can conduct conveyancing work in accordance with the Legal Profession Act 2004. They are not required to hold a conveyancer’s licence.
6. How will you communicate with me?
   Asking how they will communicate is important. Will they call, text, WeChat or e-mail? Ask how long they typically take to respond to a client or pass information on to a client once received.
7. Total Costs
   Ask what the total fees are for this transaction. Have them confirm their fee, PEXA, stamp duty (if you know what you’re going to buy) and any other associated costs.

How much should I pay for the service?

For most land transactions, you can expect to pay between $440 and $1,550 depending on the complexity and who you hire.

Land transactions are typically quite straight forward, however the more complex the purchase, the more you may be quoted.

Here’s a typical breakdown of what you can expect to pay in Victoria:

• Typical Conveyancer $880
• PEXA Fees
• Change of ownership $132.66
• Stamp Duty (if you are buying) – this will be your biggest expense and is determined by purchase price.

*A full list of PEXA fees can be found here: https://www.pexa.com.au/pricing/
Stamp duty calculator for Victoria can be found here.
https://www.e-business.sro.vic.gov.au/calculators/land-transfer-duty

When am I charged?

Typically, at settlement of the property. Some may ask for fees upfront due to long settlement times.

Is the fee fixed?

In most cases, yes. It’s rare to receive a variation.

Once you’re comfortable, you can engage your preferred conveyancer by speaking with them.

It’s an investment, can I claim the fee? No. It’s considered a “capital cost” which falls into the same category as stamp duty. But fees in relation to any loan are deductible.

Now that you have a conveyancer, you’ve paid a deposit into a ‘Trust Account’. What is that?
In a land purchase, a trust account is specifically used by the agent to hold your deposit on a land sale. It’s then usually transferred by the agent to the vendors solicitor.
Is it a normal bank account? No, it’s a special account. How is it different? Trust accounts are very tightly regulated and must be fully audited once a year.

The Real Estate Agent cannot invest or use your funds, they can only hold them. Breaking the law may result in a very large fine and up to 10 years in prison.

Does the developer get interest off my money? It is common for the account to produce interest which is owned by the developer while you wait for your land to title.

Building Contracts

• Deposits don’t need to be paid into a trust account.
• Deposits can’t be more than 5% by law if the contract value is over $20,000.
• The builder can use the deposit paid to operate the business.

Why do I need to pay a deposit?

1. Show that you’re serious – A refundable deposit is paid to hold a block of land and show that you wish to proceed once negotiations are finished.
2. Collateral – the full deposit is paid so you don’t walk away from the deal. Typically, if you break the terms of the contract, you will lose your deposit. This reassures the developer that you will eventually pay the remaining funds once the land is titled.
3. Project Funding – If a developer needs to get a bank loan to construct the land, they will use the deposit as proof of sale to the bank. The banks will usually request a certain number of deposits be held prior to them funding the stage for construction.

Settlement – what do I do?

Your legal representative (conveyancer or solicitor) will be notified when settlement is approaching. It’s typical for notifications to be sent for the following:

• When practical completion is achieved
• When statement of compliance (SOC) is achieved (this is when they lodge to titles office)
• When Titles are achieved

You may also be contacted directly by the sales company.

When titles are achieved, it means that the land has gone from a single large piece of land to multiple smaller pieces of land and now you can take ownership of the one you have chosen.

Typically, from lodgement, titles can be received in as little as five days once SOC is achieved.

Once titles are achieved, you have 14 days to settle. Beyond that, you may incur penalties from the developer.

PEXA is used by your legal representative to handle the process of settlement.

What is PEXA?
Every time a house is bought, sold or refinanced in Australia your lawyer/conveyancer and lender will most likely use a digital platform to settle your property and it’s typically through PEXA.

It allows real time tracking, so every party understands the status of settlement and is very necessary.