What is a Mortgage Broker?

A person or company who deals with multiple banks on your behalf.

Why not just go to a bank? You can, but they only represent their products that may not best fit your needs and will not tell you about better deals with other banks. A broker will generally have access to hundreds of products from over 20 lenders. This gives you more options and potentially saves thousands of dollars.

Key Advantages of a broker:

• Existing relationships with banks
• Knowledge of various products to assist in finding the best loan for you.
• A single point of contact who represents you and deals with the banks on your behalf.
• They only get paid if your loan is successful, incentivising them to perform and make you happy.
• Heavily regulated to ensure your best interests come first.
• Bankers generally move on to other banks or with promotions, whereas brokers tend to maintain longer-term roles focused on building relationships.

Do I need to pay a broker? Typically, no.

How do they get paid? The banks pay them with one upfront commission and a smaller trail commission over the life of the loan. This is paid as an incentive because they brought business to the bank.

The trail commission is paid for retaining your loan, so the broker is incentivised to provide continued good service.

Does their payment impact my price? No, brokers have access to the same base rates and in fact have access to pricing reviews for discounts with most lenders, brokers also have a legislative duty BID “Best interest duty” which requires a broker to always act in the best interest of a client.

Are they licensed? Yes, they usually operate as a credit representative under an aggregator who holds the credit license or may hold their own credit licence.

Does this help protect me? Yes, you cannot be an authorised credit representative if you have been convicted of a crime or serious fraud within the last 10 years. They must also be qualified by doing the following:

• Have at least a Certificate IV in Financial Services (Finance/Mortgage Broking)
• Undertake 20 hours of continuing professional development each year.

When should I hire a mortgage broker? As soon as you’re ready to look at property. The broker will be able to determine how much you can borrow without submitting a loan to the banks, allowing you to understand your budget and what you can spend. They can also provide initial advice if you’re not ready yet.

If you believe you’re ready, a broker can lodge a pre-approval so you can enter the market with confidence, this is generally valid for up to 90 days.

It’s very important that you understand your financial position before making any type of offer on a property.

What documentation do I need to apply for a loan?

• Proof of identity (Combination of Passport/driver’s license/birth certificate/Medicare)

• Proof of income – Share details of your employer, two recent consecutive payslips, and details of your previous employer if you’ve been in your current job for less than one year.

• Proof of expenses – Lenders will typically use your bank statement to determine how much money you must put towards your loan repayment each month.

• Asset List – It allows lenders to see your wealth and may assist in obtaining a mortgage as you can potentially use these assets if required.

• Liability List – It’s very important that you’re honest with this, make sure you truly declare any outstanding debts to ensure you can afford your repayments. This includes things like car loans and Afterpay.

Can I find out what I can borrow without it appearing on my credit history?

Yes, a broker will typically conduct a serviceability check to determine roughly what you would be eligible for. This follows all the criteria that the banks use, without the banks being informed.

You would typically use this method for an untitled lot that is over 3 months away from settling. It will give you the confidence to place an offer without formally approaching a bank and having your conditional approval expire.

NOTE: You can also use an online loan calculator, one is available at the bottom of this article.

How do they calculate how much I can borrow?

They use a Serviceability Calculator.

What is a ‘Serviceability Calculator’? It is a tool used by the banks to make sure you can afford to repay the loan each month.

How does it work? They take your monthly income and subtract your monthly expenses. Every bank is different, however most will build in a buffer, example:

The current interest rate is 6%, they will calculate it at 9% to be safe (they added a 3% buffer). They will then add your expenses and subtract your income, if you have enough money to cover your repayments and expenses, you qualify.

Why add a buffer? To be safe and cover any future interest rate rises or any unforeseen changes in your expenses/earning capacity.

Do all banks need to include this? Yes, a minimum of 3% must be added. This is set by a government authority called ‘APRA’ (Australian Prudential Regulation Authority)

What is conditional approval (pre-approval)?

You are approved for the agreed borrowing amount, but not guaranteed to obtain the loan. This gives you the confidence to place an offer on a titled lot or one that will settle within three months.

How long does it last? Generally, up to 90 days (3 months)

Why isn’t it guaranteed? The bank will still need to see the property contract and may still need to verify your financial position or perform other necessary checks such as a valuation on the property.

How long does it take to receive conditional approval? The length of time it takes to get conditional approval depends on your individual circumstances. In some cases, it takes a few hours. In other cases, it may take a few weeks.

What are the steps when applying for a loan?

1. Engage a mortgage broker or bank.
2. Discuss your goals and objectives (what you’d like to buy and/or borrow)
3. You confirm which finance product is right for you to the mortgage broker or lending specialist at the bank.
4. Provide the required documentation (as noted earlier).
5. Submit your loan application to the broker or bank (they will walk you through this)
6. Your broker or bank lending specialist submits the loan application along with your supporting documents to the bank.
7. Conditional approval is received.
8. Place offer on desired property.
9. All parties sign property contract.
10. Submit contract to lender.
11. Lender conducts valuation on property.
12. Valuation amount is satisfactory (what you paid and what the bank values the property at are the same or similar).
13. Receive unconditional approval.

What does ‘Unconditional Approval’ mean?

The bank finds you eligible for a loan and have no further conditions to satisfy.

• • The bank will then send a contract for you to sign agreeing to the loan. Your broker will present this to you.

In this article, we will be covering the main steps, processes and elements when it comes to building a new home, while also answering some important questions when it comes to what you’re entitled to and how it all works.

Firstly, what is a ‘residential build’?

A residential build is typically a single title home that is constructed on a vacant piece of land. This is  typically in newer areas where suitable land is widely available (Greenfield areas), however it can also be in inner-city areas where you choose to knock down and rebuild a dwelling.

What are the typical steps when looking for a new home?

 Note: To start, either you own a block of land or you are currently looking for a suitable block of land.

1. Find the home builder and design that suits you

There are many display villages in newer areas, these are designed to showcase new homes that are suitable for majority of the vacant land sizes on sale. These display villages are the perfect place to look at what homes and designs will suit your needs as an individual or family.

Each home on display will have a sales representative who works there between the advertised hours. The sales representative is expected to  have the knowledge and expertise to answer any of your questions regarding the build or the process. Some building companies have slightly different processes to others, however the majority are quite similar. 

2. Check your finances

Either your preferred mortgage broker, bank or the builders referred broker will need to begin the process of confirming your ability to borrow money (if required). Before you commit to anything, it is best to make sure you will be in a position to obtain finance, even if your land doesn’t title for some time.

3. Home Proposal

Once you’ve chosen your preferred design and building company, you will be presented with a sales estimate by the consultant with any options you’ve selected for your new home. A siting will usually also be presented in this meeting, displaying how the home sits on the land.

In this meeting, if you are happy with what is presented, the next step will be to pay an initial deposit. This will secure your site start date and keep things moving along.

Checklist for your home proposal meeting:

• Initial Deposit
• Provide a copy of the land contract
• Provide finance pre-qualification
• Developer guidelines (if buying in a new project)
• Relevant land documentation
• Read and sign off any required documents

4. Colour Selections

Once you’ve indicated that you’d like to proceed, in most cases you’ll have a colour selection appointment. This appointment allows you to select any upgrades on offer, such as a larger stove, different flooring and more.

5. Sale Completion Appointment

This appointment will go into the finer details of your home and confirm everything including your sales quote. At this stage, you also have the opportunity to ask the sales consultant any other questions that may come to mind since meeting with them last.

Checklist for your Sale Completion meeting:

• Sign off on your house plans including siting on your block
• Sign off on your house specific options including colours, electrical and facade
• Pay the second installment fee (amounts differ between builders)

6. Pre-Contract Meeting

You will usually have one final meeting prior to your contracts being issued. This meeting will cover what is in the contract, and allow you to make any final requests or ask any questions.

You can expect to receive the following documentation in this meeting:

• Blank/Draft Master Builders Association Victoria Contract
• Special Conditions

7. Contract appointment

At your Contract Appointment you will be presented with your tender document and a full set of your house plans including siting on your block. A further deposit payment is usually payable upon contract signing or just after. This totals 5% of the contract price.

8. You are ready to start building

When building a new home, the cost of your house will generally be paid in 6 stages. This makes paying for the home more manageable and allows the bank to check that the work has been done prior to releasing more funds, protecting you and the banks interest. 

While the percentage of a contract can change to suit lending policies, the below percentage amounts can be considered reasonably standard and within HIA or MBA (Master Builders Victoria) building guidelines.

10% payment at completion of Slab Stage

This is where your slab is laid to act as the foundation of your construction. The type of slab that is laid will depend on the class of site you are building upon. The most common form of slab is a concrete slab that is laid prior to any walls or roofing being completed.

Upon completion of the slab, the builder will inform the owner, who is required to pass on the invoice to it’s lender/broker. The bank will then organise an independent inspection to ensure the quality of work is to its satisfaction. Once approved, the invoice will be paid and the builder will proceed on to frame stage.

15% Payment at completion of Frame Stage

Once the frame of your house is completed, this will be inspected by a surveyor (like the slab) and approved if satisfactory. Most frame types in Victoria will be pine timber frames. Other states could consist mainly of double brick or steel.  

35% payment at completion of Lock up stage

External wall cladding and roof covering is fixed, the flooring is laid and external doors and external windows are fixed (even if those doors or windows are only temporary).

At this stage, the outside appearance of the house will look mostly complete (excluding landscaping/driveway and fencing). It’s at this stage that the house can be locked up to improve security from material theft which can occur.

25% payment at completion of Fixing stage

At this stage, all internal cladding, architraves, skirting, doors, built-in shelves, baths, basins, troughs, sinks, cabinets and cupboards are fitted and fixed into position.

Generally, you are about 6-8 weeks from handover at this point. This will depend on the time of year and position of your builder. It may also vary depending on the type, size and complexity of your new build.

Final 10% Payable at Completion/Handover

Practical completion 1 (PC1):

This stage allows you to visit the home with your supervisor and inspect the quality of workmanship. Normally you will go from room to room and highlight areas of dissatisfaction to correct. A good supervisor will highlight errors themselves to assist you in the process, or you can bring an independant building inspector along for your own peace of mind.  

Practical Completion 2 (PC2):

This viewing is to tick off the errors highlighted in PC 1. Once all errors have been rectified and given your approval,  you are all but ready to proceed to you completion and handover to take full ownership and occupy the property.

This is your final stage before taking ownership of your new property. You can view the items required to satisfy this stage in the below link.

https://www.consumer.vic.gov.au/housing/building-and-renovating/checklists/when-building-work-is-complete

What is the deposit process when building?

Initial $1,000 Deposit (can range from $888 – $3,000)

This will typically be refundable (not always) and lock in the current promotion and pricing.

NOTE: Some builders opt for a second progress payment of around the same value once you agree to the tender. 

Unconditional deposit: 5%

Builders will generally charge a non-refundable deposit amount of 5% of the contract price. This payment will allow them to pay for services required to achieve a successful building permit on the new home and start construction. Services will include engineering reports, water and plumbing reports and council/developer required documentation.  

This will get you to your site start or site cut to prepare your land for a slab to be laid.   

Important Note: For works over $20,000, 5% is the maximum deposit that can be requested by a builder.

Build Contracts

Typically, the contracts used will be supplied by HIA, forming the base agreement. The builder will then add in variations to suit your specific agreement. It is always advisable that you have your legel representative review the contract prior to signing so you fully understand the agreement.

Price Freeze/Increases – is it a fixed price forever? No.

This is why it’s important to have your legal representative review the contract or for you to ask this question directly to the builder. Builders will typically hold the price for a set time before implementing an agreed increase in price, this is to safeguard the builder against unforseen delays in site start.

Typically, a builder will hold your price (price freeze) for 12 months before implementing an additional fee to continue the agreement.

How much extra will I pay?

Builders will commonly charge an additional $1,000 – $3,000 per additional month of delay. This is a typical range, some builders may charge less or more.

The most common reason for delays are to do with new land development and land not titling when originally forecast.

How do home upgrades fit into it?

To start with, builders will typically offer you standard inclusions. These are the basics you need to move in, however they include very few luxuries. Higher end builders will have more luxury inclusions in their base specifications, however for most major builders, this is uncommon.

You will need to review the base inclusions and determine what is important to your quality of life and budget. It might be opting for a larger oven, stone benchtops or higher ceilings.

Typically you will be able to choose these upgrades initially with your sales consultant and make any final decisions at your ‘colour appointment’. During this appointment, you will be able to view all the options physically, allowing you to touch and feel the items you will include in your home.

All chosen upgrades will be added to your contract and final pricing.

How do Site Costs work?

Site costs are the works required to prepare your land for a build. The requirements and costs varies by region, individual site and costs are impacted by soil type, rock, site fall, driveway gradient and fill.

Builders are able to review developer engineering for individual lots to assess what is required upfront, however sometimes when the builder is performing the initial site cut they might encounter something unexpected like rock for example, which may incur further costs.

Are my site costs fixed? This depends on the builder and agreement. There are a few different scenarios to consider:

1. Fixed site costs and free rock removal: Meaning the costs are agreed upfront and if the builder discovers rock on your land, there is no extra charge to remove it.

2. Fixed site costs with a rock removal allowance: Meaning the site costs are fixed, however if they find rock it will only be covered up to the agreed allowance. Anything over, you will need to provide extra funds.

3. Site and rock allowance: The builder provides an allowance for both works based on your land documentation. The final costs won’t be determined until on site tests are completed.

When do I find out how much it will cost if it isn’t fixed? The builder will typically need to go on site and perform tests to determine what the actual costs will be.

Design Guidelines

All new land estates have a set of guidelines to ensure consistency and standards across the area. They include items such as exterior materials, home sizing, energy efficient requirements, colours used and more.

Your building sales consultant should be familiar with what is expected within the land estate you may be purchasing in and can assist with selecting the right homes and options to suit.

To receive your building permit, you must first have approval via the appointed Design Review Panel (DRP). Their details will be in your design guideliens provided by the land project and your builder will typically handle the application and relay any feedback to you.

Council and Permits

Once your land is titled, the builder will apply for the appropriate documents to obtain a building permit. This includes ordering engineering, developer approvals, energy rating assessments and any additional approvals required through council.

What is a Façade?

In building, your façade is the stylised street fronting design of your home. This is typically what will give your home character and is largely based on your taste along with what the Design Guidelines will allow.

Majority of builders will provide ‘base’ facades that cost no extra, while also offering upgraded facades which use different materials and are a little more structually complex.  

Available materials typically include brickwork, render or feature cladding materials like weatherboards, cedar panels or tiles. You also have the option of a wide range of roof tile profiles, colours and materials along with alternative window materials such as timber.

Warranty, Insurances & Protections

Does my builder have to provide a warranty? Yes.

The Residential Building Work Contracts and Dispute Resolution Act 2016 (‘the Act’) requires builders to provide warranties on all building work they perform. These are called statutory warranties and they must be included in all residential building contracts.  

How long is the legislated warranty? The statutory warranties last for six years from the date of practical completion in the case of a permit or notifiable work.  If the property is sold, the new owners get the benefit of the warranties until the end of the original 6 year period. 

Do builders offer longer warranties? Yes, with a number of them offering over 25 year warrranties, however it’s best to review what is covered in detail as some are purely for structure/slab and have certain conditions which need to be met outside of the mandatory period.

Is my deposit safe? Yes, Victorians are now protected with much harsher penalties for builders who fail to take out domestic building insurance prior to full deposit payment.

What does ‘Domestic Builder Insurance’ cover? Initially, it will protect your 5% deposit.

Domestic building insurance covers you if your builder:

• dies
• is insolvent
• disappears.

When is the insurance taken out?

The builder must provide you with a copy of the policy and a certificate of currency covering the property before you pay your full deposit.

If you have more questions on this or a related topic, you can speak to an expert by calling 1300 289 324 or by visiting www.buyfairproperty.com.au 

Produced by BuyFair Property Group in collaboration with Eight Homes and Openlot.com.au

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.