The business of conveyancing is a complex and ever-changing field, particularly for someone who is unfamiliar with it.
Overlooking small contractual changes or missing important deadlines can result in you paying hugely in your time and money.
If you’re considering undertaking a property transaction, it’s important to be familiar with the common pitfalls of conveyancing, particularly if you’re thinking of carrying out the transaction without the assistance of an experience conveyancer or property solicitor.
Common Problems in Conveyancing: Selling
1. The purchasing party misses their deposit deadline
Timing is everything during any conveyancing matter. Should the party purchasing your property forget or refuse to pay their deposit before the required deadline, your real estate agent is responsible for following up on this issue. However if the buyer continues to cause problems with the deposit payment, you will require the legal advice of a conveyancer or solicitor. Your solicitor might suggest charging interest on the unpaid amount as a consequence. Without the legal guidance of a professional, however, you might find that the transaction falls through entirely.
2. Your bank misses the settlement date
Unless you’ve repaid your mortgage in full by the time you decide to sell your property, you’ll have a mortgage that needs to be settled. A good conveyancer or solicitor can make arrangements with your bank to ensure that your mortgage is disengaged by the required date. It’s crucial that your bank discharges your mortgage before the date of settlement, so that the Certificate of Title can be awarded to the buyer as soon as they have paid out the mortgage with the proceeds of the sale.
Sometimes the discharge process takes longer than expected. This might happen if a specific department doesn’t receive the required documents from other departments. If this should happen, your solicitor might be unable to book a date for the settlement of the property. An experienced solicitor will be able to rectify a matter such as this with little consequence: you, alone, might find yourself in hot water with the buying party.
3. The buyer isn’t prepared for settlement
It’s not only you who is relying on your bank to liquidate your debts before the settlement date: the buying party must wait for their own bank to grant them a mortgage. If the buyer is caught up in waiting for their bank to finalise their mortgage documents, they might not be ready to settle on the date you have set. An experienced solicitor or conveyancer can inform you of the rights you have in this situation, and advise you on which actions to take: whether you reschedule, or charge a penalty of interest on the price of settlement.
4. The buyer refuses to settle
Before the sale of property is settled, the power is in the hands of the buyer. Before the date of settlement, your property will undergo a final inspection by the buyer. Should they find something unsatisfactory that they missed on the first inspection, they might decide to refuse settlement until the faults are repaired. You’ll need to contact your solicitor or conveyancer for legal advice should this situation arise. A good solicitor will know exactly how to negotiate this situation: often they will enforce the rules outlined in your Contract of Sale.
Common Problems in Conveyancing: Buying
1. Your bank won’t grant you finance
Unless you have the money to buy a property outright, you’ll need to obtain some manner of finance before you purchase a new home. To help in the acquisition of a loan, you’ll need to sign a Contract of Sale. Contracts of Sale include an agreement for a set date of settlement: this is the date that the Certificate of Title is passed to you. You will need to have paid your deposit in full by this date, and you will begin making repayments on your new home. Yet if there is a stall in finalising your mortgage documents, your bank will be unable to approve your loan by the required date.
Your conveyancer or solicitor will need to negotiate with the selling party to grant you an extension on the date of finance. It’s important that you communicate any issues with your loan application with your solicitor, because if you should fail to notify the vendor of these issues, they may nullify the Contract of Sale and the deal will fall through.
2. The bank misses your date of settlement
If you don’t have access to your home loan before the date of settlement, you most likely will fail to meet the obligations of the settlement by the required time. This is essentially a breach of the Contract of Sale, and the vendor has rights to charge you penalty fees or interest, or nullify the contract completely. It’s essential that you have a solicitor or conveyancer to discuss legal options should this issue arise, or to discuss ways to avoid this problem before it occurs.
3. Issues with the condition of the property
Before you complete the transaction of property, you’ll undergo a final inspection to ensure that the property is in the same condition as it was when you signed the Contract of Sale. If you are to notice any differences in the condition of the property, or other flaws you might have overlooked initially, you can ask your solicitor to advise you of your rights. You are granted rights by the Contract of Sale, and you should be able to dispute changes to the condition of the property. This is a surprisingly common issue, and so an experienced solicitor will have encountered this problem before.
Common problems with real estate contracts
If you’re unfamiliar with the ins and outs of conveyancing, it’s easy to fill out the necessary paperwork incorrectly, or forget to submit it altogether. Both of these mistakes can result in disaster for any buyer or seller. It’s best that you enlist the assistance of an experienced solicitor or conveyancer to avoid the following mistakes:
1. The property or land description is incorrect
Generally this means that the incorrect Certificate of Title has been entered on the contract: whether the parent title is entered in place of the current title reference; or the street address is confused with the lot number on a block of divided land. This is one of the more common contract mistakes, yet extremely complex – and expensive – to reverse.
2. Incorrect purchaser’s name is entered on the Contract of Sale
If you’re unsure of what name you wish to have on the title, you might enter the term ‘and/or nominee’ on your Contract of Sale. Be aware, however, that this phrase doesn’t grant you the scope to change your name after the contract has been signed: you must have decided upon the name you wish to use before you sign the contract. Similarly, you need to have signed and dated a Letter of Nomination before signing the contract. If you decide to change the name only after signing the contract, it will be viewed as an assignment of contract instead of a nomination. This can come with substantial stamp duty consequences.
Similarly, the name signed on a contract cannot be changed by addendum without full termination of the conveyancing contract.
3. You fail to list property encumbrances
If you’re inexperienced in matters of conveyancing, you may not be familiar with the conveyancing process of ‘lifting and replacing’ encumbrances. This refers to the process of nullifying the existing mortgage on the property and applying a new encumbrance with the purchasers. If you fail to undergo this process, it can cause significant problems at the settlement date. Not only this, but there are a number of fees associated with the lift and replace process, and these need to be listed on to avoid the frustration of both buyers and sellers.
4. The tax information is incorrect or incomplete
There are varying sections referring to tax depending on the type of contract you are using in your property transaction. It’s easy to fill in these sections incorrectly or overlook them entirely: however this can lead to significant taxation and stamp duty consequences.
Avoid the pitfalls of conveyancing
The Real Estate Institute of Queensland strongly recommends against undertaking a property transaction without the full guidance of an experience conveyancing professional within the conveyancing field, and with so many potential pitfalls, you can understand why. Reconsider undergoing the conveyancing process alone: an experienced solicitor or conveyancer can help you negotiate and avoid the pitfalls of property transaction, thus saving you time, money, and frustration.