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When you find your dream home what happens next?

Negotiations when buying property move quickly, particularly in a competitive market. Generally, there is a period of only 6-8 weeks from when a vendor accepts an offer until completion of a purchase, however there is a lot of work to do during this time.

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Conveyancing is the process of transferring legal title of a property from one party to another. This can generally be separated into 3 major stages, with various steps falling within each. The following outline will help you understand what is involved in purchasing property and how we can assist you throughout the process.
Finance, contract review and pre-purchase inspections

If you are getting a loan, finance should be pre-approved. This means that you can look for a property within your price range and, subject to valuation and other lending requirements, formal approval generally follows quickly so you can proceed with the purchase.

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Contracts should not be exchanged without formal finance approval.
Finding the right property is a chaotic time with offers going back and forward between the vendor, purchaser and agent. There is a sense of urgency, often with the perception that you will miss out if you do not act quickly. However, your decisions need to be informed and it is critical that your Lawyer reviews the contract before you commit.
We will go over the contract with you, discuss the title to the property and ensure that you understand your rights and obligations under the contract.
The contract will note the legal description of the property and show any interests affecting the land such as easements or restrictive covenants. The planning certificate confirms the permitted use of the land and sets out matters impacting upon it such as heritage listings or flood zones. This information is not apparent from a physical inspection of the property, and may prompt enquiries of Council.
Special conditions attached to the contract, usually for the vendor’s benefit, should be reviewed and, if necessary, negotiated.
Whilst the property and building may look sound, obtaining pest and building reports from a reputable inspector will flag existing or potential pest or structural problems.
Exchanging contracts

Exchanging contracts is the formal process of committing the purchaser and vendor to the agreement. Each party signs replica contracts and their Lawyers swap and date the documents. The deposit, as agreed between the parties, becomes payable. Until contracts are exchanged no legal rights or obligations arise.

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After exchange we will recommend further enquiries to ascertain whether the property is affected by Government proposals, work orders or land tax. Certificates from Council and water authorities provide rate details to be used for adjustments on settlement.
Stamp duty requirements and insurance are discussed and we will start liaising with your lender and vendor’s Lawyer in preparation for settlement.
Settlement statements are prepared to show the final balance owing on completion taking into account the deposit, rates and other adjustments. These are checked and agreed between the parties.
Completion

On settlement the parties’ Lawyers and bank representatives meet and the purchase funds are handed over in exchange for the title deeds. Many settlements are now completed electronically.
Unless the contract provides otherwise,

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the property must be vacant for the purchaser’s possession on the day of completion. The keys may be handed over at settlement or collected from the agent.
If you have borrowed funds, your lender will arrange to have the title to the property transferred into your name and the Valuer General, local Council and water authorities are notified of the new owner. If the property is strata title, we will confirm your new details with the strata manager.
Information and preparation are key to reducing the stress that accompanies a property purchase. Our property Lawyers have dealt with many residential purchases and will guide you along the way so that you can make informed and timely decisions.
New versus old

Buying off-the-plan generally means purchasing a property that has not yet been built. When construction is complete and the contract settles the purchaser becomes the owner of a brand new home or apartment.

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The decision to buy off-the-plan is based on a perception of the finished product from plans and specifications, schedules of finishes, marketing campaigns and promotional material. Buyers may have visited display homes or other developments completed by the same developer, however have not had the opportunity to walk through the ‘subject’ of their purchase. Accordingly, an off-the-plan purchase will require special considerations in addition to the usual matters typical of purchasing existing property.
If you are considering purchasing off-the-plan, we recommend you bring the contract to us in the early stages. We will go through it thoroughly, explain the usually-extensive conditions, and provide guidance so you can make an informed decision.
We invite you to visit our page on ‘Buying a residential property’ which gives an overview of the conveyancing process. You will find a lot of this information relevant once construction of your property is completed. In the meantime, the following are some important matters unique to off-the-plan purchases.
What are you really buying?

The final development and construction may vary in size, design or finish from the marketing material and draft plans provided.
These changes may be necessary to take account of pre-approval and registration requirements or the availability of finishes and fittings.

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The extent of variations allowed will be governed by the contract however these should not be excessive and the right to vary finishes and fixtures should never jeopardise quality.
We will review the contract and its conditions carefully to ensure your rights are protected and that you are able to rescind the contract for excessive changes to the original concept.
Strata schemes

Many off-the-plan properties are in a strata complex. Land in a strata scheme is divided into lots and common property.
Owners have title to their individual lots and an interest in the common property with other lot owners.
On settlement, a lot owner becomes a member of the Owners’ Corporation and is bound by its by-laws regulating matters such as future development,

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the use of common property, parking and keeping of animals. Developers of strata schemes may already have contracts in place with caretakers or building managers. By-laws and service contracts should be read carefully so that you understand their effect.
The Owners’ Corporation establishes an administrative fund to pay regular outgoings and maintenance and a sinking fund for long-term work such as repainting. Your contribution to these funds is determined by the unit entitlement of your lot, as is the value of your vote at meetings. Estimates of levies may be provided beforehand however the actual cost is usually not known until after construction.
Will I still be able to finance the purchase on completion?

Completion of an off-the-plan purchase does not occur until many months after exchange of contracts. Settlement will be subject to registration of the plan of subdivision and issue of an occupation certificate.
The contract will contain terms like ‘completion date’, ‘sunset date’ and ‘expiry date’ to allow for contingencies likely to delay construction such as inclement weather or the unavailability of materials.

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The actual completion date does not become apparent until well after the contract is signed. You must be certain that you can complete the purchase when settlement is due, allowing for an earlier or later than expected settlement date if the contract permits.
Finance approvals generally only last a few months and must be refreshed. You should stay in contact with your lender during the construction phase to provide updates so that formal loan approval and finance is available in time for completion.
You will need to consider contingencies that may affect your desire or ability to complete the purchase such as the loss of a job, unexpected health concerns and other personal circumstances.
Major v minor defects

Defects may be major or minor. A major defect means that the property is uninhabitable as a result of the defect and a purchaser is entitled to delay settlement until it is fixed.
Minor defects will not usually entitle you to delay settlement.

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Rather, these will need to be listed and notice given to the vendor, usually within 3 months of completion.
The nature of commercial leasing

Commercial leasing provides a tenant (lessee) with a right to occupy premises owned by the landlord (lessor) in exchange for rental payments and subject to conditions.
Leases are common commercial arrangements which provide businesses the opportunity to use premises for a specified time, in a location suited to their needs.

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Commercial property can be a good investment choice and lessors would no doubt wish to receive optimum return and to ensure that the premises are looked after. Ideally, leases should balance the rights and responsibilities of both parties.
Leases should be in writing and contain all of the negotiated terms. The lease agreement, the general law and legislation will govern the rights of the parties. As with all commercial arrangements and subject to some constraints, the parties are free to negotiate the terms.
What does the lease document contain?

The following are some typical terms contained in a lease:
• Area to be leased – this should be clearly described with its legal description and street address and include use of additional facilities such as carparks, storage, amenities and other common areas. A plan should be included showing the leased area and size of the premises.

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• Term of the lease – terms should be carefully considered. Lessees should ensure that the lease term and any renewal options (which are desirable) coincide with their business plans.
Lessors will no doubt want a long-term commitment however may also need to consider future plans to sell the property and whether or not it is optimum for the property to be sold with an existing lease.
Options to renew and the time and process for exercising options must also be clear.
• Rent and outgoings – the rent, method and time for reviewing rent must be agreed and understood. The outgoings payable by the lessee are often disputed so estimates should be provided and the parties’ respective contributions clearly set out.
• Permitted use – the lease should allow for the lessee’s intended use which should be broad enough to cover any growth in the business activities. Despite what is contained in the lease, it is the lessee’s responsibility to ensure that any necessary Council approvals or licences are in place.
• Fitout and refurbishment – lessees often require fixtures and fittings installed suitable for the intended use of the premises. The lease should describe the fitout permitted, who is responsible for costs and installation, whether fixtures may be removed by the lessee at the end of the lease and refurbishment obligations when the lease expires.
Retail Leases

A retail lease is essentially a commercial lease regulated by the Retail Leases Act 1994 (the ‘Act’). If the premises fall within the definition of ‘retail’ then additional requirements and considerations apply. The Act gives greater consumer protection for lessees.
Before offering or entering into a retail lease, lessors must have available a draft lease and Retail Tenancy Guide.

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The lessor must give the lessee a disclosure statement at least 7 days before the lease is entered into. The disclosure statement contains detailed information such as the base rent and whether it is calculated on the lessee’s turnover, estimated outgoings including promotion and marketing cost, services and facilities, restrictions on trading hours and details of planned alterations or renovations to the leased premises or surrounding area.
Failure to follow these provisions enables the lessee to terminate the lease within 6 months after entering into it.
If a retail lease contains no option period then the lessor must, no later than 6 months or earlier than 12 months before the lease expires, notify the lessee in writing as to whether a new lease will be offered. If the lessor fails to give the notice and the lessee requests the notice before the end of the lease, the lessor must grant a further 6 months from the date of the notification.
Security bonds required under a retail lease must be lodged with the New South Wales Retail Bond Scheme and the lessor cannot require the lessee to pay its legal costs for preparing the lease, unlike other commercial leases.
Other matters requiring consideration include insurance, assignment and sub-letting provisions, repairs and maintenance, rent abatement and what happens when a party defaults under the lease. Lease documents should always be reviewed before allowing or taking possession of the premises.
We act for both lessors and lessees and have extensive experience in preparing and advising on commercial leases.
Do you really own your land?

You’ve worked hard to buy property, managed to obtain finance and maybe even paid out your mortgage. However, do you really absolutely own your land?
Compulsory acquisition of land (also known as ‘resumption’) refers to the right of the Government or a delegated authority to acquire land that is privately owned.
The right stems from the ‘doctrine of tenure’ adopted from English common law, meaning to hold or possess land ‘of’ or ‘from’ another; the principle being that all land belonged to the monarch, despite various grants.

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Australian society has dramatically changed since adopting the common law but the principle remains. As a result, ownership of land in Australia is subject to the right of the Government to ‘take back’ or acquire the land or part of it.
This all sounds very radical but fortunately, the Constitution requires that any acquisition must be on ‘just terms’. In New South Wales, the Land Acquisition (Just Terms Compensation) Act 1994 (the ‘Act’) sets out the process, rights and responsibilities of Government authorities and owners when private land is acquired.
Why is my land needed and who may acquire it?

Government agencies, local councils and state-owned entities have the right to acquire private land. The ‘acquiring authorities’ exercise their powers pursuant to specific legislation however the overall process in New South Wales must comply with the Act.

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Land is acquired for public purposes such as installing or upgrading infrastructure, roads and public transport. Less frequently, land may be acquired because it is contaminated or considered to be a public risk.
If you receive an acquisition notice it is wise to involve a Lawyer immediately to ensure that your interests are protected and that you obtain the maximum compensation possible, which is your fundamental right.
What is involved in the compulsory acquisition process?

Land may be acquired by private agreement between the acquiring authority and landowner, or failing agreement, compulsorily. The difference between the two processes is that when land is acquired compulsorily the Valuer General, as an impartial party, determines the compensation payable to the land owner.

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The acquiring authority must provide written notice of its intention to acquire private land, triggering the acquisition process. Following this, the acquiring authority and owner may agree on an amount to be paid. It is beneficial to involve your Lawyer in these negotiations as he or she may recommend obtaining valuations or other evidence to support the value of the land.
The time for acquisition of the land is generally between 90 and 120 days after service of the notice. The notice sets out the requirements for vacating the land and the method for calculating compensation.
If agreement is not reached the compulsory acquisition still proceeds whilst the amount for compensation is determined by the Valuer General. The acquiring authority becomes the owner of the land once it publishes an acquisition notice in the Government Gazette.
Generally, a former owner may occupy the land until compensation is paid. If the land is the principle place of residence or the place of business, the owner may stay in occupation for up to 3 months after compensation has been paid with some arrangements allowing the land owner to stay longer.
The Valuer General calculates the compensation to be offered to the former land owner within 30 days of publication of the acquisition notice, and the acquiring authority advises the former owner. If accepted, the compensation is paid within 28 days.
How is compensation determined?

The amount of compensation should ‘justly compensate the person for the acquisition of the land’. Compensation will consider the land’s market value, any special value (attributable to the use of the land), losses in market value as a result of the acquisition, disturbance losses

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(legal and financial costs, valuation fees and stamp duty) and non-financial compensation based on inconvenience.
The right to appeal

Compulsory acquisition is not unlawful and can rarely be avoided. Generally, the most feasible approach will be to ensure that the acquisition takes place fairly and compensation is in the most favourable terms possible.

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In limited cases land owners may have legal cause to object to the acquisition. Appeals concerning the amount of compensation may be made to New South Wales Land and Environment Court within 90 days of receiving the compensation notice.
If you have an interest in property that is being resumed, please talk to us early. We can assist you in navigating the process and ensure that you are properly compensated for what is often an unexpected interruption and upheaval to your life.
Decided to sell? What happens next?

Most vendors are anxious to get their property ‘on the market’ once a decision to sell has been made. If you have listed with an agent, he or she will be keen to start an advertising campaign for your property. In New South Wales residential property cannot be advertised for sale unless there is a written contract available for prospective purchasers.

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We can organise a contract quickly but it is important that it is properly prepared and complies with legal disclosure requirements. This will avoid delays in securing the sale once a purchaser is found and reduce the possibility of having an interested buyer later pull out.
Preparing the contract – disclosure and warranties

The contract must contain certain disclosure documents including a copy of the title search, deposited plan, easements or other interests over the land, a planning certificate and drainage diagram. We can order these documents on-line with fast turn-around.

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If you have had building work carried out during the past 7 years, the certificate of insurance should be included in the contract so the purchaser gets the benefit of the remaining insurance term. Additional requirements apply if the property has a swimming pool.
Owners must give warranties that their property does not have ‘adverse affectations’ or defects as listed in the relevant legislation. These include proposals for road widening or orders for fencing, work or demolition.
Approval for the construction and use of the buildings on the property is implied in every contract and a statutory warranty that there is nothing likely to result in a work or demolition order. If a purchaser finds that you are in breach of these warranties, then the contract can be rescinded (cancelled).
If you are in doubt, you may choose to obtain building reports or fix defects before selling. Alternatively, we can disclose any defects or non-compliant buildings in the contract and prepare a special condition limiting a purchaser’s right to avoid the contract on account of these issues. Your choice will be influenced by many factors and we can assist you in deciding what do at our initial meeting.
Taking your circumstances into account

When we meet we will ask about the property, the inclusions and your intentions once the property is sold. If you are selling and buying at the same time, then we can usually coordinate a simultaneous settlement. You may require a longer or shorter completion date and these matters can be factored into the special conditions.

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We will walk you through the process and discuss contingency plans in case unforeseen events happen that cause settlement to be delayed.
What happens when a purchaser is found?

Once a purchaser is found your agent will send a sales advice with the buyer details, purchase price and any negotiated conditions. We will complete the contract and confirm with you before sending a ‘counterpart’ to the purchaser’s Lawyer or Conveyancer.

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The purchaser will likely arrange inspections for pest and building reports, identification surveys, etc. and your cooperation will assist in moving towards an exchange of contracts.
We will arrange for you to sign the original contract and discuss any concerns before exchanging.
Exchanging contracts is the formal process of committing the purchaser and vendor to the agreement. Lawyers swap and date identical documents and the deposit must be paid by the purchaser, usually to the agent. Until contracts are exchanged no legal rights or obligations arise. Purchasers have a statutory 5-day cooling-off period however in most cases we will ask for this to be waived so contracts are immediately binding.
If you have a mortgage we will notify your lender of the sale and request that a discharge of mortgage be prepared and payout figure advised in anticipation of settlement.
Settlement

The purchaser’s Lawyer will prepare settlement adjustment figures showing the final balance owing to you on completion after taking into account the deposit, rates and other adjustments. Close to settlement your bank confirms the payout figure for your loan. This amount is provided to the bank on the day of settlement in exchange for the title deed which is given to the purchaser’s Lawyer. Many settlements are now completed electronically.

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Unless other arrangements are in place, the property must be vacant for the purchaser’s possession on the day of completion.
The purchaser’s Lawyer or bank arranges for transfer of the property into the purchaser’s name which instigates notification of the new owner to the Valuer General, local Council and water authority.
As vendors, it is important to have an understanding of the general conveyancing process and your obligations when selling residential property. We have assisted many vendors with the sale of their residential property and look forward to guiding you through this process.
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