This is the technical word that is used to describe the way that property is legally transferred from one person to another.
Solicitors and conveyancing companies
Most conveyancing is done by either solicitors or, in some States, conveyancing companies.
Whichever you choose, there are a few things you should think about:
- Auction or private sale? If you are buying at auction you may want to get legal advice before you bid or sign anything. You may want someone to bid on your behalf. Check whether a solicitor or conveyancing company can offer these services.
- What's the cost? This is an obvious question. Many solicitors and conveyancing companies offer fixed price conveyancing. But make sure you know what you are getting for the fixed cost. You may just want the forms filled in and lodged.
- Alternatively you may want to get advice before you sign anything - see if you can negotiate these extra services as part of the fixed price.What if something goes wrong?
- Are there extra charges if they have to chase up the seller because the bungalow doesn't have a building permit? If they don't offer a fixed price make sure you know how they will itemise their fees.
- What protection do they have if they make a mistake? Solicitors must have insurance which covers faulty work. In addition there is a fidelity fund that covers situations where the insurance does not apply. Check the protection provided by conveyancing companies.
- Who will supervise the work? It's common for conveyancing to be handled by clerks. You should make sure that the person who is responsible knows what they are doing.
- Are they members of any association? Do they have any special qualifications? Some solicitors are accredited property law specialists.
- Are there other issues that you may need advice about? For instance, will the purchase affect your pension; should you change your will; are there any family law implications as a result of the purchase?
- Are you going to use the property as an investment? Besides the tax implications, including negative gearing, are there any issues you need to deal with in relation to a tenancy agreement? If so, you might be able to negotiate a price where a solicitor will undertake all the necessary work at one time.
Some other issues
There are other issues that may require professional advice, whether from a lawyer and/or financial advisor:
- Are there tax implications? For instance, what will be the effect on capital gains tax, which is a tax payable on the capital gain made in the sale of investment properties. It is calculated on the basis of the profit earned in the final sale price compared with the original purchase price. This is also an issue that can be explained by your solicitor or professional advisors.
- Are there any problems with the title or legal issues that you need to consider?
- Will you be in a position to cover your mortgage obligations?
- Is the housing loan fixed (capped) or variable, and which would be better for your situation?
- Is the purchase part of a long term financial strategy that maximises your future financial stability?
- What is the reasonable outlook for interest rates and the price of housing?
There are a number of do-it-yourself kits available in some States and Territories.
- whether the conveyancing looks straight forward (are there caveats, covenants, has the house been owner-built)?
- whether you have the time to do-it-yourself?
- what protection is provided if something goes wrong?
- is there any back-up if you're unsure what to do at any stage?
Of course, some people are happy doing their own conveyancing simply because they've done it themselves before.
Beware! Laws change frequently and just because you did it all five years ago, doesn't mean that there may not be a surprise lurking around the corner that might catch you out.
What can go wrong?
There are a number of traps that can arise when you buy a house or property. These include:
- illegal structures such as an extension or outbuildings that haven't been approved by the council;
- damaged or missing property that is discovered on the final inspection. Usually the contract will allow you to claim compensation, but you won't be able to hold up the settlement. This means you may have to chase the money after settlement, which can be much harder;
- identifying the boundaries of the common property when you are buying a strata title unit;
- houses built by owner builders. Special rules apply to the sale of these houses and you should make sure that all the checks and balances are in place;
- the measurements of the property being different to the title;and
- a lost title.
Last updated - April 2010