Frequently Asked Questions

What is conveyancing?
What is a contract?
Does a contract need to be in writing?
What is real estate and what is land? Is it different from “property”?
What is Torrens Title land?
What is the Land Titles Office?
If I leave a holding deposit with an agent will the Vendor have to sell the real estate to me?
If I am buying, should I obtain any reports before I sign. This is to say, for example, pre-purchase building, pest and strata reports?
Does a contract for sale of land have to include anything?
What is council zoning?
What is a drainage diagram?
What is a title search?
What is a title diagram?
What terms and conditions does a contract for sale of land set out?
What is exchange?
How much will the deposit be?
What are searches?
What is an order on the agent?
What is strata title property?
What is the Body Corporate/Owners Corporation?
What is the Administrative Fund?
What is the Sinking Fund?
What is a Managing Agent?
What is Company Title Property?
Is the contract for sale of Torrens Title or Strata Title land the same as the contract for sale of shares in a land owning Company?
Do I have to have the written contract ready before my agent can market my property?
How much will my legal costs be if I am buying?
How much will my legal costs be if I am selling?
Isn’t conveyancing easy?
Who is an agent?
What is the agent’s job?
What is a caveat?
How much can I borrow?
What is a mortgage?
Who is the mortgagee?
Who is the mortgagor?
What is a lease?

Question: What is conveyancing?
Answer: The process of transferring property from one person to another.
Question: What is a contract?
Answer: A contract is an agreement which binds parties to do what they have promised to do.In the case of a contract for sale of land the owner promises to sell real estate to the purchaser, and the buyer promises to buy real estate from the owner.
Question: Does a contract need to be in writing?
Answer: Only some contracts need to be in writing. The law requires that contracts for the sale of land be in writing.
Question: What is real estate and what is land? Is it different from “property”?
Answer: The words “real estate” “land” and “property” tend to be used interchangeably.  When these words are used, it could be a reference to:-

  • land and anything permanently attached to the land, including buildings
  • land and anything permanently attached to the land, including fences and trees
  • an interest in these things, including leases
  • an apartment, regardless of whether there is any earth underneath
  • time share holiday units
  • leases of commercial and residential premises

These are examples. The meaning of the words depends on the context in which they are used.

Question: What is Torrens Title land?
Answer: The ownership of land was once normally recorded on a written document signed by both the Vendor and Purchaser. It was known as an “Old System” deed. It described the land by reference to geographical features.For someone to prove ownership of “Old System” land they once had to have possession of all the deeds which recorded the title of every previous owner.In South Australia, in the 1850’s, a new system was introduced. It involved a Government based register which is known as the Land Titles Office. The Land Titles Office kept a surveyor’s drawing of the land and the name of the person who owned it.This system was picked up all around Australia and much of the rest of the world. It is internationally known as the Torrens Title. It is named after the man who was Premier of South Australia in the 1850’s, Robert Torrens.
Question: What is the Land Titles Office?
Answer: This is the office where the records relating to land ownership are recorded. What we refer to as the Land Titles Office in Sydney is now part of a larger NSW government office:-
www.lpma.nsw.gov.au/land_titles
Question: If I leave a holding deposit with an agent will the Vendor have to sell the real estate to me?
Answer: Generally, no. Unless you and the Vendor have signed a valid and binding contract the leaving of a deposit will probably not give you any rights. It will probably only be a goodwill gesture.
Question: If I am buying, should I obtain any reports before I sign. This is to say, for example, pre-purchase building, pest and strata reports?
Answer: There are several reports you should consider obtaining before proceeding with your contract. Some of these are:-

  • A building report 
    These are usually available within a few days to a week of requesting them. Sometimes it is worthwhile obtaining a building report even if you are buying an apartment. A building report may give you an idea about how much money you may have to spend on the property in the months and years after your purchase has settled.
  • A pest inspection report 
    These reports are usually available within a few days to a week.
    Sometimes it is worthwhile obtaining them even if you are buying an
    apartment.
  • An electrical wiring report 
    You could ring Energy Australia on 132604 to arrange an inspection.
  • A strata record inspection report 
    If you are buying a strata unit you should obtain a report on the
    strata records. These reports usually cost between $200 and $350. A good strata record inspection report is likely to warn you about the
    following:
    1. what quarterly levies will be payable by you once you own the unit
    2. whether there is any problem with the building which may necessitate a large “one off” levy which you have not budgeted for. These levies are sometimes necessary to enable the body corporate to fix structural problems.
    3. whether there have been complaints about noise from neighbouring apartments.

You should ask your solicitor/conveyancer about the pre purchase reports that you should obtain for the property you want to buy.

Question: Does a contract for sale of land have to include anything?
Answer: It does have to include certain documents. Depending on the contract, these include, amongst others:-

  • a zoning certificate. This is also known as a section 149 certificate. This is a certificate issued by the local council. It will tell you what the council will permit you to do with the land, including whether you can open a shop on the property or operate a home business from the property
  • if you are buying ‘town land’ as distinct from ‘farm land’, the contract will usually have to include a drainage diagram, also known as a sewage diagram
  • if the land is Torrens Title or Strata Title, the contract will have to include a copy of the title search
  • if one exists, the contract will have to include a copy of the title diagram
Question: What is council zoning?
Answer: This is what the Council lets you do with you the land. This is to say, for example, whether council will permit you to open a shop, whether you can live there, and so on.
Question: What is a drainage diagram?
Answer: This is a diagram maintained by the Council that shows where the property’s sewage lines connect to the Council’s main sewage lines.
Question: What is a title search?
Answer: This is a search of the Land Titles Office records. It identifies the owner of Torrens or Strata Title land at the moment of the search as well as the nature of any interests that anyone else has in the land which have been registered at the “Land Titles Office”. A title search could disclose a caveat.
Question: What is a title diagram?
Answer: This is a copy the plan of the land that has been prepared by a registered surveyor and lodged with the Land Titles Office.
Question: What terms and conditions does a contract for sale of land set out?
Answer: In New South Wales, the contract for sale of land is usually in a standard form approved of by the Law Society of New South Wales and the Real Estate Institute of New South Wales. The Vendor of the land will usually add special conditions to the contract. The Purchaser is free to negotiate with the Vendor about the terms and conditions.The contract will usually contain terms and conditions about the following, amongst many others:-

  • The Deposit
    The Deposit will be forfeited to the Vendor by the Purchaser if the Purchaser, without lawful excuse, pulls out of the contract, after any cooling off period has expired.
  • The Deposit Bond
    This is an alternative to a cash deposit. It is issued by a financial institution. If a financial institution issues one of these it is promising to pay the Vendor an amount equal to the deposit should the Purchaser breach the contract.
  • The Cooling Off Period 
    In New South Wales, a Purchaser of residential land is often entitled to withdraw from a Contract for Sale of Land without a giving a reason, but only during the cooling off period.  The cooling off period usually lasts until 5:00 pm on fifth business day after the contract has been formed.The Purchaser will usually have agreed to forfeit to the Vendor 0.25% of the purchase price if he exercises the right to terminate the contract during the cooling off period.
  • Section 66W Certificate 
    If your conveyancing solicitor or conveyancer has issued a section 66W certificate you will have waived the right to a cooling off period.
  • The date of exchange 
    This is the date when parties have agreed to be bound by the contract. It is referred to as the date of exchange because, in New South Wales, the parties exchange copies of the contract. At exchange the Vendor will receive a copy of the contract signed by the Purchaser. The Vendor will receive a copy of the contract signed by the Purchaser. These copies are called “counterparts”.
  • Early Possession
    Usually a Purchaser won’t be eligible to access the property until after settlement. Possession before then is known as “early possession”. The parties to a contract can agree for the Purchaser to have early possession.
  • Requisitions on Title
    Usually the Purchaser can ask the Vendor questions about the Vendor’s title within 21 days of the contract being formed. These questions are called “Requisitions on Title”.
  • Compensation and rescission of the contract 
    Following exchange, the Purchaser may learn, perhaps because of answers to requisitions that have been asked or because of searches that have been made, that a neighbour has a right of access over the land being sold, or that some of the land will be compulsorily resumed. If this kind of thing happens, the Purchaser may be entitled to claim compensation from the Vendor. Or the Purchaser may even be entitled to rescind the contract and recover his deposit
  • Risk of loss and Damage
    In New South Wales, unless the Purchaser goes into occupation before completion, the Vendor will usually be liable for any loss because of accidental damage, such as because of fire. For this reason the Vendor should keep the property insured until the moment of settlement. Insurable risk will pass to the Purchaser beforehand if the Purchaser has gone into early possession.
  • What is the difference between termination of the contract and rescission of the contract. 
    If a contract is terminated, the contract ceases to exist. However if one of the parties did the wrong thing in relation to the contract the innocent or injured party may have rights. The innocent party may be able to sue the party that did the wrong thing. On the other hand, if a contract is rescinded both parties are returned, as much as possible, to the position they were in before the contract was formed. Rescission usually happens if nobody is at fault but for some reason there is a problem with the performance of the contract. If a contract for sale of land is rescinded the Purchaser will usually be refunded the deposit and the Vendor will keep the land.
  • Completion/Settlement 
    These two words usually mean the same thing. They refer to the moment when the Purchaser pays to the Vendor the balance of the money necessary to buy the property. At that moment the Vendor will transfer his ownership of the land to the Purchaser. This often happens 42 days after the contract has been formed.
  • Adjustments 
    Usually the Vendor is liable for all council rates and other outgoings up until and including the date of settlement. Prior to settlement the Vendor and Purchaser agree what these adjustments should be. They record their agreed adjustements on a settlement sheet.
Question: What is exchange?
Answer: Exchange is a reference to the way parties usually enter into binding contractual relations in New South Wales. In New South Wales the binding contract frequently comes into existence in the following manner:-

  • the Purchaser signs the contract
  • the Purchaser’s solicitor posts the copy of the contract signed by the Purchaser to the Vendor’s solicitor
  • the Vendor’s solicitor receives, in the mail, the copy of the contract signed by the Purchaser
  • the Vendor’s solicitor contacts the Vendor and makes arrangements for the Vendor to sign a copy of the contract
  • the Vendor’s solicitor then dates each counterpart copy of the contract. The contract is formed at this moment
  • the Vendor posts the copy of the contract signed by the Vendor to the Purchaser’s solicitor
Question: How much will the deposit be?
Answer: The deposit is usually ten percent of the purchase price, but can be varied by agreement. Sometimes purchasers try to reduce the deposit to five percent.
Question: What are searches?
Answer: Following exchange of contracts the Purchaser has the opportunity to  conduct searches of authorities such as the Railway, Electricity, or Main Roads Authorities, or Local Council, or the Office of State Revenue, and the Education Department. The purpose of these searches is to find out whether any of these agencies have acquired an interest in the land, for example by way of compulsory acquisition, or whether they have a charge over the land, such as for council or water rates.
Question: What is an order on the agent?
Answer: This is the document that the Purchaser gives the Agent at settlement and which directs the Agent to release the deposit to the Vendor.
Question: What is strata title property?
Answer: Because many people live in apartments Torrens Title has been adapted so that it can record the ownership of apartments. This is called Strata Title.For this purpose, the Land Titles Office keeps a diagram of the apartment complex. This is called the Strata Plan. The Land Titles Office also records the names of the owners of each of Lots in the Strata Plan. Each Lot owner is issued with their own Certificate of Title. The Lot owner will usually have the right to own and exclusively occupy a specific Lot, (usually being an apartment and perhaps a car space) in the Strata Plan. That Lot Owner usually has the right to use Common Property such as lifts, pools, stairwells, car park access, and driveways. This right is shared with the owners of the other Lots in the Strata Plan.The Common Property is owned by the Owners Corporation. A Certificate of Title in respect of the Common Property issues in its name.
Question: What is the Body Corporate/Owners Corporation ?
Answer: Owners Corporations used to be known as Body Corporates. The Owners of the Lots in the Strata Plan are the members of the Owners Corporation. They each contribute to the expenses of the Owners Corporation in an amount calculated with reference to their unit entitlement. This unit entitlement is usually worked out with reference to the area of the Lot Owner’s specific unit in relation to the size of the other units in the complex.The Owners Corporation can make by-laws for the benefit of all the Lot Owners. Legislation controls what Owners Corporations can and can’t do and the rules and by-laws they can make.Owners Corporations usually engage a professional strata management person or company to manage the building on behalf of all owners. This person is called the Managing Agent.The Owners Corporation deals with physical property issues and issues relating to people living together. Physical property includes gardens, tennis courts, driveways etc. and issues relating to people living together include parking, behaviour and noise. Owners Corporations can make decisions at either a general meeting of all the owners or at meetings of the committee.
Question: What is the Administrative Fund?
Answer: This is the fund maintained by the Owners Corporation to cover expenses, such as engaging cleaners and the Managing Agent.
Question: What is the Sinking Fund?
Answer: This is the fund maintained by the Owners Corporation to cover the costs of maintaining and restoring the Common Property.
Question: What is a Managing Agent?
Answer: This is the person or agent contracted by the Owners Corporation to keep its books and accounting records, to convene meetings, to send out levy notices to Lot holders and so on.
Question: What is Company Title Property?
Answer Company Title is an alternative way of obtaining the exclusive right to occupy a unit in an apartment complex. In this case the land and building is owned by a company. The owner of shares issued by that company is entitled to occupy the particular unit which is referable to those specific shares.Many people regard Company Title as an inferior way of obtaining an interest in an apartment. The reasons for this include the following:-

  • the owner never actually owns their own unit. The owner merely obtains a right to occupy it through the ownership of shares.
  • some financial institutions don’t lend against the security of shares as distinct from land.
  • Shares in a unit holding company may be less valuable than a strata title unit.
  • The directors of the land owning company have the right to approve or disapprove of any potential purchaser of the shares. There is no equivalent approval process with the transfer of title to a Lot in a Strata Plan.On the other hand, this is the very reason many people prefer Company Title; this is because they can control who has the right to live in their building.
Question: Is the contract for sale of Torrens Title or Strata Title land the same as the contract for sale of shares in a land owning Company.
Answer No, however the law requires that some of the documents that must be included in the contract for sale of land must also be included in the contract for sale of shares. These include the zoning certificate that pertains to the land owned by the Company.
Question: Do I have to have the written contract ready before my agent can market my property?
Answer: If the property is residential property, you do have to have a contract ready to give to anyone who is interested in buying your property.
Question: How much will my legal costs be if I am buying?
Answer: If you are buying a residential property and it is a routine purchase (which nearly all are) then the charge up to and including settlement, and including the cost of searches that occur after settlement, will usually be fixed at  $1,600 inclusive of GST.If you obtain pre inspection reports you should budget on spending some extra money. Our fixed charge does not include the cost of reports such as  building and pest report.If you are buying a Lot in a Strata Plan or Company Title shares you should also budget on spending about an extra $400 to cover the cost of buying:-

  • a strata/company records pre inspection report and
  • the section 109 certificate/Company title equivalent
    The section 109 certificate is issued by the Owners Corporation. It certifies, amongst other things, how much is owed by the Vendor to the body corporate. This information is necessary for the preparation of the settlement statement.
Question: How much will my legal costs be if I am selling?
Answer: If you are selling residential property and it is a routine purchase (which nearly all are) then the fixed charge, up to and including settlement, and including the cost of obtaining the documents that will need to go into the contract, will usually be fixed at $1,500 inclusive of GST.
Question: Isn’t conveyancing easy?
Answer: Experienced conveyancing solicitors can guide you through the process and ensure that the process is as easy as possible. Most conveyances will go through without a hitch. However, there are many potential complications. Conveyancing is about contract law and specific legislation. Contract law can be very confusing. It is a good idea to ensure that your solicitor or conveyancer has the necessary experience, especially if something unexpected comes up.
Question: Who is an agent?
Answer: This is someone who represents someone else. A real estate agent usually specialises in representing Vendors of land.
 Question: What is the agent’s job?
 Answer: The agent typically lists a vendor’s property for sale. Listing a property gives the real estate agent the right to sell a property on your behalf.The agent is usually obliged to act in the Vendor’s interests. The agent has to keep the Vendor informed about any offers that are received. The agent should take reasonable steps to sell the property for the best possible price. An agent will usually obtain a signed agency agreement from the Vendor.This agreement will set out conditions such as:-

  • the commission that the agent is to be paid if the property sells
  • extra fees the agent will pass on, such as advertising charges
  • whether the agency agreement is exclusive, or for a fixed term, etc
    The different types of agency agreements include:-Exclusive agency agreement
    Exclusive agency agreements are commonly used for the sale of residential property. They give exclusive rights to one agent to sell your property. This type of agreement will normally entitle that agent to be paid a commission if the property is sold during the fixed term of the agreement, even if that agent does not introduce the buyer. The agent may also be entitled to the commission if the property later sells to a person who started negotiating for the property with the original agent

    Sole agency agreement

    This is similar to an exclusive agency agreement. However, whilst this agreement gives rights to one agent to sell the property you are ordinarily still free to find your own buyer. If you do find your own buyer you may not have to account to the agent for a commission.General listing/Open agency agreement
    This lets you list your property with a number of agents. You would ordinarily only pay a commission to the agent who finds the buyer.Multiple listing
    This usually involves you dealing with one agent who is part of a network of agents who are working together to sell your home. It can cover auction sales and private sales. You will only pay a commission to the agent you signed with.Auction agency agreement
    This is effectively an exclusive agency agreement, but with the additional factor, that the property is listed for auction.
Question: What is a caveat?
Answer: This is a document registered at the Land Title Office. It stops others from registering a document, such as a transfer of title, which is inconsistent with the rights claimed in the caveat.Caveats are lodged by people who want to protect their interest in land.A Purchaser pursuant to a valid contract for sale of land has an interest in land. That Purchaser can register a caveat.
Question: How much can I borrow?
You may find the calculator on this link useful:-
Actual Finance Solutions calculators
Question: What is a mortgage?
Answer: A registered mortgage stops a land owner from transferring the mortgaged property whilst the mortgage remains registered on the title. The person giving the mortgage is the land owner. Mortgages usually arise when a lender advances money to the land owner. In the mortgage agreement, the land owner usually gives the lender the right to sell the land if the loan is not repaid.
Question: Who is the mortgagee?
Answer: A mortgagee is the usually the Bank or lender which lends money to a land owner on condition that the Bank will be able to sell the property to recover its debt if the land owner fails to repay the borrowed money.
Question: Who is the mortgagor?
Answer: A mortgagor is the land owner who agrees with a Bank or lender that that Bank or lender can sell the land if the land owner fails to repay the loan.
Question: What is a lease?
Answer: A lease is the right to use someone else’s land for a defined period of time.