The following is an outline of the steps that generally occur when a residential property is bought or sold. There are, however, many ways in which a transaction can vary from the description below. In particular, aspects of conveyancing transactions are increasingly occurring electronically. Fidelity Legal is registered to participate in electronic conveyancing.
Appointment of Real Estate Agent
The vendor appoints a real estate agent (agent) to market, promote and sell the property. The terms of that appointment are set out in an agency agreement. A cooling-off period applies to agency agreements for the sale of residential property - Section 59 of the Property, Stock and Business Agents Act 2002 (PSBAA).
Instruction of Solicitor
Where the vendor instructs a solicitor to act, the solicitor obtains particulars of title to the property and makes all necessary applications to obtain all of the prescribed documents (other than those which the agent has agreed to obtain).
The vendor's solicitor prepares the contract as soon as practicable after the solicitor has obtained the prescribed documents and has sufficient information and instructions to do so. If the solicitor has been instructed by the vendor that the sale is by auction or that the agent is authorised to participate in the exchange of contracts, the solicitor shall forward to the agent the contract in 2 counterparts. Otherwise, the solicitor sends to the agent a complete photocopy of the contract for exhibition and marketing purposes.
If the agent introduces a buyer, negotiates a sale and is not authorised to participate in the exchange of contracts, the agent forwards a detailed sales advice to the vendor's solicitor.
The sales advice usually sets out:
- name of vendor
- address of property sold
- full name, address and telephone number of the purchaser(s)
- ABN/ACN of the purchaser where applicable
- name address and contact details for the purchaser's solicitor/conveyancer
- deposit paid and the identity of the stakeholder
- any changes to the settlement date and time
- any inclusions in, and exclusions from, the sale
- whether the sale is with vacant possession, or subject to an existing tenancy
- whether the deposit is to be invested and if so by whom
- information of any negotiations that requires the vendor's solicitor to draft additional conditions
The vendor's solicitor obtains any necessary further instructions from the vendor and completes the preparation of the contract. The vendor’s solicitor then forwards a counterpart contract to the purchaser's solicitor and makes arrangements for the vendor to sign a counterpart contract.
If the property is tenanted and the agent is the managing agent then the agent provides to the vendor's solicitor a copy of the:
- Residential Tenancy Agreement;
- details of the current rent; and
- details of any rental bond or guarantee that the tenant has paid.
If the property is tenanted (and the agent is also the managing agent) but is to be sold with vacant possession, the agent and solicitor co-operate to ensure that the appropriate termination notice is given to the tenant in sufficient time to comply with the requirements of the Residential Tenancies Act 1987 and the provisions of the contract in relation to the settlement date of the contract.
Exchange of contracts
The contracts for sale of the property do not operate until the signed counterpart contracts have been exchanged.
Exchange by Agent
The agent may, under section 64 (1) of the PSBAA:
- write the purchaser's name, address and description, solicitor's details, purchase price and date on the contract;
- insert or delete the description of furnishings or other items to be included in the sale;
- participate in the exchange (subject to section 64(2) of the PSBAA).
The agent must ensure that the execution pages of both counterparts of the contract, any special conditions and all annexures to the contract are executed properly.
On exchange the agent dates both counterparts of the contract and receive the agreed deposit payable under the contract and, if so instructed, a section 66W certificate, by which the purchaser waives the statutory cooling off period of 5 days. If either the vendor or purchaser is present at the time of exchange the agent hands to the purchaser the counterpart contract executed by the vendor and hands to the vendor the counterpart contract executed by the purchaser and if applicable, the section 66W Certificate.
Alternatively, immediately after exchange the agent:
- causes the counterpart contract executed by the vendor to be delivered to the purchaser or where the purchaser has notified the agent or it is apparent from the contract that a solicitor acts for the purchaser, to the purchaser's solicitor
- causes the counterpart contract executed by the purchaser and section 66W certificate where applicable to be delivered to the vendor or where the vendor has notified the agent or it is apparent from the contract that a solicitor acts for the vendor, to the vendor's solicitor; and
- confirms the total deposit paid and held.
Exchange by Solicitor
If an exchange of contract is effected by the vendor's solicitor without the participation of the agent, the solicitor, within two business days of exchange, notifies the agent in writing of the date of exchange. If the stakeholder of the deposit is the agent, the solicitor remits the deposit to the agent at the same time.
If the stakeholder of the deposit is someone other than the vendor's agent or if a bond has been used to pay the deposit or if the deposit has been released or paid direct to the vendor on exchange, the notification to the agent includes confirmation in writing of the solicitor's understanding of the arrangements made by the vendor for the payment of the agent's commission on settlement.
Deposit held by an agent as stakeholder
If any part of the deposit is dishonoured or not met on presentation, the agent notifies the vendor's solicitor. Otherwise, the agent confirms in writing the amount of deposit held by the agent as stakeholder as soon as possible after exchange.
Prior to Settlement
The agent and the vendor's solicitor shall consider the following matters and mutually co-operate to make appropriate arrangements to ensure:
- A pre-settlement inspection by the purchaser is carried out, if required;
- that vacant possession will be available at the time of settlement (if applicable);
- that sufficient information is available to make necessary adjustments and arrangements on settlement for rent and rental bonds (where applicable);
- the parties are aware of the location of all necessary keys and security devices at settlement;
- that the deposit or part of it is available, if required, at the necessary time to be released by the agent upon reasonable notice to be used as part of the purchase price at settlement.
The vendor's solicitor notifies the agent by telephone as soon as possible after settlement occurs to authorise the release of the keys and the agent on receipt of this verbal authorisation, releases the keys. The vendor's solicitor confirms such authorisation by facsimile or email as soon as practicable after settlement.
Following settlement the vendor's solicitor forwards to the agent an order on the agent authorizing and directing the agent to account to the vendor for the balance of the deposit held by the agent and reports to the client regarding aspects of the transaction.
[Refers to the Protocol entered into by The Law Society of New South Wales and the Real Estate Institute of New South Wales on behalf of their respective members]