Monkey's Guide to How Conveyancing Works

Conveyancing is the process of transferring ownership of land from one person to another, under the terms of a contract for the sale of that land. That’s it!

Understanding how conveyancing works means understanding that every Australian State has different law, forms, regulations, fees, time requirements, protections, jargon and government departments as part of the conveyancing process.

But basically each State follows the same steps – just the details changes.

Whether you are buying or selling, there is a Contract that sets out the terms of the sale. The Buyer and Seller have obligations and rights under the Contract. The Conveyancer’s job is to make sure you do what you are supposed to do when you are supposed to do it. That is what Monkey does best.

Buying a House or Unit in Queensland

It is illegal in Queensland to have conveyancing companies owned by Licensed Conveyancers. All paid conveyancing work in Queensland must be done by a Law Firm. These must comply with the rules and regulations of a Legal Profession Act which is administered by the Queensland Law Society and Legal Services Commission. Licensed Conveyancers and Paralegals can be employed in these law firms run as conveyancing companies, but all work must be supervised by a Solicitor.
When you are ready to make an offer, the Real Estate Agent will give you the formal Contract of Sale. You will sign the contract with the price on it and the Seller will either counter sign the Contract and therefore accept the price, or possibly make a counter-offer. The Real Estate Agent manages this process until a price is agreed upon.

The Contract becomes effective when it is dated. (A copy of the contract is sent to the Seller’s Conveyancer.) The Seller’s signed copy goes to your Conveyancer.
There is a cooling-off period of 5 business days. This lets you pull out of the Contract without a reason at any time in the 5 business days from you receiving the contract. It covers situations such as; you have bought without legal advice (e.g. on the spot at a Saturday inspection), or you need to get finance approval or have a building and pest inspection done (in the case of buying a house) or have a Strata Inspection Report done (in the case of buying a unit) or you have just reconsidered your decision to buy. This is your “get out of jail free” card. But the cost is .25% of the purchase price if you exercise your cooling-off rights.

There is no cooling-off if you buy at an auction so you need to have finance approved and a building and pest report done before the auction.
The amount of the deposit is negotiated. The higher the deposit the more attractive the offer is to the Seller – especially if there is more than one Buyer making an offer. The deposit is paid into the Real Estate Agent’s trust account. You are better off not letting the Seller have the deposit until you own the house.

If you don’t have the money (it could be tied-up in your sale or is coming from your Lender who is lending you the entire purchase price) you could buy what is called a Deposit Guarantee Bond. This ensures that if you breach the Contract and you have to forfeit the deposit that the Deposit Guarantee Bond will pay it for you. It won’t always be accepted by a Seller and it won’t always be available to a Buyer so don’t presume you can get one.
1. Insurance
If you are buying a house you should insure it no later than 24 hours after the contract is dated. If the house is destroyed before you become the owner, you are still bound to buy the land and pay the full price. If you are borrowing, your Lender will make you take out insurance well before they give you the money to buy the house and will insist that their name is on the Policy as an interested person.

If you are buying a unit, there is no need to insure the property because the building is owned by the Body Corporate – all you own is the space in the building that is your unit and you should insure the inside of the unit within 24 hours after the contract is dated.

2. Searching
After the Contract becomes unconditional your Conveyancer will now make enquires to test the guarantees the Seller has put into the Contract.

These guarantees include:
  • House
    • The local Council (for rates paid and owing)
    • Land Tax (for taxes levied and owing, if any)
    • Transport Authority (land resumptions for road widening or a freeway for example)
    • Mine Subsidence (if it is a country house in a mining area)
    • Heritage
    • Neighbourhood Disputes
  • Unit
    • The local Council (for land and water rates paid and owing)
    • Land Tax (for taxes levied and owing, if any)
    • The Body Corporate of the Strata Plan (for levies paid and owing)
    • Neighbourhood Disputes
    • Body corporate issues which would unreasonably affect you.
Common-sense may indicate that all searches may not be needed. Discuss this with your Conveyancer.

3. Satisfying Your Lender’s Conditions
The Lender will want to know that when they hand over the money that they are getting what they need to register the Mortgage. Your Conveyancer will meet the bank’s conveyancing requirements.

4. Paying Transfer Duty on the Contract (also known as Stamp Duty)
The Contract is the written evidence of the terms under which you are buying.

Transfer Duty (a government tax) must be paid on the Contract within 30 days of the Contract becoming unconditional or at settlement. This is because the Department of Natural Resources & Mines will not let your Lender register the Mortgage unless the Transfer Duty has been paid on the transfer document. The Lender will want to register the Mortgage as soon as possible after it lends you the money, so everything has to be done before they hand over their money.

Transfer Duty is calculated on a sliding scale and whether you are going to live in the home or rent it out. Click here for information on how Stamp Duty is calculated.

If you are a First Home Buyer you could get a First Home Owner Grant and a Stamp Duty concession. For more information to see if you are eligible for a concession, click here.

There are also exemptions from Stamp Duty regarding the transfer of ½ share of a home to a spouse or part of a divorce where joint ownership is being split.

5. The Transfer
The Transfer is a legal document which is lodged at the Department of Natural Resources & Mines. This is where land ownership information is kept. The effect of the Transfer is to register you as the owner of the home. It is prepared by your Conveyancer and the details on it must exactly match the Contract and the details on the Mortgage otherwise there will be issues at the Stamp Duty Office and the conveyancing process stops until the problems are sorted out. This can be time consuming, complicated and stressful if you are leaving the payment of Stamp Duty to the last moment – something you should NEVER do. Some examples of what can go wrong could be spelling differences (Elisabeth not Elizabeth), middle names on one document but not the other, typographical errors.

6. Notice of Sale (Form 24)
Your Conveyancer also needs to prepare the Notice of Sale. This notifies the Council, Water Board and other government departments of the sale and gives them your details so they know where to send your notices. The Notice is lodged with the Transfer (and the Mortgage if there is one) at the Department of Natural Resources & Mines. The Lender lodges these documents if there is a Mortgage, otherwise your Conveyancer will.

7. Settlement Figures
Handing over the money to pay for the home and getting the legal documents so you have ownership of the house can be transferred to you (the Buyer), is called “Settlement”.

To work out how much to hand over at Settlement, all council rates, water usage, body corporate levies (in the case of a unit) and taxes on the home will be divided fairly between the Buyer and the Seller based on the number of days that each own the home. These amounts are called “the adjustments”. The Buyer’s Conveyancer puts these figures together from the information they extract from the searches and sends the figures to the Seller’s Conveyancer.

The Seller’s Conveyancer then agrees to the figures (or not – in which case they are negotiated) and tells the Buyer’s Conveyancer how to make out the cheques for Settlement. The Seller and Buyer’s Conveyancers then set a time and place for Settlement. Settlement usually happens at the office of the person/entity who holds title to the property e.g. the Seller’s bank.

8. What if You Want To Move In Before Paying For the Home?
This is called “taking early possession”. As a rule it is not popular with the Seller and their Conveyancer will usually advise them not to agree. There is a saying: “possession is 9/10ths of the Law”. Once someone is in the house it is very hard to get them out.

What if the sale doesn’t go through because of any of the following examples; you get sick, you are a couple who are getting a divorce, you discover problems with the house, or it burns down? It is therefore the Seller that is taking all the risks.

It is possible for early possession to happen. It could even be a condition of purchase. The terms of the possession are covered by the standard printed Contract. It is not covered by Tenancy Law because it is not a rental. It is a License to occupy the house.
1. Final Inspection
You now need to check that:
    • The home is still in the same state of repair as it was when you bought it.
    • The Seller has moved out (or they are pretty well on the way to being out by Settlement time).
    • Rubbish has been removed.
    • The Seller has left behind any goods that were sold with the house – like the dishwasher, blinds, light fittings etc.

2. Keys
The house keys are usually left at the Real Estate Agent’s office and can be picked up from there after Settlement.

3. Final Search
On Settlement day your Conveyancer will do another search of the title at the Department of Natural Resources & Mines in Brisbane, to make sure no one has registered their interest in the land e.g. a creditor, a de facto partner, business partner, or anyone else who claims they own the land or part of it.

4. Settlement Itself
You don’t need to be there. Here the Seller’s Conveyancer will hand over the Transfer and the Notice of Sale and your Conveyancer will hand over the money and a letter for the Real Estate Agent authorising them to release the deposit. Your Lender will take possession of the documents as they need to have these in order to lodge the Mortgage.

5. After Settlement
The Seller’s Conveyancer will notify the Real Estate Agent that the sale has gone through and authorise them to release the keys to you as the Buyer.

Your Conveyancer will get in touch with you to let you know that Settlement has gone through. They will also send you a Settlement statement showing how all the moneys have been dealt with.

If you are buying a unit, your Conveyancer will notify the Body Corporate of your details (as the new owner) so they will know to whom to send the Notices of Levies. Notices of Levies include building insurance, maintenance and a fund for future maintenance and repairs to the building.

If there is no Lender, your Conveyancer will arrange for the Transfer, the Notice of Sale and the Discharge of the Mortgage from the Seller to be lodged at the Department of Natural Resources & Mines in Brisbane. After you are registered as the owner, your Conveyancer will let you know that you have been registered as the new owner and will send you a Registration Confirmation Statement.

Selling a House or Unit in Queensland

It is illegal in Queensland to have conveyancing companies owned by Licensed Conveyancers. All paid conveyancing work in Queensland must be done by a Law Firm. These must comply with the rules and regulations of a Legal Profession Act which is administered by the Queensland Law Society and Legal Services Commission. Licensed Conveyancers and Paralegals can be employed in these law firms run as conveyancing companies, but all work must be supervised by a Solicitor.
When the Buyer is ready to make an offer the Real Estate Agent prepares the Contract of Sale. The Contract has clauses in it which guarantees the Buyer there are no current or threatened notices or orders outstanding on the property and if there are, details of these will need to be included in the Contract. If they are not disclosed, the Buyer can pull out of the Contract before Settlement if these notices or orders are discovered later.

It is extremely important to tell the Real Estate Agent as much as you can about the property otherwise you risk the sale falling over after you and the Buyer have signed the Contract. You then have to start all over again to find a new Buyer. If you have any doubts, talk to us here at Monkey for some professional advice.
After the Buyer signs the Contract with a price on it and the Seller will either counter-sign the Contract and therefore accept the price, or possibly make a counter-offer. The Real Estate Agent manages this process.

The Contract becomes effective once it is dated. The copy you signed as the Seller is sent to the Buyer’s Conveyancer and a copy goes to your Conveyancer.
There is a cooling-off period of 5 business days. This lets the Buyer pull out of the Contract without a reason at any time within 5 business days of them receiving the Contract. It covers situations such as; the Buyer has bought without legal advice (e.g. on the spot at a Saturday inspection), the Buyer needs to get finance approval or have a building and pest inspection done (in the case of buying a house) or have a Strata Inspection Report done (in the case of buying a unit) or they have just reconsidered their decision to buy. This is their “get out of jail free” card. But the cost is .25% of the purchase price if they exercise their cooling-off rights.

There is no cooling-off if you sell at an auction, so the Buyer needs to have finance approved and a building and pest report done before the auction.
1. The Deposit
The amount of the deposit is negotiated through the Real Estate Agent. The deposit the Buyer has put down on the property is paid into the Real Estate Agent’s trust account. It is unlikely that a Buyer will agree to letting you have the deposit until they own the property.

2. Insurance
If it is a house you are selling (as opposed to a unit), you should not cancel your house insurance. You still own the property. If you have a Mortgage, your Lender will insist on insurance remaining in place until you don’t owe them any money. There is no home and property insurance if you own a unit.

3. Tell Your Lender That the House Has Been Sold
The Lender will have you sign a Request for Discharge of Mortgage. You should sign this as soon as possible after Contracts have been dated because it can take a few weeks for the Lender to do what they need to do and you can’t be paid for the property unless a Discharge is handed to the Buyer first.

When the time comes for being paid for the property, that event is called “Settlement”. The Buyer can’t have their name recorded as owner unless they have the Discharge document to lodge at the same time as they are being recorded as the owner.

4. Tell Your Tenant That the House Has Been Sold
If your property is being rented, you must give the tenants notice to leave. The period varies depending on the lease but the period will have been taken into account by the Real Estate Agent and the Buyer when setting the date for paying for the home.

5. Signing the Transfer and Notice of Sale
The Contract of Sale is only the written evidence that contains the terms under which you are selling. There’s a legal document called “The Transfer” and this is what is lodged at the Department of Natural Resources & Mines to register the Buyer as the new owner.

The Transfer is prepared by the Buyer’s Conveyancer and sent to your Conveyancer for you to sign. Your Conveyancer will hold the Transfer until you get paid for the property. At that time, the Seller’s Conveyancer will hand over the Transfer in exchange for the money. This happens at Settlement.

The Buyer’s Conveyancer also prepares the Notice of Sale and sends it to your Conveyancer for you to sign. The Notice notifies the Council, Water Board and other government departments of the sale. The Notice is lodged with the Transfer at the Department of Natural Resources & Mines.

6. Settlement Figures
All council rates, water usage, strata levies (for units) and taxes on the land have to be divided fairly between the Buyer and you. These amounts are called “the adjustments”. The Buyer’s Conveyancer calculates the figures and your Conveyancer agrees to the figures (or not – in which case they are negotiated) and tells the Buyer’s Conveyancer how the cheques are to be made out on Settlement. A time and place is then set for Settlement. Settlement usually happens at the office of the person who has the Title Deed, although that can sometimes be negotiated, depending on the circumstances.
1. Final Inspection
You now need to check that:
    • The home is still in the same state of repair as it was when they signed the Contract.
    • You have moved out (or are pretty well on the way to being out by Settlement time).
    • Rubbish has been removed.
    • You have left behind any goods that were sold with the home – e.g. the dishwasher, blinds, light fittings etc.

2. Keys
These are usually left at the Real Estate Agent’s office before Settlement.

3. Settlement Itself
You don’t need to be there. At Settlement, your Conveyancer will hand over the Title Deed, the Transfer and the Notice of Sale. They will also receive from the Buyer’s Conveyancer, the money and a letter to the Real Estate Agent authorising them to release the deposit.

4. After Settlement
Your Conveyancer will notify the Real Estate Agent that the sale has gone through. They will also authorise the Real Estate Agent to release the keys to the Buyer and fax them the authority from the Buyer to let them take their commission from the deposit and to pay you the balance of the deposit.

Your Conveyancer will let you know you that Settlement has gone through and they will place the proceeds of sale into your bank account or hold the cheque for you.

They will also send you a Settlement statement showing how all the sale moneys have been dealt with.