Selling Property - Frequently Asked Questions
1. I want to sell my property what do I do first?
The first thing you need to consider when selling a property is whether you have the legal rights to do so. If you act on behalf of someone ie. You are their guardian or act as their power of attorney or you area an executor of a will, you may need to firstly ensure that you have the legal rights to sell the property. Also if you share the property with another person you will also need to make sure that the other person agrees to the sale of the property beforehand. If you are unsure as to your right to sell your property, your solicitor can advise you.
There can be other considerations such as GST and Capital Gains Tax that you may also need to discuss with an accountant before you proceed to putting your property on the market.
2. Do I need a contract to sell my property?
Most houses are sold in New South Wales by private treaty through a real estate agent and to do so you must have a proper contract, without one is it an offence. There is essential information that must be included in the contract for sale which are known as Vendor Disclosure Requirements, theyinclude a council certificate, title search and drainage diagram. Depending on your property you may also need to include other searches such as copies of documents creating easements, rights of way, restrictions or covenants. If you are selling a strata unit you must also show a strata plan and any by-laws that affect the property.
It is the duty of the vendor to disclose any information pertinent to the property which your solicitor can help you to do. It is also important that you understand your contract fully and that you fully understand the terms in it as you will bound by them when you do sell the property. The contract will also include other specific items that you may elect to leave in the property or take with you, such as blinds, light fittings or pool equipment. You may like to list additional items that you want to leave behind such as garden sheds or remote controls to the garage which may entice a person to purchase the property or a purchaser may specifically request to be included in the contract.
3. Should I sell by auction or by private treaty?
This is a matter of personal choice and usually discussed with your real estate agent. The difference legally is that at auction, the purchaser is immediately ‘locked in’ to the purchase as soon as the hammer falls, this means that they forfeit their right to a ‘cooling off’ period. In a private treaty, the purchaser has five days as set out in the contract as to whether they wish to proceed with a purchase, this can be waived by agreement between the parties this period may also be extended by agreement.
4. What is a ‘cooling off period’?
A ‘cooling off’ period gives the purchaser five days after signing a contract and exchanging it to decide whether they wish to proceed with the sale. If the purchaser does pull out in this time they may forfeit up to 0.24% of the purchase price. If you would like to secure the sale you may request that the purchaser waives the ‘cooling off’ period by signing what’s known as a ‘cooling off certificate’ or a ‘s.66W certificate’. This then allows you to secure a purchase of your own with the knowledge that the purchasers must go through with purchaser within the time specified by the contract.
5. How do I know when my sale is binding?
When both parties have signed matching contracts and an agreed deposit has been paid, the contracts are exchanged. At auction this is deemed to have happened as the hammer falls, in a private treaty it is when the contract are both dated and each party holds a copy of the others contract. This process is known as ‘exchange’. The contract for sale usually allows for settlement to take place 42 days (6 weeks) from exchange and this can be negotiated between the vendor and the purchaser.
6. What happens at settlement?
At settlement, you will be paid what you are owed. This is calculated by working out what rates you have paid, ie strata, water and council and what share you should be reimbursed for (minus the deposit you have already been paid). Often a person will need to pay out a mortgage over the property which is done at settlement and the financial institution acting for this discharge of mortgage will also attend the settlement to get their money. If you have a solicitor acting for you, you do not need to attend the settlement.
7. What happens if the purchaser isn’t ready to settle or can’t settle?
The contract for sale addresses this issue. If a purchaser is unable to settle, they can be charged interest until the date of settlement or the vendor can pull out of the sale after issuing a ‘Notice to Complete’. The Vendor then has the right to recover the loss suffered due to the sale not proceeding.