Often, people assume that the transaction process for selling real property is simple, and many are hesitant to engage a professional lawyer to undertake the work on their behalf, believing that they can do it themselves to save money.
We see many files after the seller has attempted to finalise the transaction on their own, and we would strongly caution you against attempting to sell a property on your own due to the risks and ramifications which can occur as a result.
When clients ask us “what could possibly go wrong?”, our answer is always “just about everything can go wrong”. In our many years of successful conveyancing transactions as experienced Gold Coast Lawyers, we have seen just about everything, and it is imperative you have a professional dealing with your transaction to anticipate problems before they occur, and work to avoid the common pitfalls and issues to ensure that you have a smooth, hassle free transaction.
There are often many things that sellers have not thought about when selling a property, and can cause significant legal ramifications if not dealt with correctly by a professional lawyer.
This article will highlight some of the common issues we see arising in conveyancing transactions, to give you an idea of the types of issues which can occur, and why it is so important to have a professional act on your behalf.
How much do you owe on the property?
First things first, if you are contemplating selling a property and you have a mortgage over it, then it is a good idea to contact your bank for an up-to-date balance on your mortgage and whether there will be any break costs as a result of paying out the mortgage. While it won’t be an exact amount, it will provide you with a general ballpark figure to work with and to use in your calculations to ensure that you are not short-changing yourself, and leaving yourself unable to effect settlement (and thus opening yourself up to significant legal ramifications) if you sell the property for less than is needed to discharge the mortgage.
Please be aware that even if you have paid out your mortgage, the mortgage may still be registered over the property with the Land Titles Department. Generally, upon paying out the mortgage the bank will provide you with a signed ‘Release of Mortgage’ form, to be lodged with the Department of Natural Resources, Mines and Energy (“DNRME”) in order to remove the mortgage from title. Unfortunately, many people are unaware of this requirement and simply file the document away for safe keeping.
What this means is that you will need the original signed ‘Release of Mortgage’ from the bank to lodge with DNRME either prior to or at settlement. Thus, if the original form has been lost or the bank delays in providing a new one, settlement can be effected and legal ramifications may arise.
Further, adjustments to the selling price will be made prior to settlement (including any outstanding debts on the land or even commission payable to the real estate agent) which may affect the surplus monies you have to pay out the mortgage. Similarly, if you are selling the property to purchase another, you will also need to consider any funds you may need for stamp duty, search fees or other outlays that may be required. Therefore, we reiterate the importance of ensuring you will have enough money at settlement to release the mortgage from title, after the adjustments have been made for any outstanding debts, required to be paid under the terms of the Contract of Sale.
Has an original Certificate of Title been issued for the property?
Another issue which often arises is the location of the physical Certificate of Title (‘CT’).
While an effort has been made to move the registration of properties and associated documents into an online format, there are still many original CT’s in existence for properties throughout Queensland.
An original CT is a very important document, and if one has been issued for a property, it must be provided to the buyer at settlement, otherwise the seller will be in breach of the contract, which can have serious and costly ramifications.
It is often not until they go to sell a property that clients realise they don’t know where their original CT is, and sometimes, especially where the usual timeframe for settlement is 30 days from the contract date, this can present a real problem for the seller.
Unfortunately, the process to have a new CT issued is far from simple, often taking several months to complete with further arising costs. Depending on how the original CT was misplaced/lost, a seller may have to organise the completion of numerous statutory declarations including one by the last person to have control of the CT, and there may be a requirement to advertise the lost CT in the local newspaper.
If the seller is unable to settle on the due date under the contract then this may give rise to the buyer being able to seek compensation and damages from the seller.
We recommend that prior to signing a contract, you check with one of our experienced Gold Coast Lawyers as to whether your property has an original CT . Even if you are not in the process of signing a contract it would be prudent to find out if you need to locate a CT for the property so you are prepared when the time comes that it is required.
Don’t rush to sign the Contract
It is generally too late to make changes once a contract is signed. You are entitled to obtain legal advice before signing a contract so we would strongly recommend that you make sure that you obtain independent legal advice about the contract you are proposing to enter into if you are unsure about any of the terms or inclusions, and if you don’t understand what the contract means for you.
We have seen clients assume that once the contract for their sale is signed the property is ‘sold’ and they then enter into another contract to purchase a property without understanding the ramifications.
It is very important to remember that even once a contract is signed, the property is not necessarily ‘sold’. Most contracts are conditional upon certain events or conditions being satisfied, for example, a building and pest or finance condition, prior to becoming ‘unconditional’.
Generally, until settlement has been affected, there is a risk of the sale not being completed, and any other contracts entered into should be done on specific legal advice tailored to your individual circumstances so you have means to end the purchase contract if your sale contract falls over.
What is included or excluded from the sale?
Another common occurrence is disputes between the seller and the buyer about the inclusions in the contract. Generally, if there are items to be included or excluded in the sale, these should be written into the contract.
Generally, the seller cannot remove fixtures of the property, for example the dishwasher, air-conditioning units, curtains, or other items which are permanently and physically attached to the property.
If you always intended on taking the curtains from the property because they match your décor, or the shelving from the garage then you should have these written into the contract as exclusions, and the buyer should be made aware that the items are not included in the sale. If you do not ensure that both parties are on the same page with the included/excluded items, the buyer may request that the item remain at the property and it may be costly for you to negotiate to retain the item after settlement.
Other items which are often written into the contract as either inclusions or exclusions are pool equipment (creepy crawly etc), washing machines/dryers, removeable shelving/wardrobes, large pot plants and other similar items.
It is always best to obtain advice about the contract prior to signing to ensure you understand the contents.
There are many issues which can arise during the conveyancing transaction, several important documents which need to be prepared and executed correctly and negotiations between parties in relation to building and pest or other issues which may become apparent during the course of the transaction.
Accordingly, we would always strongly recommend to our clients to contact one of our friendly and experienced conveyancing solicitors prior to entering into a contract to ensure that you understand your rights and obligations under the contract, and to ensure that the contract accurately reflects your agreement with the buyers.
Please contact one of our professional Gold Coast Lawyers today on 5563 8970 to discuss your individual requirements.