Are you starting the process of purchasing or selling your property? Have you had discussions with your agent, bank or lawyer and been bombarded with legal jargon which you don’t understand? It is important that you are fully informed during this process, below is a helpful explanation of key terms commonly used in conveyancing transactions.

Purchaser is the person, people or company who are buying the property.

Vendor is the person, people or company who are the owners of the property that they are selling.

Agent is the Real estate agent who is selling the property and usually is the agent that has introduced you to the property.

Deposit is a sum of money as agreed by both parties to exchange contracts and proceed with a settlement, it is usually transferred to the agent’s trust account. The default deposit is 10%, however, this can be negotiated with the vendors if they agree to reduce the sum e.g. to 5%. The deposit is then held in trust so it cannot be released to the Vendors unless the contract permits and the vendors request this from the purchasers. The balance then gets paid to the Vendor at settlement.

Exchange is the process where the vendor and the purchaser electronically or physically exchange their signed contracts with each other. Contracts can be exchanged on different terms and conditions including:

• With a non-refundable 0.25% deposit and a cooling-off period;
  • In this case, a 0.25% deposit is paid to the agent and you will normally get 5-10 business days cooling-off period to arrange inspections and secure finance.
• With a s66W certificate, no cooling off period and a deposit of normally 10%;
  • This certificate is issued by the purchaser’s lawyer and means that there is no cooling-off period so that contracts become binding upon exchange. It is important that you have finance secured when exchanging in this fashion.

• With exchange that is subject to finance;
  • This means that a contract is exchanged with a deposit, however, it does not become binding upon the parties unless and until the purchaser receives secured finance from their bank within the time stipulated in the contract.

Cooling off is the period when negotiations to the contract and inspections to the property can take place. During this time purchasers have the ability to sign the contract, so it is off the market and withdraw from the contract if they do not wish to proceed without attracting further liability. Upon the expiration of the cooling-off period, contracts become binding on both parties. It is important to note that if you are not proceeding with the contract, you must serve a notice of rescission to the vendor and your deposit of 0.25% will be forfeited by the vendor.

Inspection reports are used by the purchaser to make enquiries regarding the property they are looking to buy, usually done before exchange and/or during the cooling-off process. Inspection reports include:

• Pest: to determine if there are any pests on the property like termites and assess the environment on the property to determine where issues may encourage their presence
• Building: to determine the condition of the property and its contents, ranging from roof tiles to toilet seats
• Strata: to determine the financial status of the owner’s corporation if you are purchasing a unit or townhouse. This also informs you of the minutes from the Annual General Meetings in relation to issues raised, including legal claims for building defects. This report is also used to advise you of the current or future strata levies.

Completion is also known as the settlement date which is when the purchase/sale occurs. The standard completion date is 42 days after exchange.

Notice to complete is a written notice issued by a party to a defaulting party if the defaulting party does not complete by the scheduled settlement date. Usually, the Vendor can charge a sum of money to issue this notice and this will give you an additional 14 days to settle. Depending upon the terms of the contract, interest may be payable during this time.

Easement is the right that is either granted or that you grant to someone for a particular purpose. E.g. an easement to drain water where pipes lie.

Restriction on the use of land is any restrictions imposed on your land. This usually involves restrictions when your home is being built.

Sewer Location Diagram is a diagram that shows you where the main water pipes and structures are located for your lot including Sydney water, wastewater, and stormwater pipes and the connection to the wastewater system.

Sewer Service Diagram is a diagram that shows you where private sewer pipes are located within a property. This is important for you to know which pipes run through your property in case there are issues with your pipes or drainage.

PEXA is the online workspace where most, if not all, conveyancing transactions happen. This is due to new requirements that have changed paper transactions to electronic transactions.

At Pannu lawyers, we strive to make the conveyancing process easier by taking the guesswork out for you. Each page of the contract is thoroughly explained, and clients are continuously updated throughout this entire process so there are no hiccups along the way. If you are looking to purchase or sell a property, whether this be commercial or residential, give Pannu lawyers a call on (02) 9920 1787 to see how it all works.