When should you organise a Vendor Statement (Section 32)

I explained in a previous article just what a Vendor’s statement (also known as a section 32) is and what it explains to the prospective buyer of your property.

When is the right time to organise the Vendor’s statement for the sale of your property?

It’s rare that someone sells their property on the spur of the moment, usually it is planned well in advance because you are upgrading, building, moving town, changing investments or so on. However, often people leave getting a vendor statement until they have the first offer.

These days, using technology we are able to produce a vendor’s statement within 24 hours but sometimes it may be more complex and require a bit more work. That’s why you should be getting in touch when you first decide to sell. You don’t need to wait until you have the cupboards decluttered or the agent chosen, give us a call and we can start the process rolling to have a vendor’s statement ready as soon as you need it.

While you are getting the property ready for sale, we can gather the relevant information from you and obtain the searches you need for a property settlement. This is particularly handy if there is something you need to follow up, a common one being proof of building or other approvals.

Thinking of selling? Give us a call on 03 5445 1000 to get the ball rolling on your Vendor Statement.

What happens on the day of settlement?

If you have purchased and sold many properties, the day of settlement is almost just another day. But if this is one of your first property transactions, or it is moving homes the day of settlement can be daunting. This is especially so if you are buying on the same day as the sale of an existing property, the degree of difficulty being escalated when you add into the mix moving and having somewhere to sleep that night.

In traditional conveyancing the settlement takes place at a meeting between the Vendor and the Purchaser’s lawyer. Also in attendance will be any banks that have mortgages involved in the transaction – that is usually the purchaser’s bank to receive the payment to discharge the mortgage and the bank that the vendor is obtaining their finance from.

At the settlement the payment of the monies owed for the purchase price is exchanged for the title and the transfer (the titles office document transferring the property to you). Once settlement is concluded you are the owner of the property.

This settlement arrangement is even easier with online conveyancing through the PEXA system. With online conveyancing, once contracts are signed by both parties and any finance is unconditional, a “virtual settlement room” is established where all parties involved exchange the information regarding settlement. A settlement time is then set and at that time some online magic sees the money exchanged, the transfer lodged at the titles office and a new title immediately produced showing you as the new owner. All while we are sitting at our desk!

Whether it is a traditional settlement or online, once settlement has concluded we will let you know. If you are the buyer you can then collect the keys from the agent and move in. If you are the seller, you will have the sale proceeds deposited to your account and the property is no longer yours.

While we are organising the settlement there are a number of things you should do to make the move as smooth as possible. A buyer should make sure they have obtained property insurance and arranged for the services such as power, gas and phone and internet to be connected for the day of settlement. Being well organised prior to settlement will help make the day of settlement less stressful.

If you have questions about your settlement, call the Conveyancing team on 03 5445 1000.

What do we mean by "online conveyancing"?

When we talk about "online conveyancing" sometimes we will refer to it as a PEXA transaction.

PEXA (Property Exchange Australia) is the name of the organisation that runs online conveyancing in Australia — and so is also the platform used.

PEXA was no easily organised start up, rather in order to ensure e-conveyancing could happen in Australia required an agreement at COAG way back in 2010. The work since then was on getting all the banks, the state title offices, the state governments and stamp duty requirements and the reserve bank were all committed to the process. From there it was building the system as well as organizing relevant changes to legislation and processes.

Which brings us to today where the transfer and exchanges of money for buying and selling money can happen online.

So econveyancing is not just us using an app to organise the settlement it is the actual settlement happening online as has now been established by all levels of Australian government.

So what actually happens in the settlement? PEXA works by having a "settlement room" for your settlement. This is a virtual meeting place where all the representatives relevant parties can make the arrangements for settlement — the buyer, the buyers bank, the seller, the sellers bank.

Within that space all documents are checked, the figures are finalised and a time for the settlement is booked in. The change that this brings is one of the best improvements of online conveyancing. In traditional conveyancing to book in a settlement time would involve ages on the phone to banks, lots of calls back and forth to make sure it suits everyone and everyone is ready.

When it comes to the actual settlement that occurs online with money being transferred from the buyer and their bank to the seller and their bank through the reserve bank (for the highest security) in a matter of minutes. Even the stamp duty and other fees are then paid.

At the same time the records at the titles office are updated and the title showing the buyer as the new owner is instantly produced - although, consistent with the new approach of online conveyancing the title is an online one.

All this means you know your settlement has happened more easily — and much easier for you to be enjoying your new property or the money from your sale!

What online conveyancing means for you?

What are the changes you as a purchaser or vendor will benefit from by having your property transaction occur online?

The biggest change is a less documents to sign, which also means less trips to our office to sign those documents.

As mentioned in my earlier post, the commencement of the conveyancing process remains the same — a contract prepared with a s32 vendors statement, then signed by both parties.

Regular readers would be aware that in recent times there has been an added process added to property transactions known as "verification of identity" or VOI. The VOI involves the owner having to produce documents confirming you are who you say you are (and be warned the process even involves a photo being taken!).

Of course, in these modern times VOI provides great protection against fraud.

With online conveyancing at that time of verifying you are who you say you are, you will also sign a "client authority to sign". That document authorises your lawyer to sign the documents needed to effect the settlement on your behalf. To get even more hitech when we sign on your behalf it is a digital signature - not signing and faxing, not even emailing or scanning but signing by clicking a button when logged in, passwords and with a dongle that confirms we are authorised!

So what does that mean for you — you don't actually sign the transfer of land — we sign that on your behalf. Leaving you more time to get on with the packing!

Stay tuned for more about online conveyancing.

Online conveyancing – the future is here

The legal process for buying and selling property is undergoing a radical transformation across Australia with the introduction of online conveyancing.

What does this mean?

While this is a whole new approach for property lawyers, the process will change what is required for buyers and sellers as well — and for the better!

In later blogs I will explain some of the specific differences, but it is probably best to first understand what is this new-fangled online conveyancing.

Traditionally conveyancing has consisted of 3 parts:

1. Getting to a binding unconditional contract of sale
2. Obtaining certificates and getting ready for settlement
3. The settlement — where the money is exchanged for receiving the title to the land.

Online conveyancing brings that 2nd and 3rd step online. The steps getting ready for settlement happen through online posts (a bit like comments on facebook). No more phone calls and faxes to tee up settlement and confirm figures.

For settlements the traditional way, we would have to get bank cheques from the bank, physically attend the settlement where the documents and cheques were exchanged and then let you know the settlement had happened.

With online conveyancing the the actual settlement happens online — money passing between vendor, purchased and banks in an online environment with the title simultaneously been updated to the new owner. It’s quicker, safer and more secure.

If you are the seller this means you get your money quicker. For purchasers the process is more secure and less risk of settlement being delayed.

At OFRM we are loving this new process, the benefit for our clients is significant. Keep an eye out for later blogs highlighting the process and some of these improvements.

Be up-front with your Contract of Sale conditions

So you have decided to sell your property.

Selecting the agent, getting the property ready for sale, thinking of what needs to be done to get the best sale price will all be occupying your mind.

To ensure that the settlement of the sale proceeds smoothly, you should also be thinking at that early stage about any conditions you wish to include in the agreement for sale. Similiarly, if you are purchasing you should include such conditions in the negotiations, not just raise them at the time of signing.

It is always best to put your desired conditions 'on the table' early on in the process when negotiating the sale details with the selling agent. That can avert an awkward conversation when signing the Contract of Sale if any conditions need to be altered or added. Within the standard Contract of Sale, these conditions are referred to as "Special Conditions".

As a vendor selling a property, receiving an unconditional offer from a buyer to purchase your property is the best offer you can receive. To have that offer amended later with conditions when a purchaser signs a contract can be quite frustrating for you and of course the selling agent.

However, when buying a property you need to ensure you are protected with conditions that you may require, such as "subject to finance" or "subject to a satisfactory pest/building inspection report". These are the most common conditions for any purchaser to consider to have included in a contract. Whilst you can often rely upon a cooling off period, which is generally 3 business days after signing, the better approach is to discuss any conditions you require as early as possible to be fair to everyone involved in the Contract of Sale.

If you are unsure on what conditions to include, you should discuss that with the OFRM conveyancing department with a call to 03 5445 1000.

To permit or not to permit? That is the risk

When acting for a client in the sale of a property, the Vendor’s statement must disclose any building permits issued in the last 7 years of ownership. Often a client will be able to provide all of the required permits and inspections but in some cases there are issues with clients who have not obtained permits for works that have been done, or for a client wishing to purchase a property that the current owner didn’t obtain a permit for works done. The classic case is when a client erects a pergola and fails to obtain a permit.

Failure to obtain a permit from the responsible authority can result in a fine or possibly an order being issued by the authority for the removal of the structure. This can cause delays with the settlement or possible the cancellation of the Contract of Sale by the buyer. When looking to enter into a sale contract, a prospective purchaser can request a copy of the permit at the time of the sale. The current owner often then needs to obtain a permit after the works are done, or obtain a compliance assessment from the responsible authority; usually the local council. This would generally result in a delay with obtaining a signed Contract of Sale from a buyer, having to arrange a number of inspections, the likelihood of a fine and then a fee to have the permit done.

If in doubt about whether a permit is needed, bearing in mind you will want to sell your house one day, I suggest to err on the side of caution and obtain advice from the responsible authority or somewhere like the master builders association. Often it is significantly cheaper to obtain the permit prior to commencement of any building works and ensure you don’t need to pull down your beloved pergola.

A Fair Share: Adjusting rates at settlement

Council rates are levied for a financial year from 1 July-30 June. As a property owner you are responsible for the rates during the time you own the property. Unless that lines up perfectly with the financial year there will be an adjustment at settlement to make sure the vendor and purchaser both contribute the right amount.

In the case where you are purchasing a property, OFRM ensures that the rates issued to the current property owner are paid in full at settlement. There will be an allowance by the purchaser for the rates payable in the current rating year which we calculate on the day of settlement. The adjustment process gives you peace of mind that all property charges are paid on the day of settlement. The process differs slightly if the settlement falls in the period where the Council has not yet issued a rates notice and in that case we work out the contributions and the purchaser will pay the rates when they fall due.

When selling your property many clients are unsure if they should pay the rates leading up to settlement. I often suggest that no rate payments should be made to the water authority or the Council within 2 weeks of settlement. This is to safeguard against a ‘double up’ of rate payments on the day settlement takes place.

Australia’s Move to Electronic Conveyancing

OFRM will be one of the first law firms in Australia to conduct conveyancing transactions electronically. Through PEXA (Property Exchange Australia) and with the support of the major banks, major state governments, states titles offices and land registries, the way property settlements are conducted in offices around the country will become a thing of the past.

OFRM are excited about the soon to be released PEXA system for online property settlement and proud to be supporting the rollout in Bendigo as one of the first cities in the country (indeed the world). This new, secure and tested system will soon be fully operational (planned Dec-Feb) to allow all property settlement transactions to be conducted securely and on time.

PEXA brings all parties (purchaser, vendor and usually two banks) together earlier in the property transaction so everyone has the same information current and available to them. For our clients it will enable their sale or purchase to proceed smoothly.

Here at OFRM, we are delighted to have been an early participant in the PEXA training programs and are already fully verified by PEXA. We are already using part of PEXA's functionality for lodgement of caveats and were the first firm in Bendigo to do so completely electronically. OFRM staff are up to date with the training roll out so that our conveyancing team of Mark O’Farrell, Josh Ennis and Cara Stone can hit the ground running when PEXA is released.