Prior to settlement
6. Prior to settlement
Exchanging contracts (Unconditional)
Once the property is sold, we will provide your solicitor with a copy of the signed contract and your solicitor will confirm the terms of the sale with you at that time.
Insurance
We recommend that the vendor maintains adequate insurance so that in the event of any incident, they can restore the property to its former state "fair wear and tear excepted" for settlement.
Some contracts do transfer the onus onto the purchaser for maintaining insurance, so this needs to be addressed on a case by case basis.
Exchanging Contracts (Conditional)
If the contract is conditional upon the purchaser obtaining finance, a satisfactory building inspection or any other matter and the condition is not satisfied by the due date the purchaser must notify your solicitor, the estate agent or you by the date set out in the contract. The purchaser may request an extension of the time to satisfy the condition or may terminate the contract. If the contract is terminated by the purchaser within the allowed time any deposit paid is refundable. If no notification is given within the allowed time the contract is deemed to become unconditional.
Changes to contracts, including settlements etc.
Although we will help in any way we can, once the paperwork has been passed on to your solicitor, any changes to be made to the contracts must be negotiated between your solicitor and the purchaser's solicitor.
Cooling-off period – a simple explanation
By law in Victoria, a purchaser is entitled to a 3 day cooling off period after exchanging contracts (the day the buyer signs is not counted nor are weekends and public holidays). In most cases, if a buyer cools off (other than due to a condition of the contract), you will be entitled to keep $100 or 0.2% of the contract price as compensation that is normally deducted from the deposit and the remainder is returned to the buyer.
Cooling off does not apply for properties sold at auction, or within 3 business days before or after a publicly advertised auction date. There are also many other fine points associated with the cooling off period that should be discussed with your legal representative.
Buyer quality inspections – how can they affect the sale?
Pest and Building Inspections are a regular aspect of the selling process, with many buyers opting to have this done prior to competing at an auction, or prior to submitting an offer on a property. In some instances, an offer will be submitted which is conditional upon the results of a building or pest inspection within a specified timeframe.
Deposit
The law requires that the deposit be paid into an estate agent's or solicitor's trust account until settlement, or until an early release of deposit is obtained in accordance with the requirements of section 27 of the Sale of Land Act 1962.
To fulfill these requirements, your solicitor must prepare a Section 27 Statement which you are required to complete to detail any money owing on the property to enable the purchaser to determine if the balance payable on the settlement day is sufficient to discharge all mortgages, and the purchaser must be deemed to have accepted title. This is usually 28 days from when the section 27 statement is served on the purchaser, provided their solicitor does not lodge any objection to the release of deposit within this timeframe.
Where new subdivisions are approved but titles not yet registered, or deceased estates are still going through probate, or if there are one or more caveats lodged on title, then it is unlikely that an early release of deposit will be possible.
Transfer of Documents
The Transfer of Land document to transfer the property into the name of the purchaser will be sent to you together with a Statement or Statutory Declaration required by law. Each of the documents will need to be signed by you. Your solicitor will hand the signed documents over at settlement so that the property can be registered in the name of the purchaser.
Strict procedures must be followed when making a statutory declaration and an information sheet will be attached to the declaration when it is forwarded to you. Please be sure to follow the instructions, as failure to do so may mean the declaration is unacceptable at settlement.
Final Inspection
Under the standard law institute contract, the purchaser has a legal right to have a final inspection or inspections at "any reasonable time" 7 days prior to the settlement of the sale. If the purchaser should choose to have a final inspection, we will be in touch with you to organise a suitable time to show them through your property.
Discharge of Mortgage
If your property is mortgaged you will need to give your solicitor the name, address, loan account numbers and contact at the bank so they can advise them of the sale. The bank will require you to sign an authority, authorising them to hand over the title to your solicitor at settlement in return for the amount of money required to pay out the loan.
This payout figure will be calculated approx. 1-2 days prior to settlement and will include a pro-rata interest calculation to the settlement date and also any penalty payable for early repayment under the mortgage. The bank will also charge a legal fee for the preparation of the discharge. This will be included in the final payout. Your solicitor is provided with the payout figure only. If you require a detailed breakdown of this figure, you will need to contact the bank directly.
Settlement
Settlement will take place at a time arranged between your solicitor, the purchaser's solicitors, your bank and the Purchaser's bank (if applicable). It is not necessary for you to attend settlement. Unless otherwise arranged with the purchaser you must vacate the property by the appointed settlement time.
Important: This general advice may not be relevant to you. You cannot rely on the legal aspects of this general advice; it is provided for information purposes only and you should please seek specific legal advice for contracts, sale documentation and settlement, and other legal issues.