Solicitors or conveyancers are usually retained by both vendors and purchasers of property.. Their role is to prepare the contracts and other documentation, including vendor’s statements, which is a vital component of the sale process. Once the authority to proceed has been signed by the vendor, instructions are then provided to their preferred solicitor or conveyancer to draw up the documentation.
This documentation provides the framework for the sale to proceed. The solicitor or conveyancer is responsible for making sure that:
- All transfer requirements are met, including the completion of title transfer documents
- Funds are received from the purchaser’s lender
- Mortgage release documents are received from the vendor’s lender
- Adjustments of service and statutory charges at settlement date are completed
- The vendor and purchaser are provided a statement of final net funds receivable by the vendor and funds payable by the purchaser
- Any encumbrances or other registrations on the title of the property are removed prior to settlement.
- At settlement, they ensure that all the documentation is correctly executed and that any adjustments are made correctly. This can occur when a property that is tenanted is sold, as the rent must be adjusted between both parties from the date the property settles.
Solicitors can provide further information and services for purchasers that a conveyancer cannot. For example, in the case of a couple purchasing a home, they have the option of different ownership structures to meet their individual needs. They may purchase as ‘tenants in common’ or ‘joint tenants’. Each has different implications and it would be wise for a purchaser to seek clarification of these before proceeding with the sale. Details of these options were covered in Module Four.
Solicitors may also be retained by property developers to draw up contracts with builders. Property developers may want immediate access to a property to begin renovations, but not be able to settle immediately. A solicitor will be able to draw up a contract where the parties can each have their own requirements met and no time lost.
Solicitors are also often involved when the purchase or sale of property requires a new will to be drawn up. Purchasing an investment property provides the owner with a valuable asset that they may want to pass on, so an adequate will is always required to ensure minimum stress on the beneficiaries. In a large number of investment situations, the property is being purchased as a nest egg for the future or for a child to occupy later in life. Setting up a legal contract that allows all these things to take place is important.
Conveyancers and settlement agents draw up documents and obtain appropriate land titles. They are an alternative to using solicitors for drawing up the contract. However, they are not able to provide the breadth of legal information that a solicitor can.
Conveyancers are specialists in property transfer and documentation. They now handle a sizable portion of the contractual requirements when a property is being prepared for sale. Legislation requires conveyancers to be licensed, have a trust account and be more accountable for the information they are providing than was previously the case.
The conveyancing company will provide all the documentation such as copy of title, confirmation from the road authorities that there are no plans for compulsory acquisition, confirmation that all rates are paid from the council and confirmation of connection of utilities such as phone, water and electricity.
Conveyancers are usually less costly than a solicitor, but may be less equipped to handle a complex situation arising from a sale. However, as the majority of sales are very straightforward transactions, conveyancers clearly provide a cost-effective and accessible option.