Selling real estate in NSW

Before you can offer real estate for sale you must have a draft contract to show to prospective purchasers. If you are using a real estate agent, the agent must have the draft contract before the agent can market the property for sale.

The draft contract must have attached certain mandatory documents which need to be ordered and it may be a few days before the draft contract can be issued.

I regularly prepare draft contracts and I order the documents which need to be attached. These documents include at least: a title search; the registered plan of the land including the text of any easements, rights of way, restrictions, etc.; a planning certificate; a sewer connection diagram; and a drainage infrastructure diagram. You may also need a swimming pool certificate.

Depending on the nature of the property, there may be several other documents to be ordered and attached.

There can be an associated water licence transfer, particularly with rural properties.

If the property is not an existing residence, for example, if it is a new build residence, or if it is commercial, there will be Goods and Services Tax issues to be addressed in the contract. An existing residence is normally exempt and there can be exemptions for some commercial sales and for some rural sales.

I regularly liaise with a client’s accountant to make sure GST implications are correctly addressed.

You may also need to factor in capital gains tax if the property is not your dwelling.

Once a buyer is found, there can be negotiations about the text of the contract before the buyer exchanges contracts. For example, the buyer may want clauses allowing for pest and building inspections or time to confirm finance approval. You may or may not agree.

Unless an auction is involved, the buyer of residential property generally has a “cooling-off” period of 5 business days. Or 10 business days if the sale is an “off the plan” building, i.e. yet to be built or finished. “Cooling-off” can be waived but only if the buyer’s qualified representative signs a prescribed waiver document. If not waived, a buyer can pull out of the contract during the cooling off period without giving a reason.

When the contract is unconditional, a “Workspace” is opened in the electronic conveyancing system and the representatives of each of the parties operate in that electronic Workspace to progress the matter towards settlement. I am an accredited system user and I represent and sign for you in the system.

There are formal requirements before the electronic conveyancing system can be used for your transaction. You must sign a prescribed “Client Authorisation” for me to operate in the system on your behalf. Additionally, your identity must be formally verified. This means you must, in person, with your identification documents (typically both your driver licence and passport), attend either myself or an independent certifier like the Post Office.

One other participant in the system, if you have a mortgage, will be your mortgagee. I regularly assist clients to have their bank initiate its steps to be ready for settlement.

“Foreign Resident Capital Gains Withholding” applies unless you obtain a clearance from the Australian Taxation Office. I regularly assist clients obtain this clearance. Without a clearance, the purchaser is required to retain 15% of the purchase price and pay it direct to the Australian Taxation Office.

Near to the time for settlement, calculations are made for adjustment of council and water rates and strata levies, etc. I handle this on behalf of clients. For example, if you have unpaid instalments, your money is used to pay these on settlement but, if you have paid, the purchaser reimburses you for that part of the rating period still remaining after the settlement date. Also, for example, if you have used water and not been billed yet, an estimate is made based on usage so that the purchaser is compensated. This is because the purchaser will be paying the bill when it is received.

When settlement occurs, I sign off for you in the electronic conveyancing system. Upon each of your mortgagee, the purchaser representative and the purchaser’s mortgagee all signing off, settlement takes place (transfer of title to the land) and the electronic system automatically pays your mortgagee, any rates or outgoings still to be paid and then deposits the balance proceeds of sale into your bank account. Usually clear funds the same day. If your real estate agent is holding the deposit, then the agent will deduct its commission and expenses and pay the balance to you direct.

Please note: The foregoing text is a generalised guide only and may not cover all the requirements for your particular situation.