What is the conveyancing process?

From the initial offer to the final settlement, getting a good idea of each stage in the conveyancing process can help make buying or selling a property that little bit easier. We’ll look into each of the steps and what’s involved for both sides.

Conveyancing is the legal process of transferring ownership of real estate, whether it's a house or land, from one party to another. This intricate process involves various legal documents, property searches, and settlement arrangements. 

The primary participants in a conveyancing transaction include:

• Vendor: The individual selling the property.
• Purchaser: The buyer of the property.
• Financial Institution: The lender provides finance in exchange for a mortgage over the property.
• Solicitor or Licensed Conveyancer: Professionals responsible for managing the transaction on behalf of the vendor and purchaser.

While there are differences between States and Territories they generally follow the same general processes.

When a buyer agrees to purchase a house or land either directly from the vendor or via the vendor’s agent through a process of making an offer which is then accepted by the vendor.

This marks the beginning of the conveyancing process:

Step 1: Contract of Sale 

The Contract of Sale outlines the rights and responsibilities of both the vendor and purchaser. The obligations of each party are to be performed over a period of time, culminating with payment by the purchaser of the purchase price and transfer by the vendor of the title to the property.

A contract of sale should not be signed and exchanged until the purchaser has reviewed the contract with their nominated solicitor or conveyancer.

Once contracts of sale have been signed by all parties and exchanged, this means that the buyer and seller each hold an identical contract signed by the other party.

Step 2: Paying the deposit 

When the contract of sale is signed purchasers are often required to pay a deposit at about 10% of the purchase price as a sign of good faith in their interest in the property. The amount of the deposit can vary and is usually advised by the vendor or agent.

Step 2: Purchaser insures property

The buyer should then insure the property, although the purchaser is not responsible for any damage which may occur until such time as settlement has occurred and the title transferred.

Lending institutions may require that proof of building insurance is provided, with the lender noted as an interested party, as a prerequisite to completion of settlement of the loan for the property purchase.

Step 3: Cooling off period

There is a ‘cooling off period’, which does vary by state, and gives the purchaser a level of protection through which they can withdraw from a contract in certain circumstances. The cooling off period does not apply to a purchase at auction.

Step 6: Transfer of title

The transfer of title starts when the purchaser's solicitor or licensed conveyancer meticulously prepares the transfer document. Once crafted with precision, the document is presented to the purchaser for their signature, signifying their intent to assume ownership and agreement to outlined terms. Throughout this process, the solicitor or conveyancer acts as a trusted advisor, ensuring legal compliance and guiding the purchaser. Upon signature, the document is submitted for processing, marking a crucial step towards the formal transfer of property ownership.

Step 7: Stamp duty payment

The purchaser pays the relevant stamp duty amount for the registration of the document. The signed document is then forwarded to the vendor’s solicitor/conveyancer for completion by the vendor.

Step 8: Transfer document stamped

The purchaser’s solicitor/conveyancer will then arrange for the transfer document to be stamped before settlement, so the purchaser can register the transfer immediately after settlement has taken place. This will often be a requirement of the purchaser’s lending institution for the transfer and so the mortgage can be registered promptly.

Step 9: Formal questions conducted

The period of time between the purchase of the property and settlement – the point at which the property transfers – does vary between the states and territories and is typically 30 to 90 days but this can vary by agreement.

During this period there is an exchange of formal questions and answers about the property between the purchaser and vendor conducted by respective solicitors/conveyancers, referred to as requisitions on title. Keep in mind, in Victoria these have been replaced by warranties in the contract.

Step 10: Searches made for defects

From the purchaser’s perspective further searches and enquiries will be made by the solicitor/conveyancer to identify any defects in title, unapproved construction on the property and land contamination amongst other things.

Step 11: Calculation of final payment

In the lead up to the settlement date the vendor’s mortgagee must be contacted to calculate the payout figure at settlement, arrange attendance at settlement to provide a discharge of mortgage and to hand across the title to the property.

Step 12: Adjustments calculated

Then ‘adjustments’ will be made up to the date of settlement, by the purchaser's solicitor/conveyancer which are then agreed by the vendor's representative to allow for council and water rates, most commonly, that the vendor has paid. These adjustments are then part of the final settlement calculation for money to be paid across at settlement.

Step 13: Settlement

Settlement day then arrives and this is the day the purchaser provides the agreed money to the vendor. The purchaser’s solicitor/conveyancer will complete a final search before settlement to ensure that the title is free from any restrictions that may have occurred between the date of exchange of contracts and settlement.Settlement is usually physically attended by both the vendor and purchaser’s solicitor/conveyancer and the financial institutions. This is where the title documents are handed over in exchange for the final payment of the agreed purchase amount.

Once settlement is complete, the conveyancing process ends, and the property ownership officially transfers to the purchaser. Whether you’re buying or selling property, understanding these steps can help you navigate the process more smoothly.

If you’re looking to purchase property in the near future, then you can check out our home loan hub or compare some of the providers in the tables below…