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Land & Build
In this article, we’ll cover the following topics, as quickly and simply as possible.
- Main responsibilities of a conveyancer
- Expectations YOU should have
- What is a trust account and how is my deposit used?
- Use of deposit explanation (funding, term deposit use) - Legal protections of a trust
- Deposit transfer from agent/developer to solicitor
- PEXA & Settlement
Key differences in conveyancing to note in states/territories other than NSW, VIC, TAS & NT.
Western Australia
- A conveyancer is also known as a ‘Settlement Agent’
- They require a ‘settlement agents’ license.
- Their license is issued by the Western Australian Government
- You will need to sign a ‘Form 1 Appointment’ in order for a ‘Settlement Agent’ to represent you.
Queensland
Solicitors must handle conveyancing transactions. Conveyancers work under solicitors in law firms. You won’t find a conveyancing practice without a solicitor.
Looking to buy land or engage in a build? You’ll need to know what a conveyancer does.
Example, you’re at the point where you’ve decided to purchase a block of land or house and land package. You’ll need a representative who can read the contract, translate any legal wording and manage the contract and settlement process for you.
Firstly, what exactly is a Conveyancer?
Conveyancing can be performed by a registered conveyancer or solicitor. A registered conveyancer is typically more common for basic property buying and selling.
Conveyancing covers all the legal aspects of buying your land (or house & land) and transferring it out of the developer’s ownership and into your own.
Do I have to?
The role of a conveyancer is diverse and is not a legal requirement, however without the experience, doing it yourself may prove to be problematic and is typically not advisable. Especially because in most states this is done online, you must use a person who has a licence to do that.
When should I hire a Conveyancer?
It’s one of the first things you should do and advisable before you sign a contract.
In land sales, you’ll be able to place a refundable deposit to hold the land while your conveyancer reviews the contract, just ask the sales consultant. This way, you can hold the land and do your due diligence without formally committing.
It will also allow you to communicate any special conditions that you’d like added into the contract of sale with the vendor.
Example special condition – subject to finance.
What will the Conveyancer do?
Review your contract of sale (land) and/or HIA contract (build)
They will review the contract and terms proposed by the developer (vendor). Their role here is very simple:
- Review the special conditions, looking out for your best interests.
- Query any irregularities that may not be favourable TO YOU.
- Ensure the Vendors Statement includes all the certificates and required documentation (vendors statement is towards the back of the contract).
- Translate any of the legal terminology into easily explained terms so you understand what they mean.
This is all done to clearly inform you on what you’re agreeing to and most importantly, what is expected of you in the agreement. That way, you can sign the contract with a clear understanding of what it all means.
Is that all?
No, they’re also:
The direct link to the vendors legal representative. They will ask any questions you have for you. If you need an extension; your conveyancer asks for you.
This is an extremely important part of the process, as the conveyancer typically knows how to speak with other representatives and has a higher chance of favourable approval on your behalf.
They prepare and lodge legal documents, including the contract, transfer documents and deal with any government incentives/requirements.
Calculate the adjustments for rates and taxes which is essentially paying any portion of water bills, council rates and any other services associated with the land. This is an adjustment at settlement and will typically be a small amount reimbursed to the vendor (developer).
Settle your property by ensuring your funds are available and attending settlement by the set date. They work with your broker and/or bank on this. Settlement is an on-line process.
Now that we understand the basics of what a conveyancer does when buying a property, what should I do before engaging one? It’s important to shortlist a few conveyancers when doing your research. Once you have your list together, there are some key things you should consider doing.
Price
How much does the service cost and what is included?
Just like anything in life, if it’s too good to be true, it just might be, always question very low pricing. If a conveyancer works off low pricing and higher client numbers you may notice worse service, delays in communication and mistakes.
Reviews
It’s always a good idea to search for the company on Google and read through the reviews. This provides valuable insight into how a company operates and treats their clients.
Ask your friends and family.
Their experiences matter and they may be able to refer someone.
Experience
Do they have experience with land and build contracts? You want someone familiar with off the plan transactions.
Does the conveyancer have a license?
Are they a member of the Australian Institute of Conveyancing?
NOTE: Lawyers can conduct conveyancing work in accordance with the Legal Profession Act 2004. They are not required to hold a conveyancer's licence.
How will you communicate with me?
Asking how they will communicate is important. Will they call, text, WeChat or e-mail? Ask how long they typically take to respond to a client or pass information on to a client once received.
Total Costs
Ask what the total fees are for this transaction. Have them confirm their fee, PEXA, stamp duty (if you know what you’re going to buy) and any other associated costs.
How much should I pay for the service?
For most land transactions, you can expect to pay between $440 and $1,550 depending on the complexity and who you hire.
Land transactions are typically quite straight forward, however the more complex the purchase, the more you may be quoted.
Here’s a typical breakdown of what you can expect to pay in Victoria
- Typical Conveyancer $880
- PEXA Fees
- Change of ownership $132.66
- Stamp Duty (if you are buying) - this will be your biggest expense and is determined by purchase price.
*A full list of PEXA fees can be found here: https://www.pexa.com.au/pricing/
Stamp duty calculator for Victoria can be found here.
https://www.e-business.sro.vic.gov.au/calculators/land-transfer-duty
When am I charged? Typically, at settlement of the property. Some may ask for fees upfront due to long settlement times.
Is the fee fixed? In most cases, yes. It’s rare to receive a variation.
Once you’re comfortable, you can engage your preferred conveyancer by speaking with them.
It’s an investment, can I claim the fee? No. It’s considered a “capital cost” which falls into the same category as stamp duty. But fees in relation to any loan are deductible.
Now that you have a conveyancer, you’ve paid a deposit into a ‘Trust Account’. What is that?
In a land purchase, a trust account is specifically used by the agent to hold your deposit on a land sale. It’s then usually transferred by the agent to the vendors solicitor.
Is it a normal bank account? No, it’s a special account. How is it different? Trust accounts are very tightly regulated and must be fully audited once a year.
The Real Estate Agent cannot invest or use your funds, they can only hold them. Breaking the law may result in a very large fine and up to 10 years in prison.
Does the developer get interest off my money? It is common for the account to produce interest which is owned by the developer while you wait for your land to title.
Building Contracts
- Deposits don’t need to be paid into a trust account.
- Deposits can’t be more than 5% by law if the contract value is over $20,000.
- The builder can use the deposit paid to operate the business.
Why do I need to pay a deposit?
Show that you’re serious - A refundable deposit is paid to hold a block of land and show that you wish to proceed once negotiations are finished.
Collateral – the full deposit is paid so you don’t walk away from the deal. Typically, if you break the terms of the contract, you will lose your deposit. This reassures the developer that you will eventually pay the remaining funds once the land is titled.
Project Funding - If a developer needs to get a bank loan to construct the land, they will use the deposit as proof of sale to the bank. The banks will usually request a certain number of deposits be held prior to them funding the stage for construction.
Settlement – what do I do?
- Your legal representative (conveyancer or solicitor) will be notified when settlement is approaching. It’s typical for notifications to be sent for the following:
- When practical completion is achieved
- When statement of compliance (SOC) is achieved (this is when they lodge to titles office)
- When Titles are achieved
You may also be contacted directly by the sales company.
When titles are achieved, it means that the land has gone from a single large piece of land to multiple smaller pieces of land and now you can take ownership of the one you have chosen.
Typically, from lodgement, titles can be received in as little as five days once SOC is achieved.
Once titles are achieved, you have 14 days to settle. Beyond that, you may incur penalties from the developer.
PEXA is used by your legal representative to handle the process of settlement.
What is PEXA?
Every time a house is bought, sold or refinanced in Australia your lawyer/conveyancer and lender will most likely use a digital platform to settle your property and it’s typically through PEXA.
It allows real time tracking, so every party understands the status of settlement and is very necessary.
Produced by BuyFair Property Group in collaboration with Colin Biggers & Paisley & Openlot.com.au
BuyFair Property Group provides off the plan investment options and education. With Australia’s first ‘Investor Centre’, BuyFair Property Group offers free education and guidance on all the main components of property investment.
Colin Biggers & Paisley has a century-long history of genuine expertise in transactions, projects, governance and dispute resolution. They are particularly known for their insurance, property, and construction experience, and have an established reputation in a range of other sectors.
Openlot.com.au is Australia’s leading off-the-plan platform. Discover land for sale, house & land packages, townhouses for sale in Australia with estate info, releases & settlements, construction updates and more.
Definitions & Terminology
Collateral - Something promised as security for repayment of a loan, to be lost in the event of a default. This may be an existing property that the bank can sell if you fail to repay the loan.
Contract of Sale – An agreement produced by a lawyer to formalise the sale of real estate. This includes all the information on the subject property, conditions tied to the sale, who is representing the buyer/seller and all the buyer & seller information.
Conveyancer – A licensed individual who is responsible for compliance with the legal requirements of a property transaction and safeguarding your interests throughout. The specific tasks a conveyancer performs may vary depending on the complexity of the transaction.
Practical Completion – All construction works for the stage are completed (driveways, roads, footpaths etc) in accordance with the plans.
Section 32/Vendors Statement – This is a legal document provided by a seller which is enclosed in the contract of sale. This document contains all the information about the property and is a requirement by law. It must include all the information that may affect the state of the property, especially if it could impact the decision of the buyer.
A vendor’s statement must be signed, accurate and current. If not, it may provide an opportunity to void the agreement.
Statement of Compliance (SOC) – Audits of the construction works have been completed by the required government authorities (water, electricity etc). If passed, council issues a statement of compliance, certifying that all requirements of the subdivision planning permit have been met.
Trust Account – A trust account is an account where a designated trustee (real estate agent) can securely retain funds in trust for another individual (seller), known as the beneficiary. This trustee can take various forms, such as a real estate agent, accountant, solicitor, licensee, or any other individual entrusted with receiving funds on behalf of another party.
