Conveyancing is defined as the legal process where property ownership is transferred from one party to another. It encompasses all the necessary legal procedures involved in buying, selling, or remortgaging a property.
The purpose of conveyancing is to ensure that property title transfers are legally binding and properly documented so that they protect the interests of the parties involved.
In this comprehensive guide, we’ll cover the laws that govern conveyancing in Melbourne, Victoria, the different types of conveyancing, and the ten-step process taken.
What is conveyancing law?
Conveyancing law encompasses the legal framework that governs the transfer of real property ownership. While conveyancing refers to the practical process of transferring property, conveyancing law constitutes the legislative, regulatory, and common law principles that underpin and regulate this process.
In Melbourne and the broader state of Victoria, conveyancing law has some specific features:
- Section 32 statements: Sellers in Victoria must provide a Section 32 Statement (or Vendor's Statement) and a due diligence checklist to potential buyers. This document discloses important information about the property and is mandated by the Sale of Land Act 1962.
- Off-the-plan purchases: Victoria has specific regulations for off-the-plan purchases, including extended cooling-off periods, completion time, and specific disclosure requirements.
- Foreign investment: Additional requirements and fees exist for foreign buyers purchasing property in Melbourne, governed by state and federal laws.
- Stamp duty: While stamp duty is still applicable for residential properties, Commercial and Industrial Property Tax (CIPT) was introduced in 2024 to replace stamp duty on new commercial and industrial properties.
You may be wondering if it matters whether you hire a conveyancer or a lawyer to help you with your property conveyancing needs. If that is the case, read our article ‘Property Lawyer vs. Conveyancer: What are the differences?’
What are the types of conveyance?
There are different types of conveyance, each designed to handle the transfer of different kinds of properties:
Residential conveyancing is the most common type involving the transfer of ownership of a residential home or apartment. For instance, when a couple decides to buy their first home together, they would need to go through the process of residential conveyancing to legally transfer ownership of the property to their names.
Commercial conveyancing involves the transfer of ownership of commercial offices, retail spaces, or industrial buildings. Commercial conveyancing is often more complex due to factors like lease agreements, business operations, zoning regulations, and new laws.
Land conveyancing is a type of conveyance that deals with the transfer of ownership of raw land, which may or may not have any structures on it. This could involve the purchase or sale of vacant land for development, the subdivision of a larger piece of land into smaller lots, or the transfer of land as part of a larger property deal.
If you’re new to the concept of conveyancing or if you’re buying or selling your first property, our FAQ section addresses common queries. Now we know what conveyancing is, it's important to understand how it works in practice. Next, we’ll examine the ten key steps in the conveyancing process.
What is the conveyancing process?
Step 1 – Contract of sale
This document details the terms and conditions of a property transaction. It outlines the agreed-upon purchase price, settlement date, conditions, and any other relevant information. As disputes can occur between vendors and purchasers, experienced property lawyers must prepare and vet this document before any party signs.
Step 2 – Make an offer
If you are serious about purchasing a property, you will need to make an offer. The seller might accept this initial offer, or they may attempt to negotiate with you on the price and conditions of the sale. Alternatively, if the property is being sold at auction, you will need to participate in the bidding process and make your highest offer on the day.
Step 3 – Paying the deposit
When the vendor accepts your offer, you both agree to exchange contracts. This is when the buyer pays the deposit, typically 10% of the purchase amount, and this sum is held by the property lawyer representing you. For auctions, buyers should have inspections and finance ready beforehand.
Step 4 – Insurance
You will need to buy insurance, as the responsibility for damage to the property passes from the vendor to yourself at settlement. Some lenders require proof of existing comprehensive building insurance as a loan condition.
Step 5 – Exchange of Contracts
The exchange of contracts occurs next, initiating the business end of property conveyancing. Both the vendor and purchaser will be provided with a copy of the agreement. The deposit will be paid when the contracts are signed. The rest of the money outstanding will be paid at settlement.
Step 6 – Cooling off period
There is no cooling-off period if you buy at auction. However, if you purchase via private treaty, then a cooling-off period applies, which allows you time to organise pest and building inspections and find finance. You can revoke the contract before the cooling-off period ends.
Step 7 – Property title transfer
Your property lawyer will organise a transfer document, get you to sign it, and pay stamp duty to register the document. They will then obtain the vendor’s signature on the form, validating the transfer. You must pay stamp duty to your lawyer before or at the settlement. Title transfer is the usual meaning of property conveyancing.
Step 8 – Adjustments
The property conveyancing process continues, with ‘adjustments’ made based on any council rates that have been prepaid by the vendor. In addition to council rates, these adjustments may concern water rates, strata body corporate contributions, land tax, and rent.
Step 9 – Settlement day
Property conveyancing is complete at settlement, the day the buyer pays the rest of the money for the title, with adjustments taken into account. Your Melbourne property lawyers will do one last search of the title to make sure nothing has come up between the date you exchanged contracts and the settlement.
Step 10 – After settlement
After settlement, the purchaser’s mortgagee will submit the transfer documents to the Land Titles Office. This action will transfer the title from the seller to the buyer. All relevant authorities concerning the property will be notified of the new ownership by The Land Titles Office.
Get help with property conveyancing from P&B Law
There you have it – property conveyancing explained in a step-by-step process. If you need clarification or assistance, our experienced Melbourne property lawyers are ready to guide you through your conveyancing journey.
Contact us today for a seamless property transfer.