Often we hear people say “but I’m just selling my property, why do I need a good lawyer?”. There are many reasons why it pays to have a good, specialized property lawyer on your side when selling your property, and there can be significant financial consequences if you get the wrong advice. If you haven’t already done so, it’s also worth checking out our guide on an overview of the process for selling a property.
1. Preparation of the Contract
New South Wales have some of the most complicated property and conveyancing laws in the whole of Australia. There are many documents that are prescribed in the various bits of legislation, including:
- The Real Property Act 1900 (NSW)
- The Conveyancing Act 1919 (NSW)
- The Conveyancing (Sale of Land) Regulations 2022 (NSW)
In addition to this, there are certain warranties that vendors provide to purchasers which are implied by the legislation, and which apply to a contract regardless of what the contract actually says.
Unfortunately we often see incorrectly prepared contracts, which can result in a purchaser being able to get out of the contract. If that isn’t bad enough, what’s worse is that in most cases where a deal falls through due to a deficient contract, the vendor will still be liable to pay marketing costs and a commission to their selling agent. This can have significant financial impact on you, as commissions these days tend to be in the tens of thousands, or hundreds of thousands of dollars.
Where a prescribed warranty is breached, in addition to potentially being able to get out of a contract, under some circumstances, a purchaser may be able to make a claim for financial compensation against a vendor.
2. Contract Negotiations
Unfortunately, we’ve seen countless situations where deals have fallen through in the contract negotiation phase, because a party hasn’t received the wrong advice, or because a party’s conveyancer or legal representative has acted too aggressively, resulting in a spooked purchaser and the deal falling through. What’s worse, when this happens several times in a row because the vendor has the wrong advisor, the property can remain on the market for a long time and can start to be seen by potential buyers as ‘having something wrong with it’.
Having just one less bidder on your property can make a difference of tens of thousands, or even hundreds of thousands of dollars to your sale price, and it’s important to have a property specialist on your side who can help cut through the complexities of negotiating a sale by letting you know what is standard practice, what things will scare buyers away, and what is absolutely necessary to protect your interests.
3. Contract Deadlines
Due to the conveyancing legislation constantly changing, the obligations of parties during the settlement period are also constantly changing. The standardized components of property sale contracts have also been rapidly and consistently updated over recent years, meaning that if you haven’t picked up a contract in a while, you may not be up to speed on the latest changes.
While under contract, vendors have numerous obligations which include the provision of Land Tax Clearance Certificates, the provision of certificates pursuant to section 184 of the Strata Schemes Management Act 2015 (NSW), and the provision of Foreign Residents Capital Gains Withholding Certificates, and other items which may be required on a case by case basis. Where these items are not provided to the purchaser in the form and timing required by law or as required by the terms of the contract, a purchaser will have rights to delay settlement, which can result in increased legal and holding costs for you, as well as the risk that a buyer may have rights to claim against you, or exit a contract.
4. Tax Considerations
Selling a large asset like real estate often comes with tax considerations, including land tax, surcharge land tax, capital gains tax, and goods and services tax. Often these items are considered and included in the contract of sale, and so it is essential that you get these items correct prior to selling your property. Once the contract is signed, it’s often too late to make any changes, and you may lock yourself in to certain tax obligations.
As you can see, it’s incredibly important to have the right legal advisor on your side when selling real estate, as there can be significant financial consequences if done incorrectly. At Thornton and King our expert property lawyers have decades of experience dealing with all types of property transactions. Our team includes one of the few Law Society Accredited Specialists in the state. If you’re thinking of selling a property, we’d love to hear from you. Give us a call or submit an enquiry now.