Loan pre-approvals by banks can be confusing. They aren't a rubber stamp to buy whatever you want, but some buyers are being a little too cautious.
Quiet professionalism beats theatrics
Richard Wakelin takes a look at the art of conveyancing
Extroverted show men and women populate the residential property industry, or at least that’s how it’s usually comes across; be it the stereotype of auctioneer as the big tent ringmaster or the look-at-me buyer agent with a funny hat or gold medallion.
But beneath this veneer of show biz is an army of genuine no-fuss no-glory professionals, most highly specialised: think building inspector, property manager, mortgage broker. They don’t get the publicity but they are vital to the smooth running of a multi-billion dollar industry and, most importantly, your and my property transactions.
Perhaps the least understood of all the roles in the property industry is the conveyancer. Before they buy their first property, 99% of people are oblivious to the role of this character. The arcane-sounding name doesn’t help. It feels like it belongs with the titles of long extinct professionals such as apothecary, fletcher or withy peeler.
After buying our first property, most of us learn that conveyancers are responsible for ensuring the property title is transferred legally. But typically our understanding doesn’t go much deeper.
Which is a shame, because understanding conveyancing just a little better helps participants use conveyancers more effectively and avoids that all too frequent panic as settlement day dawns.
For instance, the first and most important job for a conveyancer acting for a buyer is to review the contract of sale in order to identify any deficiencies or inconsistencies between what was marketed to the client and what will be ‘conveyed’ to them at settlement. Does that property really have a dedicated car space? Will you actually be allowed to use that right of way? And is the vendor indeed the current owner?
Given the make-or-break nature of what the conveyancer might find, it makes sense to share a contract of sale with a conveyancer in advance of purchase. “A client who passes me the contract of sale a few days before an auction date rather than on the Monday after the event avoids the risk of being dragged through the troublesome process of extracting themselves from a sale with a fatally flawed contract,” says Justin Lawrence of legal firm Henderson and Ball. “It also gives them the peace of mind to bid knowing there are no contractual skeletons in the property’s cupboard.”
The second main job of the buyer’s conveyancer is to prepare paperwork for various interested parties in a transaction – the mortgagee (the bank or other lender), the titles office and the stamp duty collection department. So passing contracts to a conveyancer early in the piece also ensures that the contract paperwork is completed in good time in advance of settlement date.
“Conveyancing is an exercise in detail,” says Lawrence. “There are a number of steps and interactions between the conveyancer, their client and other parties. Our job is to strike a balance between obtaining the relevant information from the client in a timely manner, whilst not over-whelming them with demands that spoil the ‘I’ve just bought a house’ glow.”
This choreography is most acute on settlement day. This is the moment when the ownership is, hopefully, successfully transferred. This will only happen if every party to the proceeding is satisfied. The vendor wants payment. The vendor’s mortgagee wants to be paid out on any outstanding loans. The buyer wants the property. Their lender wants the property’s title deed as security. Outstanding bills and other encumbrances on the property must be accounted for. It’s a process that invariably requires the drawing up and handing over of several bank cheques. It’s the conveyancer’s job to advise what cheques are required. “And to remind clients in bold capital letters that personal cheques can never be used in a settlement,” chuckles Lawrence.
Conveyancers are just as important to the vendor. They are responsible for preparing the contract of sale and ensuring there are no deficiencies that could lead to the sale falling through. A not uncommon error of vendors, according to Lawrence, is to penny-pinch on conveyancing charges and find themselves with a cookie-cutter contract that contains spurious terms and special conditions. “More often than not, these conditions are absolutely redundant and don’t matter, such as in the case of terms relating to a lift in a two-story apartment block without a lift. But on occasion, the seemingly superfluous terms can cause real problems such as where they refer to an owners’ corporation that simply doesn’t exist or where the vendor purports to have the deposit paid by the purchaser automatically released in the sale of an as-yet-uncompleted building. Such clauses can be contrary to law.”
Conveyancing is an age-old industry and there is little new under the sun. But Lawrence anticipates that conveyancers’ future workload will be impacted by the rise of television-driven DIY over the last 20 years. “I expect we will be called upon to argue the point over whether a vendor’s weekend warrior handiwork is ‘building work’ for the purpose of the legislation. If so, then there is a raft of pre-sale disclosure documentation that must be provided. If in that case the documentation is not provided the purchaser may be entitled to walk away from the contract at any time prior to settlement. It’s a nightmare scenario for vendors, and one that is so easily avoided with care and competent advice. That’s the bit they don’t show you on the telly.”
So, despite what I wrote earlier, perhaps conveyancing will become part show biz after all.
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Image: Danilo Rizzuti