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Commonly used terminology when buying or selling properties &cooling off explanation

Mullane & Lindsay Solicitors
Mullane & Lindsay Solicitors
Commonly used terminology when buying or selling properties &cooling off explanation

In the following podcast Conveyancer, Michele Rumph explains some commonly used terminology when buying or selling property. As well as explanation of what is meant by the term “Cooling off”.

Lorraine: “Good morning and welcome to Michele Rumph, licensed conveyancer with Mullane and Lindsay. Commonly used terminology when buying and selling properties and cooling off explanations is what Michele will be speaking about. Okay, Michele, what is exchange of contracts”

Michele: “The exchange of contracts takes place when the parties are ready to enter into a contract, its process whereby the Vendor’s representative will compare both contracts as signed by the Vendor and the Purchaser to ensure they are identical, then they’ll also confirm that the deposit is held by the agent and the Purchaser’s representative provided a certificate waiving the cooling off period and once all these items are in order and the contracts are identical, then dated and the vendor will hold the purchasers signed and dated contract and the purchaser will hold the vendors signed and dated contract and this is known as exchange of contracts. When you exchange contracts, you can do it unconditionally or under a cooling off period. If you exchange under unconditionally, you should always have the contract reviewed and at that time negotiate any changes that may be needed or you need to understand the terms and conditions, you also need to know the title of the property, if there are any easements or covenants that may affect anything you may want to do with the property, there’s a planning certificate from council which outlines the zoning and what can and can’t be done with the property and there’s also a location of the sewer and that’s important because you need to know where the sewer is and keep in mind if there’s any sewers or easements that may affect you putting in a swimming pool or something like that or if there’s any building over the sewer, it should have approval by the relevant water authority and that’s important to make sure that’s all in place, you should also have and be satisfied with the property and that you have completed pest and building and strata inspections. Your finance should be unconditionally approved this means your approval can’t be subject to something such as a valuation, if it’s not unconditionally approved at the time of entering into a contract then you risk the lender retracting finance which would leave you in a position where you cannot complete contract and you would have to forfeit your deposit. You should also factor in stamp duty and other costs involved in any purchase. If you enter into a contract unconditionally then you have no cooling off period then you are bound by the terms of the contract and if you can’t complete again you would forfeit the 10% deposit you have paid and unconditional exchanges are generally done by the solicitor and not the selling agent.”

Lorraine: “So, how does cooling off work?”

Michele: “You can enter into a contract into cooling off and the standard cooling off period under a contract is 5 business days, however it can be extended by agreement. Its quite common for a Purchaser to need 10 business days to get their finance in order. Cooling off is a good way for a Purchaser to secure a property as long as they are aware that they have to forfeit 0.25% of the asking price, if they decide not to proceed. It also allows the purchaser to do their pre-exchange inspections and get their finance in order without the risk of being gazumped by another buyer that might come in and offer more money. Just keeps it off the market and secure for them. In a cooling off period a Purchaser can pull out anytime for any reason and from a vendor’s perspective because it takes the property off the market, the vendor cannot pull out, they’re actually locked in, the purchaser would generally not want to forfeit any money, so they are possibly less likely to walk away from the deal.”

Lorraine: “And what is a Section 66W Certificate?”

Michele: “This is a certificate used to waive any cooling off period under the contract for sale and the purchasers conveyancers or solicitor must explain to the purchaser clearly that they will be entering a contract unconditionally with no cooling off period and they need to sign a certificate and then the purchasers representative will then provide that signed certificate to the vendors representative when submitting the contract for exchange and this will waive the purchasers cooling off rights. The purchaser will then enter the contract unconditionally unless the contract is subject to any other conditions.”

Lorraine: “What is VOI?”

Michele: “VOI is short for Verification of Identity; we are now required by law to verify the identity of any persons transacting in real property. When a person is selling a property we must also confirm they have the right to deal with the property  and this will be done by the VOI, to prove that they are the owner such as council rate notice and the like and regardless of whether you’ve know that client for 20 odd years or so, we still have to complete a VOI for each person involved in the transaction and it has to be current for 2 years and if it’s out of date and you buy or sell another property, we have to VOI you again. This continues every 2 years regardless of how long you’ve known your representative. Since last October, paper Certificates of Title are no longer valid and all titles are held electronically, so you can’t even walk in with your old Certificate of Title, which we used to have and hand over to any buyer, now its all done electronically so its even more important to verify the identity, make sure you have the right to deal and then all settlements are done on PEXA workspace and the VOI is just a normal part of the process these days, it just has to be done.”

Lorraine: “My last question is, what is a certified copy?”

Michele: “Certified copy a copy which is basically verified by a qualified witness so if we need to certify identification or forms of idea like certificates or marriage certificates, birth certificates, anything like that, it is required to be certified which means a qualified witness, a solicitor, a justice of the peace, quite a list of qualified witnesses, some doctors are also a qualified witness but they have to actually site the original document and then they stamp the documentation on that copy to say that it’s a true and correct copy of the original sited and that again is basically what we use a lot of the time to verify peoples and their identification.”

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