Differences between the Queensland and NSW conveyancing process
While buying and selling property across Australia generally follows the same process, there are some substantial differences in the governing legislation, contract conditions and case law that affect the conveyancing process in the different states and territories. For Queensland and New South Wales in particular, there are a few key differences that buyers and sellers should be aware of when transferring ownership of property in either state.
The Contract of Sale
A formal written contract of sale is required for all property transactions in Australia. Once both parties have signed and dated the contract, it becomes legally binding. In New South Wales this is known as ‘exchange,’ while in Queensland the property is referred to as being ‘under contract.’
In Queensland, most contracts will contain special conditions providing that the contract is conditional upon the buyer obtaining finance approval and being satisfied with a building and pest report (usually within 21 days of the date of contract). Further, nearly all residential contracts must have a warning statement attached and the purchaser’s attention must be drawn to the warning statement when the contract is presented to them for signing.
With respect to selling property in New South Wales, the seller is required to prepare a contract of sale before putting a property on the market. Putting a property on the market without first having a proper contract in place is an offence in New South Wales which may attract fines.
In New South Wales, while there are no standard building inspection or finance clauses in the standard form contract, the seller has certain disclosure obligations. If the seller fails to disclose certain matters in the contract of sale, the buyer may have termination rights - in some cases up until the date of settlement.
Solicitors or Conveyancers
New South Wales allows for both solicitors and licenced conveyancers to perform property transactions. This is not the case in Queensland where all property transfers must be completed by or under the direct supervision of a Queensland registered solicitor.
Interestingly though, in Queensland it is often the seller’s real estate agent who prepares the contract for sale, while in New South Wales the contract must be prepared by the seller’s solicitor or conveyancer. It is always a good idea to speak to your solicitor prior to entering into any contract of sale, whether you are buying or selling.
Searches & Prescribed Documents
In Queensland, the ‘let the buyer beware’ doctrine applies and the buyer is required to conduct certain searches to ensure they are satisfied with purchasing the property.
In New South Wales, the seller has a duty to provide certain prescribed documents in the contract of sale which assist the potential purchaser in assessing the suitability of the property. These vendor disclosure documents include:
- zoning certificate;
- sewerage or drainage diagram;
- copy of the certificate of title;
- copies of any documents creating easements, rights of way, restrictions or covenants; and
- title search.
A potential purchaser in New South Wales may also conduct various other searches in addition to the prescribed documents, however generally the mandatory documents will provide the most relevant information that could affect a decision to purchase property.
Cooling off period
Generally, a five-business day cooling off period will apply to contracts of sale in both Queensland and New South Wales jurisdictions (unless the property is purchased at auction). The cooling off period gives buyers a chance to consider whether they wish to go ahead with the purchase of the property and they will generally only forfeit 0.25% of the purchase price if they elect to terminate during this time. This penalty is at the seller’s discretion.
During the cooling off period in New South Wales purchasers are required to obtain formal loan approval and they will have the opportunity to conduct property enquiries such as building and pest reports. On obtaining finance and satisfactory completion of the searches, the purchaser is required to pay the balance of the 10% deposit to the real estate agent by 5pm on the last day of the cooling off period.
Alternatively in Queensland, the cooling off period is primarily used by the buyer to conduct searches not included in the contract (e.g. title searches, flood search etc.) and determine if they are happy to go through with the purchase. Should any of the special conditions to the contract not be met after the cooling off period has expired but within the time specified in the contract, the purchaser may still have recourse to terminate the contract and have all deposit monies refunded in full. Once the purchaser receives confirmation of the special conditions and formal loan approval, the contract becomes ‘unconditional.’
Time is of the essence for contracts in Queensland. This means that both the seller and purchaser must be ready willing and able to settle by the specified time on the date for settlement. A failure by either party to do this will, in most instances, entitle the other party to terminate for breach of an essential term of the contract.
In New South Wales, time is not of the essence. This means that if a party to the contract fails to settle on the settlement date, the other party cannot immediately terminate the contract. In that situation, the aggrieved party would be required to issue a ‘notice to complete’ to the other party. The notice to complete effectively makes the time for performance of the obligation essential when it was not previously. If the party fails to comply with the notice, the other party may then terminate the contract and seek damages.
While purchasing property interstate is a great way to expand your property portfolio, it is important to be aware of these subtle but important differences in the conveyancing process in Queensland and New South Wales.
It is always recommended that both purchasers and sellers seek proper legal advice when entering into property transactions to ensure their interests are protected. DSS Law’s property law team are available to assist you through every step of the conveyancing process throughout Australia.
DSS Law insight articles are intended to provide commentary and general information. They should not be relied upon as formal legal advice. If you would like specific advice relating to this topic, please contact DSS Law on firstname.lastname@example.org.