BUYING PROPERTY IN THE ACT FAQ

Here are a few answers to some very common questions we are asked frequently

By Steve Lowe

22-11-2018
HOW LONG IS THE SETTLEMENT PERIOD?
Usually 30-120 days.
Settlement periods are stated on the front page of the contract of sale and can be negotiated PRIOR to exchange or the fall of the hammer. Usually 30 days, it is not uncommon for up to 120 days.

HOW MUCH IS THE DEPOSIT?
An normal deposit is 10% of the purchase price. Upon exchanging contracts, the 10% deposit is paid to the stakeholder to be held in trust until settlement.

HOW DOES A 5% DEPOSIT WORK?
It is common for people to negotiate a 5% deposit and have a 10% deposit still stated on the contract. This is known as 'deposit by installments' The first installment is the 5% upon exchange and the second installment at settlement. If you rescind the contract you are liable to pay the full 10%.

IS THE DEPOSIT REFUNDABLE?
Yes, only before the exchange of contracts.
If you have paid the deposit, it is held in trust and once the contract have 'exchanged' and the cooling off period has expired, the deposit is non refundable and you are at risk of losing 10% of the purchase price should you not complete the contract.

WHAT IS STAMP DUTY?
Conveyance duty, commonly known as stamp duty, is a tax you pay when you buy property in the ACT, whether it’s a home, land, or a commercial property. As part of the 2018-19 Budget, the Government is continuing to reduce conveyance duty rates for residential properties and for transactions of commercial properties with a dutiable value of $1,500,000 or less. More info here: https://www.revenue.act.gov.au/land-duties/land-duties

WHAT IS AND DO I NEED A CONVEYANCER?
Conveyancing is the branch of law that deals with the transfer and ownership of property. A conveyancer, as such, is someone who will act both for and with you when it comes time to purchase, sell, transfer or subdivide real property. It is not a legal requirement to hire a conveyancer, but they do make property transfer a lot easier than it would otherwise be. We have some great conveyancers, get in touch and we will share their details.

EXCHANGE OF CONTRACTS?
Exchanging sale contracts is the legal part of selling a home. There will be two copies of the sale contract: one for the seller and one for the buyer. You each sign one copy before they are swapped or ‘exchanged’. This can be done by hand or post and is usually arranged by your solicitor, conveyancer or the agent. At the time of the exchange, the buyer will be required to pay a deposit, usually 10% of the purchase price.

The contract exchange is a critical point in the sale process for a number of reasons:

- The buyer or seller is not legally bound until signed copies of the contract are exchanged.
- Buyers of residential property usually have a cooling off period of five working days following the exchange of contracts during which they can withdraw from the sale unless this is waived with a section 17 in the ACT.
- If the agent arranges exchange of contacts, the agent must give copies of the signed contract to each party or their solicitor or conveyancer within two business days.
- The cooling off period can be waived, reduced or extended by negotiation.
- There is no cooling off period for sellers. Once contracts have been exchanged, sellers are bound to complete the agreement.
- There is no cooling off period when purchasing at auction.

WHAT DOES A STAKEHOLDER DO?
The stakeholder holds the deposit from exchange to settlement.
The stakeholder is nominate don the front page of the contract and is usually the real estate agency and sometimes the sellers solicitor.