Selling a Home in NSW

Your family home is usually your most valuable asset. This means it is essential that you understand you legal rights and obligations when it comes to selling it.

After an offer is made for your home the buyer will wish to negotiate terms and conditions before they finally agree to buy and it is important that you have guidance and a solicitor to advise you on what is in your best interests.

This post outlines the processing of selling your home and gives you the information you need to understand your rights and obligations as a seller.

Contract for sale

The first thing you will need to do in order to sell your home is to have a contract for sale prepared. It is an offence under the law of NSW to put your house on the market without having a proper contract for sale and could lead to a fine.

Certain information must be included in the contract for sale and the contract must also make certain warranties or promises about the property. In law, these requirements are known as the Vendor Disclosure Requirements.

The most common documents you may be required to include with the contract for sale are:

• A zoning certificate issued by the local council. This shows planning controls and other things which may affect the property.
• A drainage diagram. This shows the location of any sewer lines
• A copy of the certificate of title confirming that you own the property
• Copies of any documents creating easements, rights of way, restrictions or covenants.

Your solicitor will be able to advise as to whether there are any additional documents you should include in the contract for sale.

There are also additional requirements where you are selling strata title property. Most apartments in NSW are under strata title, and their contract for sale will also require:

• A copy of the property certificate for the lot and common property
• A copy of the strata plan showing the lot
• A copy of any by-law changes affecting the use of common property.

Unless you specify in the contract for sale, by putting your property on the market, you are making certain promises about its condition. If the property does not comply with these promises the buyer may be able to cancel the contract for sale and you will be required to return their deposit.
This is one of the reasons that it is crucial that you seek advice from a solicitor when selling your home. They will be able to draft the contract for sale for you to avoid this issue.

What’s included in the sale?

The property is generally sold  ‘in the state it’s found’ unless otherwise specified in the contract for sale. This means that anything deemed to be a ‘fixture’ of the property is automatically included.

The definition of a fixture is anything that cannot be easily removed from the property or without doing damage to the property. Things such as stoves are usually fixtures because they are wired into the property. It is possible to exclude some fixtures for the sale and anything that is not clear-cut should be discussed between buyer and seller so as to be clear.

Exchange

The contract for sale becomes binding when the buyer and seller sign their copies of the contract for sale and ‘exchange’ them.

Usually, at the point of exchange the buyer will give the seller a deposit (normally this is 10% of the total price).

If the property is being sold at an auction, exchange happens automatically after the winning bid is accepted.

It is usually your solicitor who will effect exchange by delivering the signed copy of your contract to the buyer while collecting the buyer’s signed copy of the contract as well as the deposit. The contracts can also be exchanged by mail and this is not unusual.

Stamp Duty, Goods and Services Tax and Capital Gains Tax

Only the buyers pay stamp duty on the purchase of a property, but the seller may liable for certain other taxes – in particular if it is investment property that you are selling.

Goods and Services Tax (GST) generally does not apply to the sale of residential property. However, a seller may be liable for GST if the property being sold has a commercial use and in certain other limited circumstances.

Furthermore, unless the property was bought before 1985, you will usually be required to pay Capital Gains Tax unless it is your own home you are selling. The rules surrounding tax can be complicated and thus you should consult with your solicitor to find out whether you are liable to pay any CGT.

Settlement

Once both parties have signed the contract for sale, a settlement date will usually be agreed. Normally this date will be six weeks after exchange.

Settlement is when the buyer pays everything owed to the seller to ‘settle’ the purchase. The amount owed takes into account any utility bills and tax already paid – this can be calculated by your solicitor.
In the circumstance where the buyer is unable to settle on the agreed date, the seller will be able to charge interest or in certain limited circumstances, even cancel the sale.

Contact Us

If you are thinking about selling a property or for any other matters relating to property transactions or property disputes, contact Szabo & Associates Solicitors today. At Szabo & Associates Solicitors, we can advise on all aspects of property law. Call us on (02) 9281-5088 or fill in the contact form to the right of this page.