Buying a home in NSW: the conveyancing process explained

Buying a home is one of the biggest financial decisions most people make. Conveyancing is the legal work that moves the property from the seller to you. This guide walks through each stage in detail, so you know what to expect and where the risks sit.

What conveyancing covers

Conveyancing is the process of transferring legal ownership of land. It runs from the moment you consider a property through to settlement and registration of the title in your name. A solicitor or licensed conveyancer manages the legal side. We act for buyers across Manly and the Northern Beaches.

The stakes are real. A contract for the sale of land is binding once exchanged, the sums are large, and small problems in the contract or the title can be expensive later. Good advice early is the cheapest insurance you will buy in the whole transaction.

The contract for sale and vendor disclosure

Every sale in NSW starts with a contract for the sale of land. The seller's agent usually arranges it, but the seller's solicitor is responsible for its contents.

The seller must disclose certain things. Under the Conveyancing Act 1919 (NSW) and the Conveyancing (Sale of Land) Regulation, the vendor must attach a set of prescribed documents to the contract before you sign. These generally include the title documents, a drainage or sewerage diagram, and a planning certificate issued by the council. If the property has a swimming or spa pool, pool compliance documents are also required.

A term that tries to exclude or water down this disclosure obligation is not effective. If a prescribed document is missing, you may have a right to rescind the contract. This is one reason the contract should be reviewed by your solicitor before you commit.

Before you sign, we check the inclusions, the completion period, the deposit, any special conditions, and whether anything in the attached documents needs attention. We look at easements, covenants, and restrictions on the title, the zoning and any proposals in the planning certificate, and whether the physical property matches what is on paper. It is far cheaper to fix a problem before you sign than after.

Exchange of contracts

A sale becomes binding when contracts are exchanged. Each party signs an identical copy, the two copies are swapped, and you pay the deposit.

The deposit is usually 10 per cent of the price, though a smaller deposit can sometimes be negotiated. The deposit is normally held in the agent's or the seller's solicitor's trust account until settlement. If you fail to complete without a lawful reason, you can lose the deposit, so do not exchange until you are ready.

Exchange can happen in person, by post, or electronically. After exchange you are legally committed to the purchase, subject to your cooling-off rights and any conditions in the contract.

The cooling-off period

If you buy a home by private treaty, you get a cooling-off period. For a standard residential purchase it is 5 business days. For an off-the-plan purchase it is 10 business days.

The period starts when contracts are exchanged. It ends at 5pm on the last business day of the period. For a 5 business day period, an exchange at 10am on a Tuesday ends at 5pm on the Tuesday of the following week.

You can withdraw during the cooling-off period, but it is not free. You forfeit 0.25 per cent of the purchase price to the seller. That is $250 for every $100,000.

The cooling-off period can be changed. Your solicitor or conveyancer can give the seller a section 66W certificate, which waives or shortens the cooling-off period. Sellers often ask for this, because it locks the buyer in sooner. You should only sign a 66W certificate once you are ready to be bound, which usually means your finance, searches, and inspections are done. The period can also be extended, but only if the seller agrees.

There is no cooling-off period in several situations. There is none if you buy at auction, or if you exchange on the same day the property is passed in at auction. It also does not apply to some other sales, such as larger rural land, property with more than two dwellings, and commercial property. This is why finance and inspections matter so much before you bid at auction.

Searches and enquiries

While the contract is on foot, your solicitor carries out searches and enquiries. These confirm what you are buying and reveal anything that could affect it. Common searches include the following.

• A title search, to confirm the registered owner and any mortgages, easements, covenants or caveats.
• The planning certificate, to confirm zoning, permitted use, and any proposals or restrictions affecting the land.
• Council and water authority enquiries, to reveal rates, outstanding orders, and the location of services.
• A sewerage or drainage diagram, to show where the pipes run.
• A survey or building certificate, to reveal encroachments or unapproved building work.

A building and pest inspection is a separate step you arrange yourself, usually before you commit. It tells you about the physical condition of the property. The legal searches and the physical inspection do different jobs, and you want both.

Finance and insurance

Your loan needs to be unconditionally approved before settlement. Your lender will usually value the property and issue formal approval. If your contract is subject to finance, speak to your solicitor before the deadline passes, because missing it can put you in breach.

Think about insurance at exchange, not at settlement. In many cases the risk in the property can pass to the buyer from exchange, so it is sensible to arrange building insurance from the exchange date. Ask us how this works for your contract.

Transfer duty

You will usually have to pay transfer duty, often still called stamp duty. First home buyers may be exempt or pay a reduced rate. Duty is generally payable by the earlier of the settlement date or 3 months from the contract date. There is a separate article on transfer duty in this series that sets out the current rates and the first home buyer thresholds.

Settlement

Settlement is the final step. The balance of the price is paid to the seller, any mortgage is attended to, and the title transfers to you.

In NSW, settlement and lodgment are now carried out electronically. Since 11 October 2021, NSW has required electronic conveyancing and has cancelled paper certificates of title. Settlement usually happens through an electronic lodgment network such as PEXA, where the funds and the transfer are exchanged online at an agreed time.

Before settlement, your solicitor prepares a settlement adjustment. This splits the council rates, water, and any strata levies between you and the seller, so each pays for their period of ownership. At settlement, the funds move, the transfer is lodged, and you can collect the keys. The transfer is then registered, and you become the registered owner.

After settlement

A few things follow settlement. The dealing is registered with NSW Land Registry Services, which records you as the owner. Your solicitor will usually notify the council and the water authority of the change of ownership. If you bought in a strata scheme, the owners corporation is notified so the records can be updated. Keep your settlement statement and documents in a safe place.

Frequently asked questions

How long does conveyancing take in NSW? A standard purchase often settles around 6 weeks after exchange, though the completion period is set in the contract and can be longer or shorter.

Do I need a solicitor or a conveyancer? Either can handle a conveyance. A solicitor can also advise on broader legal issues that come up, such as trusts, tax structuring, or a dispute, and can act if the matter becomes contested.

Can I pull out after exchange? You can withdraw during the cooling-off period, with a penalty of 0.25 per cent of the price. After cooling-off ends, you are committed, and pulling out can cost you the full deposit and more.

What is a 66W certificate? It is a certificate your solicitor or conveyancer gives the seller to waive or shorten the cooling-off period. Only sign one once you are ready to be bound.

Is there a cooling-off period at auction? No. There is no cooling-off period for a purchase at auction.

What must the seller disclose? The seller must attach prescribed documents to the contract before you sign, including the title documents, a drainage diagram, and a planning certificate.

Keep reading

• Property and conveyancing
• The contract for sale of land: what to check before you sign
• Cooling-off periods when buying property in NSW
• Transfer duty (stamp duty) in NSW: who pays and how much

This article contains general information only and is not legal advice. For advice about your situation, please contact us. Liability limited by a scheme approved under Professional Standards Legislation.