Home

by Jacqui Brauman Jacqui Brauman No Comments

Solicitor for conveyancing

As a solicitor, of course I’m going to say that someone buying or selling a property should use a solicitor (lawyer) to do their conveyancing work. But what are the reasons why I recommend this and what are the primary differences in the service provided?

Training

The training and licensing requirements for conveyancers are different in each State, so everything I’m going to address relates to Victoria. 

To be a solicitor, someone has to have a Bachelor of Laws, at a minimum, which takes the equivalent of 4 years of full time study. During that bachelor (undergraduate) degree, they will study Contract Law for 6 months, Property Law for 6 months and Land Law for 6 months. Along with all the other units of study, the Bachelor of Laws teaches law students to think as lawyers. 

After completing the degree, to be able to get a practicing certificate as a solicitor, the person would need to complete a Graduate Diploma in practical legal training, which takes another 6 months. This is when they are exposed to the practical aspects of conveyancing. 

Once they have a practicing certificate, solicitors are required to undertake ongoing legal training each year to be eligible to reapply for their certificate annually.

There are different levels of practicing certificate, and to be able to operate a trust account, a solicitor must pass an extra course on trust accounting regulation and compliance, and pay an auditor twice a year to audit the account. Most law firms have a trust account, but many conveyancers do not.

To be a conveyancer, someone must have a Diploma in Conveyancing, which takes the equivalent of 3 months of full time study. They then need to have a certain amount of practical hours of experience on the job to be signed off to get their own licence. 

Industry

Both solicitors and licensed conveyancers must hold professional indemnity insurance, and both need to be registered with their industry body to have a licence issued to them – this is the Law Institute of Victoria and Consumer Affairs Victoria respectively. 

In NSW, they were the first to deregulate conveyancing and let licensed conveyancers into the industry, taking the work off solicitors. There was a good reason for this, because solicitors in NSW charged on a percentage basis depending on the value of the property. This has never been the case in Victoria. Solicitors have generally charged a fixed fee for conveyancing, so the gauging wasn’t going on in this State. Arguably, there was no need to deregulate conveyancing in Victoria in the first place. 

Cost

Solicitors cannot compete with conveyancers for cost, so what they compete on is value for money and quality of service. Conveyancers generally work for themselves, and often work from home, so they don’t have the overheads and costs that solicitors have. Solicitors have offices, staff, higher insurance, more regulations to comply with, and often operate trust accounts which require regular audits. 

Solicitors do fixed fee conveyancing in Victoria, as do conveyancers. Conveyancers are generally a couple of hundred dollars cheaper. 

In the Office

Conveyancers generally work from home and work alone. 

Solicitors generally work in small, medium or large law firms with support staff. Quite often there are combined decades of experience, and support staff are often qualified conveyancers who didn’t want to go out on their own. 

Solicitors operate trust accounts which make settlements much easier in most cases, particularly for purchasers. Instead of the purchaser running around getting bank cheques and getting them to settlement, the solicitor can ask for all the funds into their trust account, and they do all the running around for you (hence, quality of service).

When things go wrong

Conveyancers have a very narrow scope. When something usual happens, they have to refer you to a solicitor. 

If the contract falls over and becomes a fight, the conveyancer will need to refer you to a solicitor. 

So better to start with a solicitor that can handle everything in the first place!

Here’s more on buying and selling property.

by Jacqui Brauman Jacqui Brauman No Comments

Offering vendor finance

So you’re selling your house, investment property or business? The person you’re negotiating with to buy it from you doesn’t have enough money to pay you what you want. Either the deal falls over, because they cannot pay you your asking price, or you can get creative and offer to help finance the deal for them. But vendor finance may be your solution.

If you don’t know what vendor finance is, read this first.

There are two prime ways in Victoria to offer vendor finance. Both have their advantages and disadvantages, so it really depends on your circumstances and what you feel most comfortable with. 

Terms contract

With real estate, you are able to enter into a long term Contract of Sale that involves instalment payments, and the purchaser taking possession of the property before making the final payment. 

You must pay out your existing mortgage to be able to enter into such an arrangement, or at least pay the mortgage off with one of the first instalment payments before the purchaser takes possession of the property. 

When the purchaser takes possession, other than your contractual rights, you can take security over the property in one of two ways:

First, you can retain the Certificate of Title. You don’t register any Transfer of Land, and you remain the registered proprietor of the property. The rates will still be in your name, so you will continue to pay these until a final settlement. 

Alternatively, if you don’t want to remain the owner, you can register the Transfer of Land, so that the purchaser is the registered proprietor of the property. You would then register a mortgage over the property based on the terms Contract of Sale. The purchaser couldn’t sell or otherwise deal with the property without your consent, and you would have rights to recover the property and resell it if the purchaser failed to pay you (just like a bank mortgage). You would also have your Contract of Sale that you could sue for damages under, if the purchaser failed to pay. 

Mortgage

Instead of taking a mortgage under a terms Contract of Sale, you could just settle as usual on the Contract (after 30 or 60 days), and then you would take the position of the bank. You would sign loan documents which would entitle you to instalments and interest over a particular period. You would then rely on that loan to register a mortgage over the property.

These methods offer much more security when you are dealing with real estate. If you are dealing with a sale of a business, you could negotiate a payment by instalments under the Contract of Sale. You could specify how you wanted to secure those payments, whether the Contract gave you a right to take over the business again, or whether you were allowed to register a security interest on the Personal Property Securities Register (PPSR) over stock or generally over the assets of the business. 

Alternatively, you could enter into a commercial loan arrangement, with or without some negotiated security, as you could just rely on the terms of the loan agreement if the purchaser failed to pay.

For more on buying and selling real estate, click here.

Top