What happens after contracts are exchanged?
When contracts have been exchanged and a date for settlement is confirmed a purchaser should verify the title being transferred by confirming that the prescribed documents attached to the contract of sale match the documents held by Land Registry Services. Searches to assist with this may include:
If there are easements or covenants listed on the property certificate further searches of the register will enable the purchaser to verify the relevant dealings which are required to be attached to the contract, and confirm that these are available in their entirety.
Further searches for adjustments
When searches confirm that the documents attached to the contract of sale are consistent with the documents on the register and the contract complies with the vendor disclosure legislation the focus of the parties will be ready to consider issues in preparation for settlement. Where a problem with the disclosure documents is identified there may be an opportunity to rescind.
When parties are ready to proceed to settlement further searches confirm the balance of any utilities which have been paid in advance by the vendor. These searches enable the parties to prepare adjustments, so the purchaser takes the property free of any existing liability to pay for services which were provided to the vendor during the period until settlement. In Sydney, these include:??????
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Adjustments for strata property
If you are purchasing property that is part of a strata scheme, s 184 of the Strata Schemes Management Act 2015 enables a strata information certificate to be requested from an owners corporation by a person authorised by an owner, although it will usually be provided by the vendor.
A strata information certificate will include the amount of any regular periodic contributions, whether there are any unpaid contributions and the amount of these and other relevant details in relation to the lot and the owners corporation. This certificate will enable the parties to determine any adjustments, but will not deal with issues of quality that may be evident through an inspection of the records of the owners corporation.
Adjustments for community property – new legislation to be gazetted
Where the property is subject to a community association, inspection of records is currently regulated by the Community Land Management Act 1989. Section 26 of this act provides a purchaser of the property with evidence as to the matters which include the amount of any regular periodic contributions, whether there are any unpaid contributions (and the amounts of these) and other relevant details in relation to the lot and the association.
On 26 March 2021 the Community Land Management Act 2021 was assented to. Once commencement of this act is gazetted, association information certificates will be required in accordance with s 174 of this act. Similarly to the s 184 certificate the s 26 certificate (or s 174 certificate in the future) will not deal with issues of quality that may be evident through an inspection of the records of the association. These, together with the s 66 and 603 certificates, enable a purchaser to calculate the adjustments required to determine the total amount due to the vendor on settlement.
The content of this article is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive and does not constitute legal advice. Although all efforts are made to attempt to ensure that the content is current, this is not guaranteed. You should seek legal advice before acting or relying on any of the content.