View Conveyancing as a Chore at your Peril!
by Amy Williams & David Evans - O'Neill Partners
Purchasing a property is, for most people, the biggest financial transaction in their lives. Interesting then, that the required process of conveyancing is often viewed as a chore or a nuisance rather than a key aspect in risk management. Financial Keys has asked O’Neill Partners solicitors, specialists in Conveyancing, to give us an overview of the tension between risk and cost in the Conveyancing process.
Thinking of buying or selling a property and not sure whether to use a Licensed Conveyancer or Solicitor? Do you also think that instructing the person with the cheapest quote will do?
If so, this article may be of interest to you.
For most people, buying or selling real property constitutes one of the largest transactions they will ever be a party to.
With the advent of licensed conveyancers, greater numbers of solicitors and deregulation of conveyancing fees, the cost of conveyancing has reduced dramatically. This is no doubt a win for the majority of consumers, but price pressure on a service where thoroughness/meticulousness on the part of your solicitor/conveyancer constitutes the safety net between you and disaster, can have adverse consequences.
It is therefore important, regardless of whom you decide to instruct to act on your property transaction, that you:
Check the credentials of your solicitor or conveyancer; and
get confirmation of the exact scope of work they will undertake for the quoted price.
It is not simply an “off the shelf” product you are buying when you instruct a solicitor or conveyancer, but a service that will change depending on the nature and circumstances of your transaction.
It is also important that you understand the buying and selling process as well as the operating parameters of your solicitor, the real estate agent and your broker/financier. For example, because the agent acts as an intermediary between a vendor and purchaser, we often find that purchaser clients will use expressions such as “the agent is guiding me through the transaction”. While an agent is of course able to assist the parties in achieving a mutually desirable outcome, it is still important to bear in mind that the role of a vendor’s agent is to achieve a sale price for the vendor on the best possible terms (obviously within legal and ethical parameters).
Who can act?
Licensed Conveyancers, along with Solicitors, are qualified to undertake the usual scope of work in connection with any transaction that creates, transfers or extinguishes an interest in property, for example a sale or purchase.
Licensed Conveyancers cannot offer legal services outside the property “transactional” scope or commence legal proceedings in connection with a property transaction if a dispute occurs.
The distinction may become relevant when a sale or purchase matter does not settle as required and a party needs to commence proceedings to protect or defend their rights under the Contract or, for a defaulting purchaser who stands to lose their deposit, for relief against forfeiture of the deposit. It may also be relevant if you are seeking broader legal services as an adjunct to buying or selling a property (for example, advice about succession planning, a family trust, or asset protection).
Does your quote include the “extras”?
It is also important to understand the scope of work your Licensed Conveyancer or Solicitor will undertake for the quoted price, especially given the highly competitive market for acting on property transactions.
One area where it is important to ensure ‘extra’ steps are taken is with respect to purchasers protecting their interests by registering a Caveat1 on the title for the property they are buying following exchange of Contracts, as recommended by the High Court in Black v Garnock2.
Some professionals will not include the work required to register a caveat in their fixed fee quote (resulting in further ‘unexpected’ costs being incurred if you wish to lodge a caveat). However, it is a recommended step in the conveyancing process given that the absence of a Caveat may result in:
Another registered interest (which in the case of Black v Garnock was pursuant to a Writ obtained following a third party Creditor’s judgement against the Vendor) prevailing over the purchaser’s interest in the property; or
There being delays with registration of the purchaser’s Transfer in respect of the property whilst a (potentially costly) dispute ensues.
The High Courts’ comments concerning the wisdom of a purchaser lodging a caveat pending settlement, starkly illustrate the distance between lofty judicial assumptions about the conveyancing process and consumer driven reality. The fact is that for many years it was not part of routine conveyancing procedure for a purchaser to lodge a caveat giving notice of their interest in the property in the period in between contracts exchanging and settlement. It was always open to a purchaser to lodge a caveat, however the reality was that the perceived risks generally did not warrant the expense. However, the question do I need to lodge a caveat? or the question what are the risks of not lodging a caveat? are each questions which, if answered comprehensively, could be answered by a solicitor (or even a barrister or Senior Counsel) with costs exceeding the costs of a typical conveyance
Certainly, our experience is that attempting to explain the implications of Black v Garnock and the utility of caveats is an exercise which is totally out of step with the cost anticipations of parties to domestic conveyancing transactions.
Making sure you disclose all your requirements up front
Another area where it is important to know what work is included in the quoted price is where you have particular requirements on your sale or purchase matter which bring it outside the scope of a “standard” transaction.
Examples of this include where:
You would like your Licensed Conveyancer or Solicitor to investigate issues with the property or in connection with your plans for the property that will affect your decision to proceed with the purchase or which may give rise to a breach of the Vendor warranties under the NSW Conveyancing Act 1919 and therefore needs to be disclosed in the sale Contract;
You would like to enter into other agreements in connection with your sale or purchase matter. For example, security documents in connection with any vendor finance loan or co-ownership / joint venture agreements in connection with any potential post completion development of the property;
Your matter is subject to steps being taken to have the property transferred into the seller’s name prior to completion because, for example, it involves a deceased estate;
Your sale involves the refinance of other properties owned by you (ie in addition to the property being sold). Alternatively, where security over another property belonging to a spouse, partner, relative, etc is being offered to finance your purchase or the third party is required to execute a personal guarantee.
Accordingly, it is important that you run through all of your requirements with the Licensed Conveyancer or Solicitor when obtaining their quote so you can ensure there are no hidden “surprises”.
While conveyancing costs and charges are an area to consider when selecting a solicitor or conveyancer, we recommend digging a little deeper and thinking about the importance of the transaction and the implications to you of something going wrong, before signing the dotted line of any retainer.
Amy Williams (Senior Associate) & David Evans (Partner)
1 A Caveat acts as an injunction preventing the Registrar General from registering any dealing on the title to the property that is in conflict with the Caveat and consequently prevents the Vendor from dealing with the property prior to completion of the purchase. The Caveat will also give notice of the purchasers’ equitable interest in the property under the Contract to anyone who may be contemplating dealing with the Vendor.
2 (2007) 237ALR1;
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