Portfolio Settlements

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This is an article written by Raymond Tan, Lawyer and Public Notary. The article first appeared in the webpage of Tan and Tan Lawyers.

Portfolio Settlements are pleased to be associated with Tan and Tan Lawyers.


Things to watch out for, how best to ensure you do not get caught on the wrong foot, what happens after the contract is signed.




Buying A Home


This will usually be the singular most important decision in a person's life if you disregard marriage. I have seen too many clients get into trouble because they did not consider carefully their actions prior to signing contracts to buy a home or for that matter a commercial property. Very often the chances of getting into trouble can be minimised if legal advice was obtained prior to signing the contract to purchase the property. Some things to consider or be aware of:


Possible method of sale:


Private treaty is the most common way to buy. It includes both...

Buying through a real estate agent; and buying directly from the owner.


The latter is known as a private sale as the seller does not engage an agent. Instead, the seller negotiates directly with potential buyers.


In both cases the agent or owner will try to "sell" you the property, emphasising its benefits and minimising its faults. You should never be rushed, pushed or persuaded to sign an offer to purchase without putting a lot of thought into the contract. You should always take your time and ask all questions necessary to ensure that you are happy with the property. Do not hesitate to ask to look at the property for as many times as you need to feel sure of what you are doing. It is a good idea to take notes while viewing the property.




Most auctions for sale of property are subject to a reserve price. A reserve price is the lowest amount the seller is prepared to accept for the property; the reserve price however is not made available to the purchasers. An auctioneer or agent is not bound to accept the highest bid if this is below the reserve price or accept any bid until the fall of the hammer.




You should always have your finance formally approved and clearly understand any conditions imposed by the lending body before attending the auction. On the fall of the hammer and exchange of contracts you are legally bound to purchase the property. You should remember your finance limit at all times so that you do not bid above your limit.


You should obtain a copy of the contract and any certificates well in advance and have your solicitor or legal representative check the terms and conditions.


Make sure you understand exactly what is included in the sale. It is advisable to check what fittings are to be included in the sale. It may be wise to pay an expert for a pre-purchase property inspection and a pest inspection to ensure the property is structurally sound and free of pests.


Sometimes, it may also be worth it to have a valuation done on the property if you are unsure of an appropriate price for the area. You may be able to establish a realistic estimate value by analysing recent sales information in newspapers or local estate agents' notices.


If you are successful at the auction as the final bidder you will be required to pay the deposit (usually 10% of the purchase price) on the spot. These moneys are handed over to the agent immediately on signing the contracts. There are certain acceptable ways of having these moneys available (you should check with the agent prior to auction).


Very Important Note:


Once a contract or an unconditional offer to purchase is signed, there is no backing out. There is no such thing as a cooling off period. One of the best ways to give yourself a way out of a contract is to make the contract subject to a condition eg. finance. Therefore it is important that you seek legal advice on the conditions that should be included in any contract or offer to purchase prior to signing. However, when bidding at an auction, you are usually unable to place any conditions on the purchase.


What Happens After The Contract Or The Offer To Purchase Is Signed?


The transfer of property ownership from the seller's name to the buyer's name is called "conveyancing" OR in Western Australia, "settlement".


You may choose one of the following options for carrying out the conveyancing procedure:

n      engage a solicitor

n      engage a licensed settlement agent

n      do it yourself


If you engage a solicitor or settlement agent it is advisable to choose one who will act solely in your interest and not also act for the seller. Very often the selling agent persuades the buyer to use a settlement agent recommended by the selling agent. Be aware that the settlement agent thus appointed may not be independent. It is also important to know that most settlement agents and law firms are now unwilling to act for the vendor and the purchaser because of potential conflict of interests situations.




All settlement agents and solicitors carry professional indemnity insurance and contribute to a fidelity fund. Settlement agents and solicitors charge a negotiable fee with disbursements usually charged separately.


Disbursements are the miscellaneous fees and charges incurred during the conveyancing process. These include search fees charged by Government authorities. Sometimes you may arrange with a solicitor not to charge for preparing the Contract of Sale and for advising on the mortgage document on the understanding that the settlement will be performed by the settlement agent and solicitors.


Settlement agents


Settlement agents specialise in conveyancing only. They charge a negotiable fee with disbursements usually charged separately. All licensed settlement agents also carry professional indemnity insurance and are covered by fidelity insurance. Settlement agent's fees are usually lower than solicitor's fees.


Do it yourself


If you do your own conveyancing, all responsibility is your own if you make a mistake. Although conveyancing is fairly routine there are potential pitfalls which a solicitor or settlement agent is less likely to fall into. The professional indemnity and fidelity cover is an important security for a purchaser to consider.


What happens at Settlement


Settlement is the completion of the transaction. A date is arranged by both parties and your lender for settlement. This usually takes place at the offices of the buyer's lending body. Representatives of the seller and the purchaser attend, together with a representative from the lending bodies of the seller.


Prior to settlement the buyer's settlement agent or lawyers will calculate, "adjustments" such as taxes, council and water rates already paid in advance by the seller for the current rating period. This payment will be calculated from the date of settlement. Land tax is payable in total by the seller and may be adjusted if provided for in the contract.


Your solicitor or settlement agent will have received a transfer form signed by the buyer and the seller together with the title deed, and the lender will arrange for the Land Titles Office to register the transfer and the mortgage on title. The title documents and mortgage will be held by the lending body until the term of the mortgage is completed.


The buyer pays the stamp duty on the mortgage as well as on the contract.  You are responsible for insuring the property from settlement. You should arrange this before settlement whether or not it was a requirement of your lender.


The key to the property is handed over 24 hours after settlement or you can pick it up from the estate agent 24 hours after settlement.


Interesting fact: In the olden days in England, for settlement to be effective, the seller had to grab a handful of the soil from the property being sold and physically hand the soil over to the buyer on site.


Portfolio Settlements are pleased to act for either Vendors or Purchasers in any purchase or sale of properties whether residential or commercial.


We are also qualified to act for you if you are purchasing or selling a business.



Do feel free to give us a call if you have any queries


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