Discuss about the Private Treaty for Settlement Plans or Contracts.
The private treaty has laid out strict procedures on the outcomes and procedures required during the sale and finalization of the sale of different types of property in Australia. It requires that the potential buyers interested in a property are firstly qualified and approved, and then they are invited to conduct inspections for the listed properties. After this process The treaty recommends that effective sales pitches can then be made to the potential buyers, such that the buyers are made aware of the of any legal requirements that could affect either the sale of the property or the process of transferring the ownership of the property (Ostrom & Hess, 2000). After this step, the potential buyers can thus go ahead with the negotiations of the sale, considering all the terms and conditions for sale and transfer of ownership. The realtor ought to remain in constant communication with the willing buyer throughout the sale process.
The sale process entails the exchange and settlement processes which could be complicated by the presence of any legal issues that affect the sale process. The sales process also entails making arrangements that will facilitate the sale of the property at hand as well as the documentation of any disbursements to the agency, settlement plans, or contracts (Wenar, 2008). This report details all the statutory and overall requirements needed for the sale process of any property to run smoothly and efficiently until completion of the process. It will also detail the benefits and inconveniences of these steps in this process following the private treaty.
In the sale process of any type of property, the private treaty identify that a sale has only been made after the potential buyer signs the sale contract. The process takes place in two stages, namely the exchange process and the settlement process (Daly, Gronow, Jenkins, & Plimmer, 2003). In the primary stage, the exchange process, any contracts agreed upon after the negotiation of terms and contract are drafted into a new contract with revised terms and conditions known as the sale contract. The sales contract ought to detail important tenets such as the property details of the property to be sold, the buyers details, the agent’s details, details of legal practitioners involved in the sale process, the deposit to be paid, installments and the total price of the property, as well as any other conditions that may affect the sale process (Denver, 2008).
After the sale contract has been signed the exchange process allows for a cooling period which is a number of days that the buyer can be allowed to walk away from any legal liabilities after agreeing to purchase any type of property. For instance, In the state of New South Wales the Private treaty allows for a cooling period of up to 5 business days, although the buyer is forced to the property seller or agent a fee of about 0.25% of the total price of the property. While this may seem like an unnecessary fee, the buyer may stand to gain about $1,000 on a $ 400,000 sale that has been cooled off (Hodgkinson, 2004). The cooling off period begins when the buyer signs the sale contract and only ends after five business days. If the buyer had signed an agreement that binds them such that the cooling off period is waived, the private treaty permits that they can exercise their recession rights, and thus an exception to the cooling off period. If the buyer had signed a contract that waives the five day cooling off period, then they are exempted from the cooling off period (Allon, 2006). The sale contracts signed during the exchange process are normally prepared by the agent so that the buyer and the seller only append their signatures on the document. Contract preparation can also be done by the legal conveyancer or a solicitor who represents the buyer. Further, each of the participants to the argument ought to keep their own copy of the contract after the documents have been signed. The buyer is then expected to make a deposit for the purchase of the property, which is mainly about 10% of the total purchase price. The deposit is paid to either the agent or the solicitor who keeps the money until the entire sum is paid in full and then it is transferred to the seller (Anastasia & Suwiro, 2015). The legal conveyancer also has the mandate of ensuring that the buyers and sellers are aware of when the agreement becomes binding and when they can use the cooling off period for further considerations. Further, the conveyancer can facilitate any negotiations to waive or alter the cooling off period following the legal guidelines. They could also serve as witnesses for the receipt of any monies paid as deposit for the purchase (Beer, Kearins, & Pieters, 2007).
The secondary stage of the sales process is called the settlement process where the transaction of the sale process is continued, continued, and completed. The settlement process occurs after 6 weeks from the day of the exchange of contracts. This time is usually taken as the balance of the total purchase price and any other adjustment costs ought to be paid and the documents of transfer of ownership and the title document ought to be finalized to completion. This process allows the new buyer to become the legal owner of the property that they have acquired during this sales process. The settlement is attended by the agent, the buyer, the seller and the legal conveyancer who participate by going through the relevant settlement requirements to ensure that no breach of contract and misunderstandings. The buyer may also have the right to request to conduct an inspection of the property before the settlement is finalized. This right may however be limited by the terms and conditions agreed between the buyer and the agent, or even through the state requirements of the private treaty (Anastasia & Suwiro, 2015).
The New South Wales state legislative requirements allow the purchaser the right to view the property prior to finalization of settlement, given that the buyer had not signed a contract to waive these rights. The agents also determine the responsibilities of both the buyer and the seller with regard maintaining the property through either building or insuring the contents of the property. This information is provided by the agents to ensure that there is no emergence of conflicts after the settlement has been finalized. All the deposit funds paid are either held or released using the procedures set by the contract between the seller and the agent during the settlement period, as any complications may results in a conflict of interest and thus a breach of contract. The settlement process is expected to continue following the stipulation of the sales contract (Denver, 2008). As such, stakeholders of the property purchase ought to be involved in the settlement process, since they are the representatives of both parties, the buyer and the seller. For instance, if for one reason or another settlement is not finalized as expected by the private treaty, the two parties and the professionals involved in the transactions ought to assist in the consideration of contingency plans so that all parties are enabled to fulfill their expectations according to the sale contract (Daly, Gronow, Jenkins, & Plimmer, 2003).
After the settlement process is completed and finalized, the ownership is transferred to the buyers’ title and they are invited to see the contents of the property and if they are in line with the agreements of the contract. The documentation for disbursing fees to the agency are also commenced at this stage by checking the transactions for deposit of monies are accurate. The total sum is also compared to the sum cited in the contract. The next step entails calculating the agency fees through computing the fees agreed in the contract. The fee is also compared to the statutory requirements of the state and then the agency policies. The account sale statement is then updated to include the value of the agency disbursements and the procedures set in place are used to obtain the permissions, and identification details of the buyer (Allon, 2006).
References
Allon, F. (2006). Suburbs for sale: buying and selling the great Australian dream. In Post-Suburban Sydney: The City in Transformation Conference.
Anastasia, N., & Suwitro, A. L. (2015). The Rational and Irrational Factors Underlying Property Buying Behavior(Doctoral dissertation, Petra Christian University).
Beer, A., Kearins, B., & Pieters, H. (2007). Housing affordability and planning in Australia: the challenge of policy under neo-liberalism. Housing studies, 22(1), 11-24.
Daly, J., Gronow, S., Jenkins, D., & Plimmer, F. (2003). Consumer behaviour in the valuation of residential property: A comparative study in the UK, Ireland and Australia. Property Management, 21(5), 295-314.
Denyer, L. (2008). Buying Property in Ten of the World’s Top Resorts. The Sunday Times.
Hodgkinson, L. (2004). The Complete Guide to Buying Property Abroad. Kogan Page Publishers.
Ostrom, E., & Hess, C. (2000). Private and common property rights. BOUCKAERT, Boudewijn a Gerrit DE GEEST (eds.). Encyclopedia of law and economics, 2, 53-106.
Wenar, L. (2008). Property rights and the resource curse. Philosophy & public affairs, 36(1), 2-32.
