Navigating a property purchase can be complex, with several terms to understand. Here’s a quick guide to the most important ones:
Settlement Period
The settlement period is typically between 30 and 120 days, depending on the agreement stated on the contract's front page. While 30 days is standard, longer periods are common and can be negotiated before the exchange of contracts.
Deposit Amount
A standard deposit is 10% of the purchase price, paid upon contract exchange and held in trust until settlement. A 5% deposit may be negotiated with the remainder due at settlement, but you are liable for the full 10% if you rescind the contract after exchange.
Refundability of Deposits
Deposits are refundable only before contracts are exchanged. After exchange and the cooling-off period, the deposit becomes non-refundable, and if the contract is not completed, you risk forfeiting the 10%.
Stamp Duty
Also known as conveyance duty, stamp duty is a tax on property purchases. Rates in the ACT have been gradually reduced since 2018 for residential and certain commercial properties. More info here.
Conveyancer Role
A conveyancer assists with the legal transfer of property. While not mandatory, they simplify the process of buying, selling, or transferring real estate.
Exchange of Contracts
Contract exchange is the formal step where both buyer and seller sign and swap copies of the contract. At this stage, the buyer is required to pay a deposit, often 10%. The contract becomes binding upon exchange, with a five-day cooling-off period for buyers (unless waived), though sellers are bound immediately.
Stakeholder’s Role
The stakeholder, typically the real estate agent or seller’s solicitor, holds the deposit in trust from exchange to settlement.
