What is a holding deposit

The holding deposit is an amount paid to the Real Estate agent by the purchaser, to show that an offer is being made to purchase the property.  It signifies how serious the buyer is about purchasing the property.  If the seller (vendor) does not agree to the price, the amount will be refunded to the purchaser.  The amount depends on what the purchaser negotiates with the Agent.  Usually $1000 will suffice however, it depends on the value of the property being purchased.

 What is a Deposit

The deposit on a purchase is usually 10% of the purchase price.  For example, if the property being purchased is for $600,000, the deposit to be paid to the agents trust account would be $60,000.  You can negotiate a lower or higher amount as long as the seller (vendor) agrees.  Keep in mind, whatever the deposit amount is, it can be released to the seller and agent once a Section 27 deposit release occurs.

When is the property ‘sold’?

The property is sold when both the vendor and purchaser have signed the contract of sale and vendors statement.  Both parties will receive a copy of the signed contract, which should immediately be given to your conveyancer or legal representative if you have not already done so. 

The sale is finalised at settlement, once funds have been exchanged and the Title and Transfer documents have been successfully lodged and registered.

What is a Section 27 – Deposit Release

A Section 27 also known as an Early Deposit Release allows the Vendor (seller) to obtain the deposit placed by the purchaser, before settlement date, once the contract becomes unconditional and the purchaser is satisfied with the S27 Deposit Release Statement.  Keep in mind, once the deposit is released the Real Estate Agent also received their commission. 

What is PEXA

Property Exchange Australia (PEXA) is an electronic conveyancing platform that allows Banks, Lawyers & Conveyancers, the State Revenue Office and Land Titles office to all integrate on the one platform.  This allows all parties to exchange funds for settlement in real time.  With the exception of some situations, all conveyancing transactions in Victoria are carried out via PEXA.

What is a Title

When you purchase a property, your details will be registered on a document known as the Certificate of Title. Conveyancing involves changing the ownership of Title from one entities name to another’s usually through buying, selling or transferring the rights of the property. If you have used a mortgagee (bank) for finance, they will hold onto the Title until you have paid out your loan.  Previously Titles were in writing on paper but in recent years the Land Titles Office has converted paper titles to an Electronic Certificate of Title (ECT). 

What are Adjustments?

Adjustments are the calculations, which provide the amounts payable for water rates, council rates, owners corporation fees, land tax, leases and any other fees that may be due.

Adjustments ensure the vendor pays for what they have used during their time in the property, and that the purchaser will reimburse the vendor for any rates that have been paid.

For example; if a property settles 6 months after a vendor has paid $2000 in council rates, the purchaser will reimburse the vendor their portion, being $1000 for the 6 months they own the property.

Usually, unless the contract states otherwise, the purchaser’s representative will prepare the adjustments showing how much is due from the vendor and purchaser.

What is a Settlement?

Settlement occurs when all parties have submitted the required documents, funds are exchanged to pay for the property including any adjustments

When can I collect the keys?

Once a property settles, the vendors representative will advise the Real Estate Agent that settlement has occurred.  You may then contact the agent to collect the keys.

What is a Verification of Identity (VOI) and Client Authorisation?

Parties to a conveyancing transaction in Victoria are required to have their identity verified through an authorised representative.  This can be done through a face to face meeting with your conveyancer or through an Australia Post outlet.  If your attending Australia Post your conveyancer will provide you with a form that has a barcode attached to the conveyancing firm.  Generally, individuals will need to attend a VOI sitting with a current Passport or Birth Certificate, Licence and a Medicare card.

 It is best to also have your Client Authorisation form completed at the same time.  The client authorisation form allows your conveyancer to act on your behalf by signing & lodging documents as well as authorising financial settlement with your conveyancing transaction.  Both the VOI and Client Authorisation are crucial documents that must be completed early in the transaction so that your conveyancer may work towards settlement.

What is Land Tax and who must pay it?

If you own property, you may have to pay land tax. If your home is the only property you own, you will not pay land tax because your home is exempt.

You pay land tax if the total taxable value of all the Victorian land you own, individually or jointly, as at 31 December, is equal to or exceeds $250,000 ($25,000 for trusts). For each year you own land in Victoria with a total taxable value equal to or above the relevant threshold, you must pay land tax.

Exempt land is not included in the total taxable value of land you own.

More information can be found on the State Revenue Office (SRO) website or see our Helpful links and calculators page.

What are Government Registration Fees?

The Victorian Government Registration fees, are the fees incurred to transfer the ownership of the property through a legal document named the Title.  For the transfer of ownership to be registered the state government charges a fee for managing the register.  Current fees can be accessed through the Property and Land titles website.

https://www.propertyandlandtitles.vic.gov.au/forms-guides-and-fees/fees

How much is stamp duty?

You can view our stamp duty calculator on our links page via the State Revenue Office calculator.

What is the Foreign Purchasers Additional Duty?

If you are purchasing residential property in Victoria and you are a foreign purchaser, you are required to pay Stamp duty as well as Foreign Purchaser Additional Duty (FPAD) on the share of the property you acquired.

If the property you acquired is exempt from stamp duty, the additional duty does not apply.

Refer to the State Revenue Office website for any changes or updates.

 See our helpful Links and calculators page.

What is an Absentee Owner?

An absentee owner may be an individual, corporation or trust.

An absentee individual is one who:

• is not an Australian citizen or permanent resident, and
• does not ordinarily reside in Australia, and
• was either absent from Australia on 31 December of the year prior to the tax year, or for more than six months in total in the calendar year prior to the tax year. 

An absentee corporation is a corporation:

• incorporated outside Australia, or
• in which an absentee person(s) has a controlling interest.

Further information can be obtained on www.sro.vic.gov.au/absentee-corporations