CONGRATULATIONS! You've sold your property and are ready to settle.
Property settlement can seem like a daunting process, but with our guidance and expertise, C&R South will ensure your sale is a smooth transaction, from start to finish.
What happens next?
We’ve put a handy flow chart HERE
together which outlines the process in simple terms, including:
what to do when you receive your contract,
what’s involved in the process, and
how to finalise your settlement.
The ins and outs of seller’s insurance
Selling a residential or commercial property can be a risky proposition. Vendors are exposed to certain risks, which may lead to considerable loss or damage.
One of the main risks associated with selling residential property is that prospective buyers may make enquiries with Council or other local authorities in relation to the property which may in turn bring the property to the attention of Council or another local authority. Until contracts are signed by the buyer, the vendor bears the risk of complying with any Building Notices issued by Council or any other enforcement action taken by a local authority.
Even after contracts are signed, the consequences of a buyer bringing the property to the attention of Council or other local authorities prior to settlement may be problematic. For example, a buyer may be entitled to sue for damages or may claim a right to terminate the contract, leaving the seller with the obligation to rectify unapproved works or remove encroaching structures on the property or otherwise face potential legal action. The seller may also be forced to negotiate a reduction in the purchase price to avoid a damages claim being made by the buyer.
In circumstances where the seller has relied upon the sale to fund a purchase of another property, then the financial consequences of losing the sale or reducing the price of the property being sold may be catastrophic.
Marketability Cover – what is it and how does it work?
‘Marketability cover’ means that the insured (the seller of residential or commercial property) will be indemnified in the event that a risk that is covered under the Stewart Title Insurance Policy (and which the insured was not aware of when the property was purchased) presents itself during the course of the sale transaction, resulting in a breach of warranty and financial loss. Such cover has not been available to sellers prior to the introduction of title insurance into the Australian real estate market. In other words, if a buyer becomes entitled to rescind or terminate the contract as a result of a risk that is covered under the Policy then the property is ‘unmarketable’ for the purposes of cover under the Policy.
What does Stewart Title cover for Sellers?
In the event that a risk or defect is discovered prior to settlement of your client’s sale, such as an unapproved structure, resulting in your client either losing the sale or being forced to negotiate a reduction in the contract price, then the insured will be compensated for any resulting “actual loss”.
Such ‘actual loss’ may include*:
the costs of rectifying the issue,
compensation for any negotiated reduction in the purchase price; or
compensation for any ‘shortfall’ should you have to re-sell the property to another purchaser at a lower price.
legal costs associated with preparing the contract for sale;
real estate agency costs, such as advertising and commissions (if payable);
bridging finance costs, i.e. the interest payments on any bridging loan secured by the insured to purchase a new home;
any other costs reasonably incurred by the insured in relation to the sale.
*The above cover would be subject to a claim being brought under the policy prior to any negotiated outcome being finalised with Council or the purchaser.
The Benefits of Title Insurance
Stewart Title’s ‘Marketability’ coverage represents a distinct benefit to homeowners when selling their residential property. A title insurance policy from Stewart Title, which includes ‘Marketability’ cover as standard, can be obtained by a purchaser client when they purchase the property which will protect them if they subsequently sell the property. The cover can also be obtained by existing owners wishing to place the property on the market.