Property is, for most Australians, the single largest financial commitment they will ever make. Whether you are buying your first home, selling an investment, leasing commercial premises or resolving a dispute with a neighbour, the law that governs land and buildings is detailed, deadline-driven and unforgiving of mistakes. Understanding how property law works in New South Wales can save you money, protect your interests and spare you a great deal of stress.
This article provides a general overview of the key areas of property law in NSW and explains where legal advice makes the greatest difference.
What is property law?
Property law governs the rights and obligations that attach to real estate, the ownership, use, transfer and encumbrance of land and the structures on it. In New South Wales, it draws on a combination of legislation and long-established common law principles, including the Real Property Act 1900 (NSW), which underpins the Torrens title system, and the Conveyancing Act 1919 (NSW), which regulates the sale and dealing of land.
The Torrens system is one of the defining features of Australian property law. Rather than tracing a chain of historical deeds, ownership is recorded on a central government register. Once your interest is registered, your title is generally “indefeasible” meaning it is protected against most competing claims. This system gives buyers and lenders a high degree of confidence, but it also means that registration, and the accuracy of what is recorded, matters enormously.
Buying and selling property: the conveyancing process
Conveyancing is the legal process of transferring ownership of property from a seller (the vendor) to a buyer (the purchaser). It is far more than paperwork, each stage carries legal consequences.
The contract for sale. In NSW, a vendor cannot market a residential property for sale without a contract that contains certain prescribed documents, such as a title search, drainage diagram and planning certificate. Reviewing the contract before you sign is critical, because the terms, special conditions and disclosures can significantly affect your rights.
Exchange and the deposit. A binding contract is formed when both parties exchange signed copies. A deposit (commonly ten per cent of the purchase price) is usually paid at this point, though the figure can be negotiated.
The cooling-off period. Purchasers of residential property in NSW have a statutory right under Section 66S of the Conveyancing Act to a cooling-off period of five business days after exchange, during which they can carry out their due diligence into the property, obtain finance approval and ensure they want to buy the property. If a buyer exercises this right, they forfeit 0.25% of the purchase price to the vendor. Importantly, the cooling-off period does not apply to properties bought at auction, and it can be waived by the buyer’s solicitor issuing a certificate under section 66W of the Conveyancing Act.
Searches and due diligence. Before settlement, enquiries are made to confirm there are no surprises, outstanding rates, zoning restrictions, unapproved building works, easements or other encumbrances affecting the land.
Settlement. This is the final step, where the balance of the purchase price is paid, documents are exchanged and title is transferred. Settlement in NSW is now largely conducted electronically. Once complete, the buyer becomes the registered owner.
Types of ownership
Not all property is held in the same way, and the type of title affects your rights and responsibilities:
- Freehold (Torrens) title is the most common form of ownership, giving the owner rights to the land and anything built on it, indefinitely.
- Strata title applies to apartments, townhouses and units. Owners hold their individual “lot” and share ownership of “common property” through an owners corporation, governed by the Strata Schemes Management Act 2015 (NSW). Levies, by-laws and building defects are common areas of concern for strata owners.
- Company title is an older structure where a company owns the building and shareholders have the right to occupy particular units. It carries different, and often more restrictive rules than strata.
Off-the-plan purchases
Buying “off the plan” means committing to a property before it is built. These purchases carry particular risks: construction delays, changes to the finished product, and the possibility that the market shifts before completion. NSW law provides some protections for off-the-plan buyers, including disclosure requirements and rights where the developer makes material changes. Careful review of the contract is essential.
Easements, covenants and encumbrances
Land often comes with rights and restrictions attached to it that “run with the land” regardless of who owns it:
- An easement grants someone the right to use part of your land for a specific purpose, such as a right of way or drainage access.
- A restrictive covenant limits how land can be used, for example: restricting building height or the type of dwelling that can be constructed.
- Other encumbrances, such as mortgages or caveats, may also appear on title.
These interests can affect the value and usability of a property, so identifying and understanding them before you buy is an important part of due diligence.
Co-ownership: how you hold property with others
When two or more people own property together, the manner of co-ownership matters:
- Joint tenants each own the whole property together. If one owner dies, their interest automatically passes to the surviving owner (the “right of survivorship”). This is common between spouses.
- Tenants in common each hold a distinct, defined share (which need not be equal). On death, an owner’s share passes according to their will, not automatically to the co-owner.
Disputes between co-owners, particularly where one party wants to sell and the other does not, can be resolved through the courts, which have the power under section 66G of the Conveyancing Act to appoint trustees to sell or partition the property.
Leasing property
Leasing is its own significant branch of property law, and the rules differ depending on the type of tenancy:
- Residential tenancies are governed by the Residential Tenancies Act 2010 (NSW), which sets out the rights and obligations of landlords and tenants, including bond, rent increases, repairs and termination.
- Commercial and retail leases are more complex and heavily negotiated. Retail leases are subject to the Retail Leases Act 1994 (NSW), which imposes disclosure obligations and other protections for tenants. Terms around rent reviews, outgoings, make-good obligations and options to renew can have major financial consequences over the life of a lease.
Whether you are a landlord or a tenant, having a lease properly drafted or reviewed before signing helps avoid costly disputes later.
Property disputes
Even well-managed transactions can give rise to disagreement. Common property disputes in NSW include boundary and fencing disputes, easement and access disputes, breaches of a contract for sale, disputes between co-owners, strata and owners corporation disputes, and disagreements between landlords and tenants. Many of these can be resolved through negotiation or mediation, but some require action in the NSW Civil and Administrative Tribunal (NCAT) or the courts. Early legal advice often makes the difference between a manageable problem and a protracted one.
The costs beyond the purchase price
Buyers should budget for more than the price of the property itself. Transfer (stamp) duty, administered by Revenue NSW, is typically the largest additional cost, though eligible first home buyers may qualify for exemptions or concessions. Foreign purchasers may be liable for surcharge duty and surcharge land tax. Other costs include legal and conveyancing fees, registration fees, inspection reports and, where applicable, lenders’ mortgage insurance.
Because duty rates, thresholds and concessions change from time to time, it is wise to confirm the current figures with Revenue NSW or your solicitor before committing.
Why work with a property lawyer
Real estate agents represent the seller, and a standard contract is drafted to protect the party who prepared it. A property lawyer works solely for you; reviewing and negotiating contract terms, conducting due diligence, explaining your rights and obligations in plain language, managing settlement, and stepping in quickly if a dispute arises.
At Owen Hodge Lawyers, our property law team assists clients across New South Wales with every stage of the process, from buying and selling to leasing, developments and property disputes. We aim to make what can be a stressful process clear, orderly and secure, so you can move forward with confidence.
If you are buying, selling, leasing or facing a dispute involving property, we invite you to contact our team for tailored advice about your situation.
This article contains general information only and does not constitute legal advice. Property law is complex and outcomes depend on the specific facts of each matter, and legislation and government charges are subject to change. You should obtain advice from a qualified legal practitioner about your particular circumstances before acting.