Article by Davina Deluao
The journey to purchasing a home is an exciting achievement and reaching the stage of signing the contract of sale is one of the most significant steps. Your contract of sale is a legally binding contract and stipulates the conditions you’ll be agreeing to when purchasing your home. In this article, we’ll be unpacking what’s involved with property contracts of sale and what to keep in mind before signing on the dotted line.
What Is A Contract Of Sale?
It’s important to have a solid understanding of the purpose of the sale contract. Although the laws may vary between the different states, a property contract of sale is a legally binding document and is required when it comes to buying or selling a house in Australia.
It contains all the necessary information regarding the property and what’s expected of the parties involved in the sale. Prepared by a licensed conveyancer or a qualified solicitor, its core function is also to protect the rights of both the sellers and buyers to ensure a fair process.
What Is Included?
A property contract of sale will present multiple key details by listing the names and addresses of the vendor and buyer, the selling agent, the date of offer, the date of settlement, and the certificate of title information. The contract will state the accepted sale price, the initial deposit needed, the type of loan, mortgage or lease agreements and other binding terms to be fulfilled. It will also mention the property address, improvements to be made, inclusions, household fixtures and furnishings, and what’s excluded from the purchase.
Conditional Property Contracts
In addition, it’s important to be especially aware of any special conditions within the property contract of sale. Conditional clauses are generally included on top of standard clauses and are added to a contract of sale to protect either party’s interests. An example of a conditional clause could be that the buyer wants the sale ‘conditional on a satisfactory Building and Pest report’ or ‘conditional on obtaining finance from the bank’ for example. Should these conditions not be met the contract could be deemed null and void by the stipulating party.
As such, before signing the contract, you’ll want to take a proper look through the conditions focusing on the cooling-off period, zoning, warranties, inspections, and finance clauses. For off-the-plan properties, a sunset clause may be established between the buyer and seller to highlight their obligations and establish a date when the development should be completed.
Unconditional Property Contracts
An unconditional contract has no special conditions attached and determines that both the buyer and seller legally have to follow exactly what’s stated in the contract. It can be beneficial as it provides stability and the certainty that the sale will be guaranteed. However, just be aware that if for whatever reason you change your mind or your circumstances have changed, it could be difficult to make any changes and terminate the contract.
What Can You Negotiate In a Contract of Sale?
While the property contract of sale hasn’t been finalised, it’s definitely helpful to take the time to discuss any negotiations with the seller and figure out what may work better for you in the long run. For instance, you may opt to shorten or extend the cooling-off period and the settlement period. You are also able to talk through the deposit amount, cancellation fees, permanent fittings, and furniture being used.
A Word About Cooling-Off Periods
The cooling-off period is the last opportunity for the buyer to withdraw from the contract of sale without any major legal or financial penalties, even if they’ve signed the contract. It’s important to note that cooling-off periods are generally only available to buyers who have bought property by private treaty. Cooling-off periods are not available for properties bought at auction. The terms of a cooling-off period may vary from state to state and in some states, there is no cooling-off period even for private sales. Check Fair Trading or your conveyancer/property consultant if you are unsure prior to signing your contract.
With plenty to take note of, it’s absolutely crucial to thoroughly review the property contract of sale and seek out professional and legal advice prior to entering into any legally binding contract. You should also check that all the conditions are adhering to the rules within the state you live in and that your personal details are accurate and up to date.