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Understanding The Contract Of Sale - 5 Things To Look Out For

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Understanding The Contract Of Sale - 5 Things To Look Out For

The contract of sale is possibly the most important document when it comes to buying or selling your house.

Buying or selling real estate is an involved legal process that, along with exchanging keys and payment, involves transferring the legal ownership over a property from one person to another. The contract of sale is legally binding, meaning once it has been signed and the cooling-off period has ended, it cannot be undone.

Here are five things to look out for in the contract of sale.

1. State-by-state contract requirements

The requirements for the contract of sale in Australia differ state-by-state. In some states the seller needs to have the contract of sale prepared before they are entitled to list the property on the market. In Victoria, the vendors statement (also called a section 32) must be included with the contract of sale. There are also different disclosure requirements depending on the state you are located in.

Whether you are buying or selling a property, the first thing you should do is make sure you are across your legal obligations in accordance with the state that you are in, so as to not risk receiving a fine, and to know what you are entitled to when it comes to creating a contract of sale.

2. Standard details

Although the exact requirements for a contract of sale may differ on a state-by-state basis, there are a number of details that must be included in a standard contract of sale regardless of which state you are in. This includes the following:

  • The contract date
  • The names of the vendor and purchaser
  • The address of the property
  • The amount of deposit that must be paid by the buyer, along with the date that it must be paid by
  • The agreed sale price of the property
  • The conditions of sale, including financing information or inspections that will be conducted, as well as the dates they will be conducted.
  • If the property is subject to a lease or will be vacant
  • Any fittings or fixtures that might be included in the sale

These inclusions must amount to outlining the sale in a clear and concise manner.

3. Additional documents included in the contract of sale

Along with the contract of sale itself, a number of other documents are often handed over at the same time, further detailing the condition the house is in at the time of the sale. This includes title documents, a drainage diagram, and a current planning certificate (issued by the local council).

Additionally, items that will be included in the property sale, such as light fittings, floor coverings and window coverings must be outlined explicitly (as well as anything that will be excluded from the sale).

4. Cooling-off periods

Once both parties have signed the contract, the cooling-off period begins. Cooling-off periods are specific time frames that are made explicit in the contract of sale in which the buyer is able to retract the contract or make amends to it.

After the cooling off period ends, the sale is ‘locked in, and must legally go ahead. Cooling-off periods generally range from 2-5 days depending on which state the sale has been made in.

5. Settlement

Also referred to as a handover, the contract of sale must include the date which the property will be handed over from the seller to the buyer. This is when payment must be made to the seller, and the deed and keys are collected. Settlement dates are typically 30 days from when the contract is signed.

The most important thing to do when preparing or signing off on a contract of sale is to do so with your solicitor or conveyancer present. Never sign anything that you are unhappy with!