Buying or selling property is a big commitment, and getting a Contract from an agent can be daunting. However, worries usually stem from not knowing what to look out for.
We always strongly recommend sellers and buyers have their solicitor check the Contract before it is signed. Occasionally, the smallest of errors can have a large impact on your sale or purchase in the long run. If these errors are picked up beforehand, this can save you time, costs and possibly losing your sale or purchase.
This article aims to take some of the mystery out of your Contract. It also aims to give you some guidance on what to look for when you get given a Contract to sign when buying property or selling property.
WHAT BUYERS SHOULD LOOK OUT FOR IN CONTRACTS
Is my full name written on the Contract?
You need to carefully check that your FULL name (including middle names) is listed correctly.
Mortgages and Queensland Titles Office documents must have identical names of the purchasing or selling entities. If your mortgage documents have your middle name noted and the Contract does not, you will be required to amend the Contract. This could potentially delay your finance application or settlement. To make any amendments to the Contract, approval is needed from the other party. This can take time to obtain.
Are all persons purchasing the Property included in the Contract?
If two or more people are purchasing a property, all parties must be listed in the contract. If a party is inadvertently listed or not listed, the Contract has to be rescinded and a new Contract entered into.
Rescinding the Contract is a costly process and often delays the eventual settlement.
- Therefore, it is important to get the purchasing entity right. If you are unsure what entity you should be purchasing in, we strongly recommend you hold off on signing the Contract until you have obtained accounting and legal advice.
Who is your Solicitor?
Although many buyers forward their Contracts to solicitors after they have been signed, it is important that you insert your solicitors’ details. This makes it easier for your solicitor to liaise with the solicitor for the other party and with your bank.
Banks will not co-ordinate with us if they have not been notified that we act for you. This again can potentially delay settlement.
Am I obtaining Finance?
If the finance condition of the Contract is incomplete (even partially), then the finance condition does not apply.
This means you will not be able to terminate the Contract and claim your deposit back if your bank declines your formal loan approval.
- You must ensure that the finance amount, financier and the finance date are fully completed. Even if you are unsure of the loan amount or of the financier you will be choosing, ‘sufficient to complete transaction’ or ‘financier of Buyer’s choice’ will suffice.
Is my Contract subject to a Building and Pest Condition?
Again, it is very important that you complete the building and pest inspection date in the building and pest condition section of the Contract. Otherwise you will not be able to terminate the Contract if any building and pest problems come up in the inspection.
WHAT SELLERS SHOULD LOOK OUT FOR IN CONTRACTS
When is the Deposit payable?
It is important that the buyer is required to pay any deposits as soon as possible. The buyer of residential property will usually be entitled to a statutory 5 business day cooling off period. If the buyer terminates the Contract during this period and the deposit has been paid, you are entitled to claim a termination penalty from them.
For more information about the cooling off period, see here.
It is also important to make sure that due dates are inserted for the requirement to pay the initial deposit and balance deposit. If there is no due date, then it is not clear when the buyer is required to pay the deposit and when the seller can terminate for the buyer’s failure to do so.
Matters Affecting the Property
- Any covenants, leases, easements or other encumbrances (whether registered on the title or not) must be included under the ‘Matters Affecting the Property’ section of the Contract.
If any of these are not included, the buyer may be able to terminate the Contract.
Therefore, it is important for a title search to be ordered when the Contract is being prepared to ensure no encumbrances are missed.
If you have any queries about whether something should be disclosed or not, please contact our office to discuss.
If the property will be tenanted at the time of settlement, the tenancy details must be completed on the contract. If the tenancy section is left blank, it means that you must provide the buyer with vacant possession of the property at settlement.
In this scenario, if the tenants have not vacated by settlement, then you will be in breach of the Contract and the buyer will have a right to terminate.
Pool Safety Inspection
If there is non-shared pool on the property, you will need to organise a Pool Safety Certificate to give to the buyer.
Please call us if you have any questions about completing the pool safety section of the Contract.
When selling a unit – don’t forget the Disclosure Statement!
The Seller must sign a Body Corporate Disclosure Statement and give it to the buyer prior to the buyer signing the Contract.
This is a very simple and common mistake to make. However, there are big repercussions if this is not done.
- If the Disclosure Statement is provided to the buyer unsigned or the buyer does not receive and sign the Disclosure Statement before signing the Contract, the buyer can terminate the Contract at any time up and until settlement.
These are only some of the things you should look out for when signing a Contract.
If there is anything unusual about the property you are selling, it is worth checking with us before you ask the buyer to sign a contract. There may be something that you should disclose now and stop the buyer terminating for later.
If you are buying, we would strongly recommend getting legal advice before you sign the Contract. That way, you know where you stand and we can act in your best interests.
Feel free to contact Sajen Legal if you receive a draft Contract to review and sign when selling or buying property. We can liaise with the sales agent to make sure that you are happy and confident to sign the Contract.
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