Signing a contract of sale is one of the most important stages of making a successful offer on a property. You’ll want to make sure you review the contract before signing it to fully understand exactly what it contains and what it legally commits you to.
Who prepares the contract of sale?
For property being sold through private sale treaty (as opposed to auction), a vendor (seller) must have a contract of sale prepared and available for inspection before they can advertise the property for sale. The contract will usually be prepared by the vendor’s conveyancer, solicitor or real estate agent.
A property is sold only once you and the vendor have both signed and exchanged the contracts and the cooling-off period has passed.
What’s in a contract of sale?
The contract should include:
- your name and the vendor’s name
- details of the property, including its fixtures (things that are attached to the property, such as a dryer) and fittings (things that aren’t fixed, such as curtains – also known as ‘chattels’). Fittings are usually assumed to be excluded from sale (‘exclusions’), so if they are to be included they must be specified in the contract
- the name of your (and the vendor’s) real estate agent
- details of your and the vendor’s solicitor(s) or conveyancer(s)
- the date of settlement
- if you’re buying off the plan, a sunset clause that enables you to cancel the contract if the plan or development isn’t completed by an agreed date
- any special conditions, such as a ‘subject to loan approval’ or ‘subject to tenancy’ clause
- an explanation of how money is to exchange hands and what will happen if there’s a breach of the contract
Attached to the contract can be:
- a statement of your cooling-off rights
- a zoning certificate from the local council
- a copy of the title to the property as recorded in the Land Titles Office (or equivalent body) in your state or territory
- a building and pest inspection report
- a drainage diagram
- copies of documents outlining other registered interests in the property.
When should you ask for the contract of sale?
After you’ve inspected the property – ideally at least twice – and flagged your interest in buying with the vendor or their agent. (It can be a good idea to inspect at different times in the day and/or different days to help get a true gauge of noise, parking, how busy the neighbourhood can get and so on.) Note that for the purposes of exchanging contracts, there are two copies of the contract – one for you as the buyer and one for the vendor.
At this point, the sale contract shouldn’t have a price listed on the front page. If you decide to make an offer on the property your offer can be made verbally or in writing. If you and the vendor agree on the terms of the contract and a sale price, and you’re ready to exchange contracts at that price, the information (purchaser’s details, sale price, deposit amount, etc.) will be written onto the front page of the contract for sale prior to exchange.
How should you review the contract of sale?
Make sure you check the contract very carefully with your conveyancer or solicitor. Don’t sign it until you and your conveyancer are both happy you understand it completely and agree to its terms and conditions. Your conveyancer may recommend changes to the contract before you sign it.