Contract of Sale for Property – Houses, Homes , Units
So Just What is this important document?
There are many legal documents that form part of the sale/conveyancing process and all of them must be completed before a real estate transaction can be closed. The contract of sale for a house, home or unit is one of these documents. It sets out terms and conditions as agreed by the seller and the buyer in a very concise and clear manner.
Special attention must be paid to the correct legal process and procedure to ensure the contract is valid and binding.
The legal document called a contract of sale, may be prepared by a solicitor, real estate agent or even a conveyancer. Where a house, home or unit is privately sold, the process of drawing up the contract of sale is often left to the seller’s real estate agent or lawyer. In the event that you want to sell your property, it is important that you pick a good solicitor or alternatively a real estate agent with enough experience and who also has enough contract knowledge to put together a contract of sale
that will be binding on all parties.
What specific details are usually in a contract of sale for residential property?
A typical contract of sale for residential property normally includes many details and these include the following:
• The property/house/home/units full and complete address
• The Local Council or Shire current Title and Plan description
• The full names and address of the contracted purchaser and contracted vendor
• Conditions surrounding the sale, for instance building and pest inspections, bank financing confirmation , bank property valuation , furniture inclusions
• The date of the settlement of the property , usually set from the date of contract
• The final property sale price after all inclusions
• Whether the property is subject to rent or a lease or if it will be available as vacant possession
• The deposit amount that has to be paid to secure the property
• Other personal property that are sold as part of package
How is a Contract of Sale for Property, Houses, Homes or Units normally Completed?
Most commonly it is the purchaser or buyer who signs the contract of sale document first.
This is particularly so with a residential contract of sale. The purchaser submits their offer to the seller, and this will include the offer price for the property as well as any other conditions. This negotiation can go back and forth a few times before an agreement is reached. Price, conditions and time to settlement are all part of a regular contract negotiation. Immediately the contract is signed by the buyer, it becomes a legally binding document.
It is worth noting that although the contract of sale document will not necessarily be seen to be in force until such a time that it has been signed by the vendor, most people do not realise that it’s still binding even with just the signature of the buyer. While some purchasers only think of the contract of sale document as an offer, it actually binds the buyer immediately they sign it, because the offer has been submitted in the form of a contract. Many property buyers seem unaware of this.
After this point, the prospective buyer can only back out of the contract by revoking the offer before it’s signed by the vendor, or if the offer is rejected by the vendor. Because it’s very difficult to back out of the agreement once a buyer has signed the contract of sale forms, it is very important that the purchaser asks their conveyancer or solicitor to carefully scrutinize the document before they sign it.
The date that the prospective buyer signs the contract of sale for a property, house, home or unit is also a very important detail. The date on which the buyer signs the contract signals the beginning of a 3-day cooling off period. A lot of people erroneously believe that the cooling off phase only starts once the vendor signs the contract document, but this is actually not the case.
The original contract of sale document is usually prepared by the seller’s representatives. This can either be prepared by the seller’s solicitor or conveyancer, or their real estate agent. Details like settlement date and selling price are not filled in. These are often left to the time a solid offer is made and then the purchaser enters them at the time of making the offer.
When is a Contract of Sale for Property Binding on the Buyer and the Seller?
The contract of sale becomes binding for both buyers and sellers when both parties have signed the forms. Once all the conditions have been met and the cooling off
period has ended, neither party can cancel the contract without facing serious legal
consequences. Occasionally disputed contracts end up in court.