Property contracts are the basis of all Australian property transactions. The legally enforceable contracts protect the buyers and sellers by setting out definite terms, conditions, and obligations of both sides. Knowing what to anticipate in such contracts will prevent you from incurring costly mistakes and ensure your property transaction takes its course.
Main Elements of Property Contracts
Parties and Property Information
All property contracts must identify the buyer and seller by complete names and addresses. The property description should include the full address, plan number, and lot number, and any title details that are relevant. Ensure that all the boundaries of the property and included fixtures are adequately described.
Purchase Price and Deposit
The agreement must stipulate the amount of the purchase price and deposit. The Australian deposit is usually 5% to 10% of the purchase price. The agreement must also state how and when the deposit is to be paid, whether the deposit is to be held in trust, and what should occur if the sale does not proceed.
Settlement Date and Terms
Australian settlement periods are between 30 and 90 days but vary from state to state and from circumstance to circumstance. Include in the contract the settlement date and whether an extension of time is acceptable. Be cautious of late settlement penalty clauses, which are expensive.
Special Situations That Qualify
Subject to Finance
This condition enables the buyers to cancel the contract when they are unable to obtain finance for the required amount within a stated period. The clause must state the loan amount, interest rate, and date of finance approval. Without this condition, you may lose your deposit if your loan is declined.
Building and Pest Inspections
Most of the contracts contain professional building inspection and pest inspection clauses. These normally provide 7-14 days for inspection and accepting the property if it is in the condition found or requesting repairs. It should be indicated in the contract who pays the inspection cost and what happens if the inspections reveal serious issues.
Cooling-Off Period
Some Australian states provide a cooling-off period during which buyers can withdraw from their contract. The terms and length vary across states, so ensure you know what your rights are and what is involved in terms of costs if you choose this path.
Requesting Professional Advice from Conveyancers and Lawyers
Conveyancers and lawyers are the behind-the-scenes agents in property sales, vetting contracts and taking care of the legal aspect of property transfers. Experienced property conveyancing solicitors can identify issues in contracts that would go unnoticed to the naked eye, such as questionable easements, zoning restrictions, or unclear title details.
A licensed professional will also conduct necessary searches, including council searches, water authority searches, and title searches. These searches can reveal useful information about the property that can affect its value or your use of it for the intended purpose.
Protecting Your Investment
Property contracts are legally binding documents which you should not sign in a rush. Take your time and read through each clause thoroughly, question anything which you don’t get, and do not be pressured to sign right away.
Remember that these contracts become legally binding documents once they are signed. Procuring professional advice from a conveyancer or solicitor prior to making a signature will safeguard you from expensive errors and facilitate a smooth property transaction. The low cost of professional advice far exceeds the risk of signing something you do not completely understand.
