Are you looking to buy your next dream home or investment property? Perhaps you are trying to sell? Either way, the Contract of Sale is a key document to buying or selling property.
The Contract of Sale sets out the terms for the sale of the property. It details the total price payable, details of the deposit and when it is payable, the time and date for settlement, and any other agreed special conditions. The Contract of Sale is only binding once the seller and the buyer have signed the document.
A conditional Contract means the sale of the property will only occur if certain conditions are met. This means that the Contract will be subject to a minimum five (5) day Cooling-Off period (the agent sometimes grants a ten (10) day Cooling-Off period to the Purchasers). The Cooling-Off period allows for the buyer’s finance to be approved, a problem-free building and pest report on the property and any other due diligence the buyer wishes to carry out.
If Contracts are conditionally exchanged with a Cooling-Off period, the buyer will pay a 0.25% deposit to the agent and if the buyer rescinds during the Cooling-Off period for any reason, the 0.25% deposit is forfeited to the seller.
Once the Cooling-off period expires the buyer will pay the remaining balance of the 10% deposit and the Contract will become unconditional.
If agreed by the buyer and the seller, there can be special conditions included in the Contract that are particular for that property or your circumstances. For example, do you require the house to be professionally cleaned? Does something specific need to be removed from the property or if there is certain damage that needs to be repaired?
Including conditions can protect you if those conditions are not met and you want to withdraw from the Contract. The wording of the condition/s is very important to ensure your rights are protected. For that reason, any conditions to the Contract should be drafted by either your lawyer or conveyancer.
An unconditional Contract of Sale means the buyer and the seller are legally obliged to follow through with the Contract, on those terms. Some Sellers insist that Contracts are exchanged unconditionally without a Cooling-Off period and for this to occur you need either your Lawyer or Conveyancer to sign off on a Section 66W Certificate which waives your Cooling-Off rights.
Before entering into an unconditional Contract of Sale you must be completely certain that you want to proceed with the Contract in those terms and that you have the necessary unconditional finance approvals in place.
The benefit of an unconditional Contract of Sale for a seller is that you have a level of certainty that the sale is going to go through. As a buyer, an unconditional Contract of Sale means that you do not have any Cooling-Off rights and you will be bound by the terms of the Contract for Sale immediately upon exchange. If you decide not to proceed with the purchase after contracts are exchanged unconditionally, the 10% deposit will be forfeited to the seller and the seller can also sue you for damages.
Conditional or unconditional – what should you do?
Make sure you obtain legal advice before signing a Contract of Sale – whether it is conditional or unconditional. The conveyancing team at Step by Step Conveyancing can provide you with advice specific to your circumstances, and what risks and benefits there may be for you to enter either contract type.
If you want to discuss options for your contract, or talk more about the conveyancing process, please contact the Elisa Western at Step by Step Conveyancing on (02) 9629 4800 or shoot us an email to [email protected]