What you should know before signing a Contract For Sale

Buying a property will probably be the most significant, exciting and expensive decision you ever will make, so it is important that you have all of your bases covered before you sign the Contract For Sale.

Firstly, identify how you are going to finance your property purchase and organise the necessary approvals from a lending institution. Having a meeting with your mortgage broker prior to house hunting can be beneficial to know your lending capability, and therefore keep your expectations realistic of what you can and can’t afford.

Once you have found the home of your dreams and you are looking to place an offer or bid at auction, it is encouraged that you conduct a thorough inspection of the property. During your inspection, ensure that all appliances including heating, cooling, garage doors, electronics etc. are in working order. When you sign the Contract For Sale, you are accepting the property in the condition that you inspected it in. If you are not confident about doing this yourself, it is recommended that you seek an independent building inspector to carry out a building and pest inspection at the property and give you a detailed report. It is also important to note that buying at auction is a different set of rules than submitting an offer for approval. When you buy a property at auction, it is an unconditional sale and you are locked into the contract that you sign. You have no cooling off period or contract exit if you change your mind.

Finally, we can not recommend highly enough that you engage a conveyancing professional to review the Contract of Sale, rather than do it yourself. You conveyancer will be able to advise you as to whether there are any matters that require consideration.

The key components of a Contract of Sale that you need to consider before signing:

1. Make sure the buyer entity on the contract is correct before you sign (i.e your name, company or trust). Changing the buyer details after the contract is signed is problematic and could attract double ‘transfer duty,’ if not done correctly.
2. Check the property description and the registered plan to ensure you are purchasing the correct property.
3. Ensure a list of all included chattels is included in the contract, e.g dishwasher, blinds/curtains, pool equipment etc. By doing so the seller is obliged to hand these over to you at settlement.
4. Title encumbrances: ensure this part of the Contract is specified as ‘NIL.’ Otherwise, the seller may not be obliged to provide you with a clear title at settlement.
5. Check the purchase price is correct.
6. A building and pest inspection clause is included which allows you to obtain your own building and pest inspection report.
7. If you have any concerns about the property or the contract, then it is recommended that a due diligence clause is inserted as a special condition. An example of a possible concern might be ensuring any recent renovations have received proper approval and final building certification.
8. A settlement period is listed, typically this is 30 days from contract date, however longer or shorter periods can be negotiated between the parties.