You have researched your real estate market and zoned in on a few properties to have look at. The bank is happy with your position and finance is approved. You are now ready to make an offer and/or bid at auction.
If you are buying at auction, and are the successful bidder, then you will be signing an unconditional contract. That means there is no cooling off period, and the contract is not subject to the approval of finance.
The purchaser will generally have a 3 day cooling off period if the sale is not through an auction. Additional terms may be negotiated (or already exist) in the contract such as subject to finance.
The cooling off period
In Victoria, the cooling off period is 3 working days from when the purchaser signs the contract. Before this time is up, you do have the right to walk away from the purchase. There are some exceptions, so have a read of them in more detail here.
WA and TAS currently don’t have cooling off periods.
The Contract of Sale
This document contains the terms of property purchase. Until the contract is signed, you can negotiate for terms and conditions to be added, removed or amended. There are a number of key elements in every residential contract of sale:
The buyers and sellers: Make sure that your name is spelt correctly on the contract. In some scenarios, you may be buying on behalf of a family member, or through a company. If this is the case then you will need to have the clause “and/or nominee” after your name.
The property description: Identification of the property can be done by referencing its address and/or title particulars (volume and folio identifier), or a lot on a plan of subdivision. Some apartments and flats include a car park with a separate title. Make sure this is checked and included in the Contract.
Chattels: Fixtures are included in the property purchase and don’t need to be mentioned here. If you are unsure about an item being a fixture, include it as a chattel.
Price: Make sure that it is very clear on whether the purchase price of the property includes GST or not. Sometimes GST is listed in the special conditions.
Deposit: The deposit is paid upon signing the contract and is generally 10% of the purchase price.
Settlement: Special settlement terms can be negotiated however normal settlement terms are 30, 60 or 90 days from the time contracts are signed. At the time of settlement, the title is transferred into your name in return for the full payment of property.
Corresponding Sale of another property: In some cases, a clause can be entered on the contract that purchase of this property is subject to sale of another property. Many vendors will not accept this clause in their contract.
Subject to finance: It is recommended that you only enter into a contract of sale with finance approved, or the available funds ready to go. However, it is possible to have a clause included in the contract that states the purchase is subject to the approval of finance. So if you have pre-approval of a loan but it falls through for some reason, you are able to walk away from the contract. You are not able to have this clause if you buy at auction.
Special clauses: Take special care with this section and ask your solicitor to explain any clauses in detail so that you understand what they mean and any implications.
State of Repair: It is not uncommon for a special condition to be negotiated into the contract that is subject to a satisfactory building inspection and pest report. However, if this is not in the contract, the purchase is on the present condition and state of repair.
Other conditions: If you are purchasing an off-the-plan property please do have your solicitor review the contract before you sign.
Titlexchange offers a range of services in relation to title transfers and conveyancing. Contract of Sale and Building Contract reviews can be purchased as individual products outside of title transferring, and at $150 ex GST each, this is a small price to pay in order to have peace of mind. It is easy to get the process started, so please speak to us today about how to get going.