Contracts

Published On: 22 June 2023

Buying or selling property is an important process that involves more than just a seller and buyer agreeing on a price.

There many legally complex documents involved, one of the most important documents is the Contract of Sale.

The Contract of Sale has a major influence on the conditions and outcomes of a property purchase. You’ll want to make sure you review the contract before signing it to fully understand exactly what it contains and what it legally commits you to.

Using your own conveyancer or solicitor is crucial to ensure your rights are protected.

What’s in a Contract of Sale?

A Contract of Sale contains key information about the property for sale, it should clearly state exactly what is being sold.

DETAILS OF THE PROPERTY
Includes land and anything fixed to the land. A fixture can be described as a chattel (a moveable good) which has become part of the land by being attached to it. If you buy a house with an inground swimming pool and built-in dishwasher, these “fixtures” become your property. However, you may not have rights over objects such as an above-ground pool or portable dishwasher unless the contract of sale specified that they were included.

DETAILS OF BOTH PARTIES IN THE SALE
This includes the names, addresses and contact details of the buyer and seller and the real estate agent.

FINANCIAL DETAILS
The sale price of the property must be included and the agreed deposit amount plus the date it is due to be paid.

SETTLEMENT
The agreed date of settlement. This date is when the buyer pays the seller the balance of the purchase price plus any adjustments for rates, etc. This date is also when the seller transfers the Certificate of Title and “hands over” the keys to the property. The buyer becomes the legal owner of the property on this date.

CONDITIONS
Include any special conditions that need to be taken into account for the Contract to successfully go ahead – these could include ‘subject to finance’ or ‘subject to sale of another property’ by the buyer or ‘subject to building/pest inspection’. The contract should provide a date by which these conditions must be met.

Whether the property is available as ‘vacant possession’ or ‘subject to a lease’.

The contact will provide details on what will happen if there’s a breach of the contract.

ADDITIONAL DOCUMENTS
The contract should include:

  • A copy of the title to the property as recorded in the Land Services SA Office
  • Documents outlining other registered interests in the property, i.e Encumbrance (if applicable).
Who prepares a Contract of Sale?

The contract will usually be prepared by the seller’s conveyancer, solicitor or real estate agent.

How should you review the contract of sale?

Make sure you check the contract very carefully before signing it.

One of the most critical services provided by conveyancers is a thorough review of the Contract of Sale.  They examine the terms and conditions, identify any discrepancies, or unfair conditions that could potentially disadvantage their client.

Don’t sign it until you and your conveyancer are both happy you understand it completely and agree to its terms and conditions. Your conveyancer may recommend changes to the contract before you sign it.

Professional service vs doing it yourself

There can be serious repercussions from not checking a Contract of Sale correctly.

As a buyer, you need to ensure you’re getting what you paid for and that you have the right conditions to meet your requirements.

If you’re a seller, it’s important that you don’t add anything to the Contract of Sale you don’t wish to part with. If you don’t outline exactly which fixtures and fittings of the house are not included in the sale, you could stand to lose them after your property is sold.

Once both parties have signed the contract, it is ‘exchanged’, which means it is now a legally binding agreement, committing both the seller and the buyer to the sale. (Subject to any conditions that need to be met)

Don’t underestimate the importance of engaging a conveyancer; their expert knowledge and experience can save you from potential pitfalls and provide peace of mind throughout the process.