Decoding the Contract of Sale for Property

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It is important for a seller to have a thorough understanding of the due diligence process at the time of entering into a contract of sale. A contract of sale, along with the relevant due diligence and/or search documents, influences a buyer’s decision whether or not to invest in a property.

Vendor Disclosure Regulation

This requires a seller to disclose certain matters in the contract and to make certain warranties about the property. The disclosure documents are compulsory documents, including the Certificate of Title, Zoning Certificate, Drainage Diagrams, and must be attached to the contract. If these documents are not attached the purchaser can rescind the contract. The required warranties you need to give as a seller as on the date of contract may include that:

The land or property being offered for sale is not subject to any adverse affectation;

The land does not contain any part of a sewer main;

The Zoning Certificate attached to the contract specifies the true status and permitted uses of the property or land; and

There is no matter about the property or land that would have the relevant council issue a demolition order or work order.

Prescribed Documents to Be Attached

Certain prescribed documents must be attached to a contract of sale. If such documents are not in place, you may lose out a buyer thereby leaving you without a sale. These documents may be described in the manner as follows:

Certificate of Title or Title search: Documents relating to Title search show the ownership, interest details and any restriction on the property. A Certificate of Title is a record of all current information relevant to a parcel of land or a property, including current ownership details. This includes volume / folio details, details pertaining to plan, any registered encumbrance, easement and *covenants recorded in title.

Any dealings on the property

Deposited Plan

Zoning Certificate: This is a certificate containing the planning controls applicable to a particular land or property. Issued by the relevant council, the zoning certificate specifies the true status and permitted use of the property. Also known as the section 149.

Drainage or sewer diagrams showing the location of the internal and external service lines or the sewer main of the property. *Sellers may obtain a drainage or sewer diagram from your concerned local water authority.

Outstanding notices search from council

Land Taxation Certification

Home building insurance: In Australia, Builder warranty insurance must be attached to the contract of sale if any building work has been done in the previous six years, the value of which exceeded $12,000. In case a building agreement is in place, you must attach an insurance certificate to the contract. Before entering into the contract of sale, you must also give to the buyer a brochure about the insurance cover and the procedures available for the resolution of any dispute that may arise. You should discuss about this with your conveyancer prior to putting the property in the market for sale

In addition to this the purchase should consider conducting a pest inspection and building reports. A pest inspection report is obtained from a qualified pest controller and it discloses whether the property is infested with pests like termites that may have caused or are likely to cause damage to the property. A building report is obtained from a qualified builder and it reveals if there is any building problems which need to be rectified.

For expert advice and assistance in matters relating to land and property, contact the team at Owen Hodge Lawyers.

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