What Does A Contract Of Sale Cover?

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  1. What is a contract of sale?
  2. Who writes the contract of sale?
  3. What is in a contract of sale for property?
  4. Special conditions in property sale contracts

A contract of sale is one of the many, essential legal documents involved in a property transaction. Whether you’re buying or selling a house, it’s important you’re familiar with this document and what should be included. To help, we’ve broken down everything you need to know about property sale contracts. If you have any questions, please don’t hesitate to get in touch with our conveyancing team.

What is a contract of sale?

A property sale contract is a legally binding document containing the terms and conditions agreed upon between a seller and buyer in relation to goods. It also lists all the relevant information related to the property, such as names and addresses, the conditions of sale and the price.

Who writes the contract of sale?

A house contract is typically prepared by a conveyancer or property lawyer. It can also be drafted by a real estate agent, but the contract is then checked by the conveyancer or lawyer of both parties.

What is in a contract of sale for property?

Property sale contracts have a list of requirements that must be upheld in order for your land sale contract to be viable. The essential components of a contract of sale include:

  • * Details about the vendor and purchaser: This includes the name and present residential addresses of the parties to the house contract.
  • The description or physical dimensions of the property to be sold.
  • A list of chattels included in the property: Chattels are items that are not physically attached to the property and these include things like curtains, furniture, dishwasher, fridge, and washing machine.
  • * The purchase price or “consideration” of the property and the date of such payment(s): In property sales, consideration may usually be divided into a deposit and the remaining balance. The percentage of the amount to be deposited depends on the terms of negotiation mutually agreed upon by both the parties.
  • General covenants such as:
  • * * Terms and conditions relating to loss or damage to the property prior to settlement
    * Consequences for breach of contract
    * Penalties for delay in settlement
    * Transfer charges
    * Whether the real estate contract of sale is subject to finance approvals or tenancy

    • Easement rights: An easement gives an individual or a company the right to use the land or property for a particular purpose. Easements that are registered on a certificate of title will remain as the land is bought and sold. It can only be removed upon mutual agreement of the easement holder and the owner of the land. Common easements include:
      • A shared driveway between neighbours; or
      • Routing of electrical mains or drainage systems through a property by governmental authorities.
  • Sunset clause: This clause is a provision in a contract of sale that sets certain stipulation(s) after which the agreement will no longer be effective, such as reaching settlement by a certain date. The incorporation of this clause enables both the buyer and the seller to protect themselves from certain circumstances. For example, a buyer can use a clause to state the expected completion date of certain constructions and/or developments, and cancel if such developments are not completed within the particular time period. Similarly a seller might use a sunset clause to fix a settlement date thereby ensuring that the payments are fully and promptly paid.
  • Cooling-off Period: The contract of sale often contains information about a ‘Cooling-off period’. This clause enables a buyer to end the contract without large penalties. Learn more: what is the cooling off period?
  • Goods & Services Tax (GST): Before signing a contract of sale, it is always recommended that the purchaser should check whether GST is included in the purchase price or not.

Special conditions in property sale contracts

Special conditions are additional conditions attached to a standard contract of sale. These can be requested by either the seller or buyer, but are subject to mutual agreement by both parties. Some examples include:

  • Payments to be made by either party regarding necessary maintenance and repairs to the property
  • Payment of the deposit amount in instalments
  • Termite inspection certificate to be prepared by a registered company

Find out more: special conditions of sale

When should I ask for a contract of sale?

When you’re buying a house, you’ll typically receive a contract of sale after your offer has been accepted by the seller (the vendor). The real estate agent or vendor’s conveyancer will send through the contract for you to sign. Before signing the contract of sale, we highly recommend getting your own conveyancer or lawyer to read over it.

However, when you buy a house at auction, you will be expected to sign the contract of sale and pay the deposit immediately after the auction (if you’re the successful bidder).

Learn more: private sale vs auction

Talk to Owen Hodge Lawyers

At Owen Hodge, our conveyancers and property lawyers are experienced at drafting and reviewing contracts of sale (NSW). So if you require any guidance or advice, please contact us on 1800 770 780 to schedule an initial consultation.

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