A binding contract does not exist until you have formally accepted a written offer and the contract has been signed by both parties.
The contract outlines the terms and conditions of the sale and contains provision for:
- The name and address of the vendor
- The name and address of the buyer
- Details of the land for sale
- Chattels included and excluded from the sale
- The sale price (including GST if applicable)
- Settlement date
- Tenancy details (if applicable)
- Conditions of the sale
The most common examples of conditions are subject to the buyer obtaining satisfactory finance, the sale of an existing property or the completion of a satisfactory building inspection. A buyer may also wish to include a pre-settlement inspection as a condition of the contract.
An auction contract of sale is generally unconditional. However, a buyer may sometimes try and negotiate the inclusion of particular terms (i.e. the amount of the deposit or period for settlement) through you or your agent prior to the auction.
You should discuss with your agent which of your appliances, furniture and other personal effects you do not want included in the sale. Generally, items such as hard-wired kitchen appliances and curtains and blinds are included in the sale. Make sure that the agent excludes your identified items from the sale.
While not a legal requirement, you may require a buyer to provide an initial deposit of not more than $100 when they offer to purchase a property. This holding deposit will be returned to them if you don’t accept the offer.
A deposit should be paid once the cooling-off period has expired or, in the case of an auction, a deposit may be required on the day of the auction. The amount of this deposit is negotiable but may be as much as 10% of the agreed sale price, particularly if the sale is by auction. The buyer may negotiate a lesser amount prior to auction or arrange to provide a bank guarantee.
The deposit should be paid to you, your agent, solicitor or conveyancer with the money being placed into a trust account until the settlement date.
If a buyer changes their mind after the cooling-off period has expired they may lose any deposit paid unless you have breached the contract in some way. They may also be required to pay further compensation for breach of contract.
Settlement is usually set between 30 and 90 days, but this period of time can be negotiated between you and the buyer. The agreed date is recorded in the contract.
A buyer is entitled to a cooling-off period of two clear business days during which they can withdraw from the sale. However, there is no cooling-off period if they are buying at auction. The cooling-off period starts after the signing of the contract for sale, or the giving of the Form 1, whichever comes last.
There is no cooling-off period for sellers.
If tenants currently occupy the premises on a lease, you must record the period of lease details in the Form 1. Depending on the agreement that the tenants have with you, you may be able to seek vacant possession as a condition of sale, but you must record the condition in the contract.