Buying or selling a property is no small task and a contract of sale (in addition to the subsequent sales advice) is at the center of the entire process. It is the vendor’s responsibility to have a contract for sale prepared prior to listing their house for sale and in NSW, this must be prepared by a solicitor or conveyancer.
A contract of sale lists all the relevant information pertaining to the sale of a property, including such things as names and addresses of the buyer and seller, as well as conditions of the sale and inclusions. Once signed and dated, it is a legally binding agreement between the purchaser and the vendor.
How to ensure each sale is as smooth as possible
For a residential property sale to proceed as seamlessly as possible for all parties, it is helpful for real estate agents to provide complete and accurate information to the conveyancer or property lawyer who is handling the transaction.
Normally, the real estate agent is the person who negotiates the deal between the purchaser and the vendor, and then provides that information to the conveyancing team to fine tune the details in the contact. It is therefore really important that the agent provides all information as accurately as possible, to ensure that the conveyancing process can proceed quickly and efficiently.
This is particularly important, if (by mutual agreement between the buyer and the seller) certain steps or conditions deviate from the normal sales process or the existing terms of the contract.
For an exchange to happen smoothly and quickly, it helps if correct information is provided to the conveyancer or lawyer, from the outset. A diligently drafted sales advice can really help to expedite the entire process.
On occasions, a real estate agent may undertake the exchanging of contracts. In this situation, it is extremely important that the correct information has been entered into the contract (such as correctly spelt names or purchaser entity details), or else the contract may need to be rescinded. It is worth highlighting that small mistakes or omissions can lead to much bigger problems or delays in the exchange process.
The most commonly incomplete or incorrectly entered sections to watch out for include:
- The parties’ full name and addresses
Do we have both parties’ full names (including middle names) and addresses, and are they correct? This may seem very basic and obvious, however missing or wrong information results in unnecessary time spent chasing up the correct details, which can slow the process down considerably (or at worst, the contract rescinded).
- Are all parties to the contract specified (and specified correctly)?
Another question to ask a both a purchaser or seller, is whether the property will be in their own name or that of a super fund, trustee or company.
- What is the settlement date?
While the settlement date will usually be a standard six-week period, there is often a particular need for additional or less time than this. It is important that the real estate agent check this information with the parties, that they both agree on the completion date and that information is supplied in the sales advice to the conveyancer.
- Conditions to be included in the contract
Are there are any special conditions that need to be included in the contract? If so, check to ensure all parties are aware of their contractual obligations and that the conveyancer is aware of the conditions of sale or purchase. This may include if a sale is subject to early access to the premises, and if so, is rent payable to the vendor?
- Items to be included in the sale
All items that are included (or excluded) in the sale of property should be listed on the contract. For example, does the property include additional structures such as a free-standing shed? If the property has an outdoor barbeque or pizza oven, does it remain as part of the sale or is it taken with the vendor? Some items may not be noted in the contract but become the subject of negotiations which may increase or decrease the purchase price and must be confirmed in writing to the conveyancer.
- Payment of deposit: When and how?
As the deposit needs to be paid prior to, or on the day of exchange, it should be specified: when the deposit is required; how much is required; and how it is to be paid. Sometimes the deposit may be paid in instalments or via a bond, and it should be noted that all parties have discussed and agreed to these arrangements.
The Contract of Sale: What has changed and why?
On 1 September 2022, the new Conveyancing (Sale of Land) Regulation 2022 commenced. It replaces the Conveyancing (Sale of Land) Regulation 2017 and has sought to simplify its structure and readability by adopting more straightforward, modern language. The new Regulation continues to support the Conveyancing Act 1919, by setting out disclosure obligations for vendors in conveyancing transactions conducted through the contract for the sale of land but does not seek to introduce any new disclosure requirements.
As a result of the changes to the Regulations, the Law Society of New South Wales recently launched a 2022 edition of the Contract of Sale, replacing the 2019 edition.
The 2022 edition of the Contract of Sale
A few of the changes to the 2022 edition of the new contract include:
- New inclusions to air-conditioning, ceiling fans and EV chargers
- A much more detailed execution page
- Restructuring of clauses in recognition that transactions are now predominantly electronic
- Payment of deposit by electronic funds transfer according to the terms of the contract
- The submission of a GST payment notification form has been reduced from five days to two business days
- Changes to deal with first home buyer choice property tax in the event that it forms a charge on the land and clarification that this tax is to be adjusted
- Clauses dealing with the electronic execution of contracts
The prescribed notices contained in the 2019 edition can be continued to be used until 28 February 2023 as there is a transitional provision, but it cannot be used for contracts entered into on or after 1 March 2023.
The 2019 edition will be phased out and withdrawn from sale at the end of October 2022.
To have RM draw up the contract for a sale of property, or to act on behalf of a prospective purchaser speak to one of our team.