Understanding a Contract of Sale
A contract of sale is a written agreement that stipulates the terms under which a property will be sold. Once signed both the seller and purchaser, the contract becomes a legally-binding document. This means, you need to understand what the contract contains - specifically, the details of the contract, the general conditions, and any 'special conditions' that may apply. I will explain each of these below.
It is always recommended that you engage a lawyer to review the contract of sale prior to signing or making a formal offer to purchase. Lawyers specialising in property law will know exactly what to look for and can identify risks and issues that you need to be aware of.
A contract of sale should contain the following elements:
Particulars Page
This is where the details of the property are set out. Key things to look out for:
- Ensure that the 'lot' (the parcel of land) and address are correct.
- The vendor name is the same as the name on the certificate of title (found in the vendor statement)
- Confirm what goods are sold with the land
- Is GST included in the price?
- What are the settlement requirements? That is, will the transaction be completed within 30 / 60 / 90 days?
General and Special Conditions
In every contract of sale there are general conditions in some form or another. These are conditions are are usually present in every contract of sale for real estate. If you only see general conditions, this is likely to be a standard contract of sale. However, if there are special conditions contained in the contract of sale, you need review these carefully. Special conditions are those that are specific to the property being sold and could potentially be problematic or place additional burden on the buyer. Special conditions can also be used to amend, or change, the general conditions. While we recommend that you have any contract of sale reviewed by an experienced lawyer, it is especially important for a contract with special conditions.
Vendor Statement
The vendor statement, sometimes called the 'Section 32', provides specific information about a property. It's important to ensure all relevant information is disclosed in a vendor statement so you can read it along side the contract of sale.
Purchasing or selling a property can be one of the biggest decisions in your life. A carefully drafted contract of sale and vendor statement can make the sale process smoother. For a buyer, understanding the contract and vendor statement will help you make an informed decision.
