So you’ve spent countless weekends scouring the suburbs of Brisbane, or the Gold Coast for that perfect property and you think you’ve finally found ‘the one’ and are ready to put in an offer and sign a contract of sale. It’s right about now that you need to tap the brakes every so slightly. There’s no point rushing in and signing your name, as the entire conveyancing process will be dictated by this contract, so you want to make sure you’ve got it right before signing.
Whether it’s an inner city apartment in Brisbane’s Fortitude Valley, a Queenslander in Bulimba, a high-rise apartment in Surfers Paradise, or a four-bedroom house at Coomera, the contract of sale for each will be almost identical, but it can be tailored to suit your needs and this is where a conveyancing solicitor can assist. They can review the contract for you prior to you signing it and adjust it accordingly.
The contract of sale is a legally binding document and if you don’t meet all of your legal obligations under it you can find yourself in breach of it and facing penalties that could potentially cost you a lot of money.
So what are some things you should consider before signing the contract?
Is the Buying Entity Correct?
The first thing you’ll need to ensure is that the correct buying entity is listed on the contract. If you’re buying the property as an individual ensure that your full legal name is put on the contract, including your middle name. This is very important as this will be the name the legal ownership of the property is transferred into.
Also if you are applying for finance for your purchase, your bank will use your full legal name on the mortgage documentation and it is vital that this matches the contract, otherwise problems can arise.
If you are purchasing as a company, ensure that the company name is spelt correctly and the Australian Company Number (“ACN") is included on the contract.
The Standard Contract Conditions:
The standard contract in Queensland will be either an REIQ contract, or an ADLForms contract and both of these include two key standard conditions; the pest and building condition and the finance condition.
In order for these conditions to apply however they must be correctly filled out on the contract prior to you signing it.
Ensure that a date that the pest and building condition is due is recorded on the contract and that ample time is provided for you to not only arrange for the inspection to be carried out, but also to receive the inspector’s report back and review this. If there are issues identified then your conveyancing solicitor will need to negotiate these with the seller’s solicitor, so it’s a good idea to leave time for these negotiations also.
The other standard condition of finance is even more important, as in most cases you will not be able to complete the purchase of the property without obtaining finance to raise the funds to pay the seller at settlement.
Even if you have obtained pre-approval for the loan, most banks still require at least 14 days from the contract date to arrange unconditional approval of finance. They will need to arrange for a valuation of the property to be undertaken and this can cause delays. You may need the contract to allow for a 21-day finance date.
You need to consider though if enough time remains after the approval of finance until the settlement date, as your conveyancing solicitor will need to carry out searches of the property after it has gone unconditional and have the results of these back prior to settlement.
Some of the required searches can take up to 14 days for results to be returned. In the case of you signing a contract with a 30-day settlement period, but with a 21-day finance period, this will obviously not leave enough time from the finance date until settlement for these search results to be received.
In cases such as this you conveyancing solicitor may need to undertake searches on the property prior to the contract going unconditional, which will mean that if you don’t receive finance approval and then have to terminate the contract you will still be liable to pay your solicitor for the cost of these searches.
Adding Special Conditions to the Contract:
One of the most important things your conveyancing solicitor can assist you with is the drafting of special conditions for the contract and arranging for these to be inserted prior to you signing it.
Whilst the standard contract of sale contains all of the basic clauses, sometimes the property may require special additional searches to be undertaken, or you might be buying the house subject to the sale of your existing property.
In most cases you will need a solicitor to draft these special conditions and they will be able to ensure that the correct conditions are added to suit your particular needs.
These are just a few of the things you need to consider before signing the contract of sale.