What to check before signing a contract of sale

After attending open home after open home, you have finally fallen in love with a property that meets your immediate and future needs - but what comes next? Before crossing the t’s and dotting the i’s on a contract for a new home, there are a number of items to run your eyes over once, if not twice. This guide will help break down what to check before signing a contract of sale.

What is a contract of sale?

After negotiating a deal on the purchase price of a home, a contract of sale is presented. In essence, the contract of sale is a legally binding document prepared by solicitors or conveyancers that sets out the terms and conditions agreed upon by the buyer and seller.

When a property is sold privately as opposed to at auction, the seller must have a contract of sale prepared and available for inspection before they can advertise the property for sale. In most cases, the contract will be prepared by either the seller’s solicitor, conveyancer or real estate agent.

Once both the buyer and the seller have signed the contract, it is exchanged meaning it is now a legally binding agreement.

What does a contract of sale contain?

Typically, a contract of sale will contain the following information:

• The names and addresses of the seller and the buyer.
• The purchase price and deposit amount.
• The date of the property settlement and whether there are any pending conditions.
• Details of the property, including its fixtures and fittings, which may include items such as a dryer or curtains - also known as chattels.
• if you’re buying off the plan, a sunset clause that enables you to cancel the contract if the plan or development isn’t completed by an agreed date 
• Whether the property is vacant or subject to a lease.
• An explanation of how money is to change hands and what will happen if there’s a breach of the contract.

How to check the contract of sale

If the property is to be purchased privately, it is a good idea to check the contract of sale before beginning the purchase process. Far too often will purchasers look to navigate the ins and outs of a property contract after they have fallen in love with a property, only for the conditions to be deemed unsuitable to their requirements. Many potential purchasers will only look through the contract once they have fallen in love with a property. If such clauses outlined in the contract of sale cannot be negotiated on, there is essentially no benefit to further the purchase process if the property is not going to suit your needs.

Ensure you take the time on your own to scan over all the elements on the property contract, making note of any language, conditions or terms that may present doubts. It’s also important to check the contract carefully with your conveyancer or solicitor as they are working on your behalf after all. Ensure you go over all terms and listen to recommended changes your conveyancer may note before signing the contract. If you decide to make changes, take these back to the seller and they will choose whether to implement these changes or stand firm. Only sign the contract of sale once you are both satisfied with the final terms and conditions.

Key questions to ask

The following questions form a fundamental basis to helping you come to terms with the ins and outs of a contract of sale. Asking these of your solicitor, conveyancer or real estate agent can assist in allowing you to decide whether or not the property is right for you.

• What am I buying?
• Are there any special conditions that must first be met?
• How much is the deposit?
• What is the settlement date?
• Is there a cooling off period?

If you are ready to take the next step on your property journey, check out our range of competitive home loans or chat to one of our lending specialists to help you get one foot in the door of your next home.

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