Contract of sale
A prospective buyer who decides to buy your home first has to make an offer. They do this by signing the sale contract. This completes their formal offer.
Their offer
Before signing, take a copy of the contract away and discuss it with your solicitor. Don’t be pressured into signing a contract without seeking legal advice first.
Do not accept it unless:
- you’ve read and understood all its terms and conditions
- the buyer has signed it properly
- you accept all the terms and conditions
- you can fulfil all your requirements
- you include the appropriate condition in the contract to pass covenants and agreements onto the buyer (talk to your lawyer for more details)
- all the details about the property (including its address and property type) are correct.
When a buyer makes an offer you can:
- accept the offer by signing the contract
- reject the offer by not signing the contract
- respond with a counter-offer.
The contract becomes binding once you and the buyer have both signed it.
Warning statement
A contract of sale must have a warning statement in it. This statement must appear directly above the place where the buyer signs the contract.
The warning statement must say:
The contract may be subject to a 5 business day statutory cooling-off period. A termination penalty of 0.25% of the purchase price applies if the buyer terminates the contract during the statutory cooling-off period. It is recommended the buyer obtain an independent property valuation and independent legal advice about the contract and his or her cooling-off rights, before signing.
If you work with a real estate agent, they will be able to take care of this for you.
However, if you are selling privately, it will be your responsibility to include the statement.
Counter-offers
Counter-offers are a common part of negotiating a sale. You can make a counter-offer by:
- altering the contract to suit your terms
- signing the contract in its updated form.
The buyer can accept your counter-offer by initialling the changes. If they do, the contract becomes binding. Otherwise, they may choose to reject your counter-offer or make an alternative counter-offer. Make sure that you and the buyer initial all the changes, regardless of who proposed each one. Otherwise, your contract may become invalid.
The deposit
Your contract should set out the payment date for the deposit.
It should:
- usually be due 2–3 days after you finalise the contract
- get paid into your agent’s trust account.
Ask your agent to tell you right away if they don’t get the deposit on time.
Conditional sale
The contract for the purchase of your home might be subject to:
- whether the buyer can get finance (a bank loan)
- what the results are from a building and pest inspection
- if they can sell their existing property.
If they can’t meet these conditions, they can cancel the contract. If you’re not sure about anything, ask your solicitor to check it before you sign.