Like buying property, selling it can be equally stressful. Especially if it is your own house, chances are you will be busy tidying it up, doing minor repairs and generally keeping it clean for those all-important home inspections. (After all, first do impressions count.) In such times, having to turn your mind to conveyancing requirements is an additional burden you simply don’t need.
Contract for Sale
Whether you are selling your house, investment unit or empty land, there are legal matters that you will need to sort out before you can put your property on the market or list your property with a real estate agent. For starters, you will need to have a Contract for Sale of Land prepared. This is where Tranter Lawyers can help.
A Contract for Sale of Land is a document which sets out the terms and conditions for the sale, including a listing of all the items that form part of the sale, such as curtains, dishwasher and other fittings. Tranter Lawyers will conduct all the necessary searches and include with the Contract a copy of your property title, diagrams on drainage and other easements and a copy of the planning certificate issued by the local council.
Essentially, the Contract for Sale is the document upon which final negotiations will take place with the purchaser – usually on price, but it may be on other things, such as the length of the settlement period, or the amount of the deposit.
In a sale of property, an offer, verbally accepted, does not make for a legally binding contract. Neither are the parties obliged to settle if a deposit is made. The property is considered “sold” only when the purchaser and vendor have signed (or “exchanged”) the Contract of Sale. It is only then that the parties are legally obliged to complete the sale.
Until an exchange of the Contract of Sale has taken place, you, as vendor, can continue to solicit offers from other purchasers, although you must advise the first purchaser if you obtain a higher bid. On the flip side, the purchaser is equally entitled to place offers on other properties which, if contracts are exchanged earlier than yours, means that you may have lost a sale. This means that it is usually in both parties’ interest to proceed to a quick exchange. (These scenarios are avoided if the property is sold at auction. See below.)
Methods of Selling Your Property
There are two ways to sell your property. The first is to sell it by private treaty, and the second is by auction. Different legal obligations apply depending on the methods chosen and Tranter Lawyers can work with you and your real estate agent to advise on the method which best meets your requirements.
1. Private Treaty
A private treaty is a sale by negotiation. When the Contract of Sale is exchanged, the purchaser is entitled to a cooling-off period of 5 working days. The cooling-off period allows the purchaser to conduct all necessary pre-purchase checks, such as pest and building inspections or securing finance.
During this period, the purchaser may change his or her mind and withdraw from the sale, without any penalty other than forfeiting an amount of money equivalent to 0.25% of the purchase price. Outside the cooling-off period, the purchaser will forfeit the entire deposit. In the current Sydney market, this is probably going to amount to quite a lot of money.
As a vendor, you may choose to require the purchaser to waive their cooling-off rights. In this case, a section 66W Certificate will need to be signed by a lawyer confirming that the purchaser has received independent legal advice in relation to the contract and the waiver of the cooling-off rights.
An auction involves the sale of a property, in a public forum, to the highest bidder. It is usually extremely competitive, particularly if there are several interested buyers trying to outbid each other. The vendor will set a reserve price, which is the lowest price he or she is prepared to accept. The auctioneer is not allowed to sell the property below the reserve price. Once the reserve price has been reached, the property is “on the market” and will be sold to the highest bidder.
An auction often involves greater certainty for both purchaser and vendor, because once the hammer falls, contracts are signed and immediately exchanged. The property is sold and the parties proceed to settlement.
It should be noted there are strict rules regarding vendor behaviour at auctions. The vendor is allowed to make no more than one bid at the auction. Further, although the practice appears common, placing “dummy bidders” at the auction, that is bidders who are not genuine buyers and whose main purpose is simply to drive up the price (to the benefit of the vendor, of course), is illegal.
The standard settlement period is 6 weeks. Tranter Lawyers will handle all inquiries from the purchaser on your behalf, contact the bank to arrange a discharge of your mortgage, if any. We will prepare a settlement statement on your behalf and arrange for the funds to be deposited according to your instructions. On the day of settlement, the purchaser is entitled to a final inspection to check that everything is in order. Unless otherwise stipulated, the purchaser is entitled to vacant possession of the property.
For specific advice on selling a property contact Tranter Lawyers.