Buying Real Estate Part 10 - The Contract of Sale and Settlement
The contract of sale is a legally binding agreement between you and the owner of the property. It's important to ensure all information provided in this contract is accurate and correct so the transaction can be completed successfully.
There are many details that need to be included in the contract of sale for a property.
- Names and addresses of seller and buyer
- Sale price of the property
- Deposit amount and due date
- Settlement date
- Any special terms and conditions (finance, inspections etc.)
- Chattels included in the sale
- Whether the house will be vacant possession or tenanted
As this is a legal document, it's crucial to go through it with the real estate agent and your own lawyer or solicitor to ensure the contract is sound. A lawyer can also help you understand your requirements during the sale.
In some states, there is a cooling off period that commences as soon as both parties have signed the contract for non-auction sales. During this defined period, you have the right to walk away from the sale, usually after paying a small termination fee.
However, some owners may provide the buyer with an agreement to waive the right to a cooling off period when signing the contract of sale.
Settling the Sale - What You Need to Remember
There are many things you'll need to organise between the time you sign the contract of sale and the settlement date.
During the settlement period, you will need to fulfil the conditions outlined in the contract of sale as well as any other obligations you have.
Before the settlement date rolls around, you will need to contact your mortgage lender and organise your finance for the home. Whether you're closing a bridging loan, using a loan portability feature or taking out another mortgage, your finance needs to be organised as soon as possible.
The balance of the home is due on settlement day and will usually be paid to the seller once the lender has authorised the payment.
If you outlined any special conditions in your contract of sale, now is the time to fulfil these. For instance, the sale of your home may be subject to an inspection, valuation or some type of work by the owner.
For a smooth transaction, this needs to be organised well in advance to ensure everything is completed by settlement day.
Once both parties and solicitors have written to the agent to confirm the sale has settled, the agent can organise the handover of the keys to the new owner.
This can take a couple of hours to be finalised, so it's a good idea to organise your removalists to come to your home the day after settlement.