Selling a Home

Published 14 Oct 2015
Louis Andreatta

Selling a Home

A Contract for Sale

When selling a house or apartment it is necessary for the vendor to prepare a Contract for Sale. Failure to prepare a Contract for Sale before putting the house on the market, is an offence under New South Wales law and you may be fined for doing so.

The Contract for Sale must include certain documents

By law, certain documents containing information relating to the property must be obtained and included in the contract. These documents are known as "The vendor disclosure requirements". Such documents include:

• a copy of the certificate of title including copies of easements, restrictive covenants or rights of way;

• A drainage diagram showing the location of the sewer line in relation to the property;

• A zoning certificate known as a "Section 149 Certificate" obtained from council containing much information relating to the property including flood affectation etc; or

• For units, a copy of the strata plan and a copy of the bylaws

Warranties

Under New South Wales law, a vendor is deemed to make certain promises relating to the land. Such promises include:

• That the zoning of the land is as shown on the zoning certificate attached to the contract.

• That the sewer line is in fact as shown on the drainage diagram attached to the contract.

• A promise to the effect that the land is not subject to any "Adverse affectation" such as a government proposal which might affect the land.

Such warranties deemed by law can be excluded by making specific clauses you may insert to the contract can be excluded by specific clauses you may include in the contract.

Failure to include the vendor disclosure documents in the contract

It may result in the buyer being able to cancel the Contract for Sale and also entitle the buyer to recover their deposit.

Terms of the Contract of Sale

Many of terms in a Contract for Sale are standard.

However, when preparing a contract for sale, Maclarens Lawyers may include non standard terms in your contract to protect your interest as a vendor.

A "cooling off" period may apply

When selling a residential property a cooling off period gives a buyer the opportunity to pull out of the contract within a certain period of signing the contract. A buyer who exercises this right to pull out usually forfeits 0.25% of the purchase price. You can ask a buyer to forgo the cooling off period if they have a solicitor acting for them and a solicitor has explained the contract to the buyer at the time the buyer signed the contract.

However, if a residential property is sold by auction, a buyer will not have the benefit of a cooling off period. Instead, if the property is purchased at auction the buyer is bound to go through with the purchase.

You may sell a property by private treaty or by auction

Private treaty is where you advertise the amount for which you are willing to sell your property and then negotiate the price with the buyer. An auction sale if normally conducted by an agent on a given date where all interested purchases are asked to bid and the property sold to the highest bidder.

What is included in the sale?

Normally, anything that is a fixture is included in the sale. Normally, a fixture is anything that cannot be easily removed or taken away without damaging the property. For example, normally a stove is a fixture because it is wired in. Normally appliances such a refrigerators are not fixtures because they can be readily unplugged. It may be arguable whether or not some items such as above ground pools or removable floor coverings are fixtures. To remove any doubt, the contractor should make it clear whether such items are included in the sale.

Agents commission

You should negotiate the fee that your agent will charge for selling your property with your agent before you sell your property. Normally the sale price will include any agents commission and will be deducted from the proceeds of sale.

When a buyer accepts the purchaser's offer

The vendor will sign a contract for sale which will include the purchaser's name and the purchase price. A separate but identical contract is signed by the purchaser. When both contracts are signed they will each be dated and at that moment the vendor has entered into a binding contract to sell the property to the purchaser and the purchaser has entered into a contract to purchase the property from the vendor. The vendor will be given the contract signed by the purchaser and the purchaser will be given the contract signed by the vendor.

The vendor remains owner of the property until the completion date which is normally about 6 weeks after the date of exchange for contract.

At exchange, the buyer usually hands over a deposit which is normally 10% of the purchase price.

Normally, the agent retains the deposit which is paid into the agents trust account.

Once settlement has occurred, the agent will account to the vendor for the deposit less any agents commission.

Finalising the sale

Settlement or completion of the sale normally occurs on the completion date specified in the contract.

At settlement, the buyer pays the balance of the purchase monies as well as any adjustments for rates and taxes such as council rates and water rates. If you owe money to your bank, at settlement your solicitor will arrange for your loan to be discharged from the proceeds of settlement.

What happens if a buyer wants to get in before settlement?

If you permit a buyer to occupy the property before settlement, a buyer will normally have to pay you an occupation fee pursuant to license agreement which will set out the terms of the occupation. Such a license agreement will normally state that the buyer must take out insurance and cannot make structural changes before settlement. Further, a buyer will be required to take responsibility for the cost of utilities such as gas and electricity and council rates and water rates from the date of occupation rather than settlement.

A vendor should never allow a buyer to take possession of a property without first consulting the vendor's solicitor.

Buying and selling at the same time

If you enter into a contract to buy a house at the same time as you are selling your current one, it is important that you make sure that the settlement date in both contracts is the same.

Your home is your most important asset.

Maclarens Lawyers has the expertise to make sure your sale proceeds smoothly.

Maclarens Lawyers can prepare the Contract for Sale.

Maclarens Lawyers can advise what laws you need to comply with.

Maclarens Lawyers can explain the conveyancing process.