and deposits - fair trading
you want to buy a home, land or
investment property you’ll have to sign a sale contract. The legal
work involved in preparing the sale contract, mortgage and other
related documents, is called conveyancing. It’s possible to do your
own conveyancing, however, most people get a licensed conveyancer or
solicitor to do the work for them.
law, a residential property can not
be put on the market until a sale contract has been been drawn up.
You have the right to examine the contract at any time once a
property is on the market. If a particular property interests you,
get a copy of the sale contract as soon as possible so you can ask
your solicitor or conveyancer to review it. You should have this done
before signing a sale contract.
contracts and paying a
sale contracts is the legal
part of buying a home. Before exchange, the agreement is usually just
verbal and not binding. Up until you exchange contracts either you or
the vendor have the right to change your minds.
you have discussed the contract
with your solicitor or licensed conveyancer and all the proper
inquiries have been made, and after all the financial arrangements
are in place, you will be ready to exchange contracts. There will be
two copies of the sale contract: one for you and one for the vendor.
You each sign one copy before they are swapped or ‘exchanged’.
This can be done by hand or post and is usually arranged by your
solicitor, conveyancer or the agent. If the agent is handling the
exchange, you must expressly authorise them to do so.
the time of the exchange you will be
required to pay a deposit, usually 10% of the purchase price.
Following exchange, you have a financial interest in the property so
it’s wise to get it insured.
A contract has not been made and
is not legally binding before the exchange of contracts and the
payment of a 10% deposit.
you buy a property in NSW there is
a five business-day cooling-off period after you exchange contracts.
During this period you have the option to get out of the contract as
long as you give written notice. The cooling-off period starts as
soon as you exchange and ends at 5pm on the fifth business day.
cooling-off period does not apply if
you buy a property at auction or exchange contracts on the same day
as the auction after it is passed in.
can waive the cooling-off period by
giving the seller a ‘66W certificate’. This is a certificate that
complies with Section 66W of the Conveyancing Act 1919. The
certificate needs to be signed by your solicitor or conveyancer.
you use your cooling-off rights and
withdraw from the contract during the five business-day period, you
will have to pay the seller 0.25% of the purchase price. This works
out to be $250 for every $100,000.
there are more buyers
looking for homes than there are properties on the market. This is
called a sellers’ market. In this case, you may want to organise a
quick contract exchange. This way you can reduce the possibility of
someone beating your offer and get your building and pest inspections
done during the cooling-off period. You will still be able to back
out if there is a problem. However, it is important to have the
contract checked by your solicitor or conveyancer before you sign it.
is possible to waive, reduce or
extend the cooling-off period with the consent of the seller. If your
solicitor or conveyancer has examined certificates from the
appropriate authorities, a pest and building inspection has been done
and your finance has been approved, then deciding to waive the
cooling-off period could make your offer more attractive to the
usually takes place about
six weeks after contracts are exchanged. This is when you become the
legal owner of the property. The balance of the purchase price and
other adjustments are paid on this date.