The Contract of Sale is the key document which commits you to the purchase of a property. During negotiations you may be asked by a seller or an agent to sign a contract to formalise your offer. Before signing anything make sure you have your legal adviser, look over it to make sure it is what you agreed to.

 

Statutory Requirements

Each state has legislation governing documentation/information which vendors must provide at or prior to execution of the Contract of Sale. Your legal adviser will ensure that all such statutory requirements are met. For example, in Victoria a Vendor Statement would be supplied. 


Vendor Statement 

A Vendor Statement is a legally required document about the financial, legal and planning details of a property. These documents are prepared by the sellers solicitor or conveyancer.

 

The Vendor Statement includes things like:

• Information about planning, developments or restrictions
• A copy of the title showing existing easements or covenants and boundary measurements of the land
• Details of any mortgage over the property
• Details of any outgoings such as any rates, body corporate fees, or any other charges that may apply
• Building restrictions and copies of any permits issued for work carried out

 

The seller and buyer must sign the Vendor's Statement before the contract is signed. Your Solicitor will assist you with this.

 

If the property is being sold at auction, a copy of the Vendor's Statement and the contract of sale must be available for inspection before the auction.

If the Vendor Statement contains incorrect or insufficient information, as a buyer you should discuss this with their Solicitor/conveyancer.

 

Deposit bond

A deposit bond is basically an insurance policy on the property.

The deposit bond is the policy document that tells the seller that the insurance company will pay the 10 per cent deposit to the seller in any of the circumstances where the deposit would ordinarily be forfeited by the seller. 

No money actually changes hands under the deposit bond. Instead, all purchase funds are paid at settlement. In the ordinary course of events, settlement takes place, the purchase price is paid in full, and the deposit bond simply lapses.

 

Cooling off period

Standard sales contracts for residential property may have a cooling off period which will differ from state to state. If a cooling off period applies to your contract this will mean that if you change your mind on a property you can cancel the contract and recover your deposit but you should check this with your legal adviser.

 

If you are considering cooling off from a property sale, you must contact your legal adviser as soon as possible as cooling off periods are very short. Your legal adviser will co-ordinate this for you.