PREPARING A SENSIBLE AND SECURE CONTRACT CAN HELP MAKE SURE YOUR SALE STAYS ON TRACK.
As the property market cools off, selling your property may not be as straightforward as when the market was sizzling.
Preparing a sensible and secure contract for your sale can help make sure your deal stays on track, and reduces the chance of nervous buyers getting cold feet, pulling out at the last minute, or raising a dispute at settlement time.
What are your obligations as a seller?
The standard Agreement for Sale and Purchase (the Agreement) is used for most property transactions. In this agreement the vendor (the seller) gives warranties as to the compliance of the property, warranting that they hold all necessary consents and permits for any work they have done to the property. The vendor also warrants that they have disclosed anything which may affect the property and have no knowledge or notice of any fact which might result in proceedings being instituted by or against the vendor or the buyer.
Rectifying any known compliance issues prior to going on the market is the best way to ensure a headache-free sale, if you’re in a position to do so. The investment of time/fees required to get the paperwork you need can pay off in attracting more buyers to put an offer on the table.
For those that aren’t able to fix the issues (if you need to get to market quickly, for example), beware of just removing the vendor warranties from your agreement entirely – doing this may be a big red flag to purchasers that something is wrong with the property. A smart contract can deal with situations by being upfront about any areas of actual or possible non-compliance and asking the purchaser to acknowledge they have been told about them. Some purchasers may be put off by a property with an unconsented sleep-out, but others may not be bothered.
Working out if all aspects of your property are compliant can be confusing to navigate. There may be different local and central authorities involved, and the rules change quite frequently. Your lawyer can help you work through these issues prior to sale so that your contract is ready to go when a prospective purchaser shows interest.
Chattel warranties – As the vendor, you also warrant that all chattels in the house (for example the oven, dishwasher, stove) are in reasonable working order, and that the chattels and other electrical and other installations are free of any charges (i.e. Q card or other finance company debt) If you know something doesn’t work, you should exclude it from the warranties. If there’s a breach of the chattel warranties, the purchaser may ask for a reduction in the purchase price to compensate for the loss, and this can cause headaches at the time of settlement as you negotiate, so it pays to be clear from the get-go.
Tenants – If your property is tenanted and the purchaser wants the property empty on settlement, you must give the tenants at least 90 days’ notice to vacate the property. Ensure that the settlement date on the Agreement allows for this.
As a vendor, once you have signed the Agreement you are legally bound by it. Make sure you are clear about what you are signing and what that Agreement is promising Getting legal advice early on can make the rest of the process much less stressful, particularly if you have a property with ‘quirks’ or are in a situation when timing is critical.
How we can help
Our highly experienced, trusted Property team can help guide you through your rights and obligations. You can view our Property team here.
WRMK Lawyers takes all reasonable care to make sure that the information in this article is up-to-date and accurate at today’s date. It is necessarily general information and not intended as legal advice to be relied upon.
Our thanks to Natalie Robinson for writing this article.
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