Preparing a property sale contract
If you’re selling a house, unit or vacant land, the first thing your conveyancer will do for you is prepare a sale contract. Getting this right will improve your chances of a smooth sale, so it’s worth spending some time on. Here’s the ideal process from our perspective.
When should you start drawing up a contract?
Your real estate agent needs a contract to be able to list the property for sale.
You can shop around for a real estate agent so you get the best commission rates, experience in your suburb etcetera, but your property can't actually hit the market until we've prepared a contract.
Even off-market sales require a contract. The only exceptions are properties considered rural, those that are larger than 4.5 acres.
So, look around for a conveyancer and a real estate agent at the same time. Your conveyancer can prepare the sale contract while you’re preparing the property.
What information does your solicitor or conveyancer need?
We have a list of questions which we send to all our clients. We need information about the property itself and about the sale.
Information about the sale
We ask specific questions including:
- Do you have a real estate agent appointed, and if so who is it?
- What’s the settlement timeframe? (6 weeks is normal, 3 months is common, the longest we’ve ever had was one year.)
- Are you purchasing another property?
We like to understand why you’re selling now. With a holistic view of what you’re trying to achieve, it’s easier for us to make sure you don’t fall into any holes. For example, if you’re purchasing another property, you may need the deposit released, so we ensure that clause is in your contract.
Information about the property
We have a specific form, which we’ve created, to make sure we get all the relevant information. It’s long, but most questions are just tick boxes. If they’re not relevant to you, you can just tick the ‘no’ option. For example,
- Basic details like the address and the kind of property (house, duplex, land, etc)
- Are there tenants? If so, have they been given notice or are they continuing?
- Does it have a garage, carport, granny flat or similar?
- Is there a pool? If so, does it have a compliance certificate?
- If there are solar panels, what are the terms with the power company?
- More specific inclusions like solar panels, ceiling fans, air conditioning, screen doors and range hoods.
- Have you had any works done on the property? If so, did they require council approval and did you seek it? We need to know about things like patios and decking, or turning a studio room into a granny flat by adding a kitchen.
We need to understand exactly what’s included in the sale, and any issues which might arise. You might think it’s obvious, but it isn’t always.
- We've had someone take the ducted air conditioning system unit with them.
- Another vendor left two cans of paint in the garage for use touching up walls, and settlement was delayed because the purchaser saw them as rubbish and wanted them removed.
A detailed sale contract, which matches the property for sale accurately, avoids confusion and keeps the sale smooth.
Once we have your initial answers, we can drill down into any areas where we need more information.
The importance of full disclosure
Renovations and extensions can often cause issues. You may have done them yourself, or you may have inherited them when you bought the property. They may be unapproved, or you may not know whether Council approved them.
Whatever the situation, you are legally required to disclose anything you know about the property. You don’t have to know everything, but you do need to share anything you do know. If you don’t, the purchaser has the right to withdraw from the contract right up to settlement.
Sometimes, your real estate agent may advise you not to mention an issue. Be careful! The real estate agent is often unaware of the consequences of this advice. They are focused on their job, which is to get you the best sale price, but it's our job to protect you legal interests.
What happens when you don’t disclose everything?
In one case we handled, a vendor didn’t disclose unapproved works and got a great price at auction. Then the purchaser found out and refused to proceed to settlement. After lengthy negotiation:
- The vendor had to organise and pay for retrospective approval, which cost tens of thousands of dollars.
- The purchase price was reduced by $100,000.
- Settlement was delayed by several months.
Your property sale contract should accurately represent your property, and everything you know about it. That’s the best way to ensure a smooth sale process with nothing coming to bite you in the back.
At KLH Conveyancing, we ask lots of questions upfront, to get the correct details while there’s time. Selling a property is stressful enough when everything goes right – let us help you keep the stress levels as low as possible.