Understanding property contracts when selling your home
When it comes to selling your property, one of the biggest things you’ll have to consider is the contract. Understanding it is key in the selling process.
When choosing your agent, it pays to do some homework. When you do choose your agent you enter into a legally binding contract with them, so it’s imperative you make the right choice.
This is the first contract you need to concentrate on. The agency agreement includes the services the agent will provide, what fee or commission you agree to pay, how and when this payment is to be made and lots more.
If you’re not sure about the agreement, it’s best to seek expert advice. And remember, the first thing you’ll need to check is to make sure the real estate agent you choose is licensed.
The contract for sale
Before you even put your property on the market, a proper contract for sale must be drawn up and ready. You may receive an offer before your open for inspection even happens, so you need to be prepared to say yes if you want to.
There is some vital information that needs to be outlined in the contract for sale, including:
- Title documents confirming you are the rightful owner of the property.
- A diagram of the drainage, showing the location of sewer lines.
- A zoning certificate showing any restrictions imposed by council or any other plans that may impact the property, for example, road works.
- Documentation outlining easements, rights of way, restrictions or covenants.
Also, due to changes of laws regarding pools in various states, some contracts must include certificates of compliance, occupation certificate to authorise the use of the swimming pool and a valid certificate of registration for the pool.
There are some additional requirements when it comes to strata title property, such as an apartment or townhouse. The contract for sale must include:
- A copy of the property certificate for the lot and common property.
- A copy of the strata plan showing the lot.
- A copy of any by-law changes that affects the use of common property.
Importantly, there are certain things that are automatically assumed when it comes to putting your property on the market.
As soon as the property is up for sale, the vendor (you) has made certain promises about how the land may be impacted. These warranties include:
- The property and/or land is not subject to adverse affectation that may affect the land, such as a government proposal.
- All documentation is accurate, up to date and complete at the date of the contract.
Understanding fixtures: what are they?
Another important element to include in the contract is what fixtures are included in the sale and what are not.
A fixture is something that is difficult to remove without doing damage. For example, a stove or taps cannot be removed without damaging the kitchen and bathrooms. Appliances such as microwaves and washing machines can easily be unplugged and moved. These are not fixtures.
The murky bit comes with elements such as blinds and curtains. You, as the vendor, need to decide what removable fixtures you will be taking with you and what will be staying in the property. Every item that will be included in the sale of the property must be included in the contract.
If the purchaser comes through the property and would like some removable fixtures included, they do have the option to negotiate with you. These can be written into the contract if need be. But remember to be upfront about whether or not you are open to negotiation on what is included in the price. If there is no wiggle room, don’t even begin the conversation.
Exchanging the contract
It’s not all over when the contract is drawn up. Remember, the other party needs to sign it.
At the exchange, the deposit is generally paid, but even then, it’s not over. You’re not out of the woods yet. Until settlement, you must still abide by the terms and conditions of the contract and it’s expected that no damage will be done to the property.
It is also expected that you will leave the property in the same way as the buyer agreed to purchase it. In most states, the vendor is responsible for any loss or damage to the property until settlement. Of course, this does not include fair wear and tear.
Speak to the experts
If during the selling process you have any doubts at all, it’s best to speak to a property expert. This goes for the initial contract between vendor and agent, and definitely get a legal expert to have a look over the contract for sale.
Despite there being standard documents to work off, there are certain things that may be relevant to your property and your property only and if the contract is not drawn up to the correct specifications, it could mean problems for you down the track.