Contracts of sale, cooling off and settlement

At M.E. Property we use the REISA standard contract of sale. The contract of sale will include the following:

Details of the buyer and seller.
Particulars of the land being purchased
Agreed purchase price between the buyer and seller
Agreed deposit payable
Settlement date
What is included and excluded in the sale of the property
Any other Special conditions or further terms and conditions of sale
Contract terms and conditions of sale.

Upon successful negotiation of the purchase price and conditions of sale, each party is provided with a fully executed copy of the contract of sale.

The purchaser is then served with the Form 1 – vendor statement for the sale contract as required under the Land and Business (Sale and Conveyancing) Act 1994.

In layman’s terms this detailed document provides the purchaser with all particulars pertaining to the property. The seller has a legal obligation to disclose any information that may affect the purchasers desire to purchase. The buyer must have full disclosure and transparency regarding their purchase. Inclusions could pertain to council approvals, easements and building defects.

The vendor statement or disclosure is included in the Form 1 cooling off papers prepared by your conveyancer or real estate consultant.

What is the cooling off period and how is this calculated?

The cooling off period is 48 hours from midnight on the day the Form 1 is served on the purchaser. The 48 hour period only includes business days and does not include weekends or public holidays. During the cooling off period is when the purchaser has the opportunity to perform building and pest inspections.

The purchaser is the only party to the contract that has a cooling off period. If the purchaser decides to proceed with the contract the vendor is bound by the contract.

If the purchaser decides not to proceed with the purchase notice must be in writing and served in the follow manner.

Methods of service

The cooling-off notice must be –

(a) given to the vendor personally; or

(b) posted by registered post to the vendor at the following address: (being the vendor’s last known address); or

(c) transmitted by fax or email to the following fax number or email address: (being a number or address provided to you by the vendor for the purpose of service of the notice); or

(d) left for the vendor’s agent (with a person apparently responsible to the agent) at, or posted by registered post to the agent at, the following address: (being *the agent’s address for service under the Land Agents Act 1994 / an address nominated by the agent to you for the purpose of service of the notice).

Are there any circumstances where there is a restriction on the purchaser’s right to cool off?

The following details the purchaser’s right to cool off and restrictions on that right.

The purchaser may notify the vendor of their intention not to be bound by the contract for the sale of the land UNLESS –

(a) purchased by auction; or

(b) purchased on the same day as you, or some person on your behalf, bid at the auction of the land; or

(c) have, before signing the contract, received independent advice from a legal practitioner and the legal practitioner has signed a certificate in the prescribed form as to the giving of that advice; or

(d) the purchaser is a body corporate and the land is not residential land; or

(e) the contract is made by the exercise of an option to purchase not less than 5 clear business days after the grant of the option and not less than 2 clear business days after service of this form; or

(f) the sale is by tender and the contract is made not less than 5 clear business days after the day fixed for the closing of tenders and not less than 2 clear business days after service of this form; or

(g) the contract also provides for the sale of a business that is not a small business.

What is the purchaser required to do if they wish to cool off?

The cooling-off notice must be in writing and must be signed by the purchaser.

Methods of service

The cooling-off notice must be –

(a) given to the vendor personally; or

(b) posted by registered post to the vendor at the following address: (being the vendor’s last known address); or

(c) transmitted by fax or email to the following fax number or email address: (being a number or address provided to you by the vendor for the purpose of service of the notice); or

On completion of the cooling off period the agreed deposit becomes immediately payable to the agents trust account.

There may still be other conditions to the contract that need to be fulfilled for example, subject to finance, subject to the sale and settlement of another property.

Once these conditions have been fulfilled the contract is now unconditional and the seller and buyer are bound to proceed with the contract.

Settlement

Most settlements of property happen between 30 and 90 days of the date of the contract, this is agreed at the time of negotiating the terms and conditions of a contract of sale.

Both the seller and buyer engage the services of their own legal representatives e.g. conveyancer.

The instructed conveyancers will work together to conclude the transaction this includes:

Liaising with financial institutions to gain finance approval
Ensuring all legal documentation such as memorandum of transfers are signed and provided
Mortgages are discharged and new mortgages registered on the certificate of title.
The certificate of title is transferred into the new owners name
Any water rates, council rates or other taxes have been calculated
Preparation of a settlement statement detailing all ingoing and outgoings.
Attending the Lands Titles Office on settlement day to complete the ownership transaction.

Settlements take place during business days usually at the Land Services Office. Once settlement has taken place your real estate agent will be notified and vacant possession provided to the purchaser. Under no circumstances will keys be provided to the purchaser until the settlement has been confirmed.