When purchasing or selling property in Tasmania, one of the most critical steps in the process is signing a Contract of Sale. This legally binding document outlines the terms of the transaction, including the price, conditions, and timelines. Whether you are a first-time buyer, a seasoned investor, or a seller, filling out a Contract of Sale correctly is crucial. Mistakes can lead to significant financial loss, legal complications, and unwanted delays. In this blog post, we will guide you through the process, highlight key points to watch out for, and explain why seeking professional advice before signing is paramount.
What is a Contract of Sale?
In Tasmania, the Contract of Sale is the legal document that formalises the agreement between the buyer and the seller of a property. It contains important details like the agreed-upon price, settlement date, deposit amount, and any special conditions attached to the sale. The contract also sets out the rights and obligations of both parties throughout the transaction process.
Key Sections to Review on a Contract of Sale
Parties to the Agreement - Ensure the correct names and details of the buyer(s) and seller(s) are listed. If there are multiple parties involved, ensure all are named appropriately including middle names.
Property Details - Check that the property description (including the address, lot, and plan number) is accurate. Any discrepancies could lead to confusion or delays down the track.
Purchase Price and Deposit - Verify that the agreed price is correctly stated in the contract, and the deposit amount aligns with your negotiation. In Tasmania, it’s common to pay a deposit of around 10% of the purchase price, but this can vary.
Settlement Date (Completion Date) - The settlement date is the day on which the buyer pays the full purchase price and the seller transfers ownership. Make sure this date works for you, as it can impact your moving arrangements or financing plans.
Special Conditions - Special conditions may include contingencies that need to be met before the contract becomes binding. For example, these could be subject to financing approval, property inspections, or the sale of another property. Ensure these are clearly outlined to avoid future disputes.
Inclusions and Exclusions - Be clear about what is included in the sale (e.g., fixtures, fittings, appliances) and what is excluded. If the seller is leaving behind certain items, such as furniture or garden equipment, make sure these are listed in the contract.
Cooling-Off Period - In early 2017, the Real Estate Institute of Tasmania (REIT) and the Law Society of Tasmania updated the approved Standard Form of Contract of Sale to include an option for purchasers to opt into a Cooling Off Period. This change aligned Tasmania with other Australian states and territories. The Cooling Off Period is a three-business-day period that begins from the Date of Contract (the date the last party signs the contract), during which the purchaser can cancel the contract without penalty. If a deposit has already been paid, it will be refunded.
This clause is particularly helpful for a prospective purchaser attending multiple open homes over the weekend and wanting to make offers on several properties. By ticking the box indicating reliance on the Cooling Off Period on each offer, the purchaser can take time to reflect on the various offers, seek legal advice, and then, without penalty, terminate any undesirable contracts within that three-day window, leaving the most suitable one in place.
If you are certain about proceeding with a particular contract, have already sought legal advice, and have had only one offer accepted, you can choose to Waive the Cooling Off Period by ticking the relevant box.
It is important to remember that while you may rely on the Cooling Off Period, other conditions in the contract, such as Subject to Building Inspection or Subject to Finance, must still be met within the specified timeframes from the Date of Contract, not the end of the Cooling Off Period (unless otherwise stated in your contract).
What to Watch Out for When Filling Out the Contract
While filling out the contract, here are a few potential pitfalls to watch for:
Errors in Personal or Property Information: Even minor mistakes can delay the process. Ensure all names, addresses, and property details are accurate.
Unclear or Vague Terms: If certain terms seem ambiguous or aren’t fully explained, ask for clarification. This could include payment terms, settlement conditions, or inclusions/exclusions.
Binding vs. Conditional Terms: Some contracts contain clauses that may be conditional (e.g., subject to the buyer obtaining finance or conducting a satisfactory building inspection).
Payment Deadlines: Check for any provisions about payment deadlines (such as the deposit), as delays in payment could result in a breach of contract.
Why Seeking Professional Advice is Essential
Filling out a Contract of Sale may seem straightforward, but there are numerous legal and financial implications to consider. Here are some compelling reasons why seeking professional advice from a solicitor or conveyancer is essential before signing:
Understanding Complex Legal Terms - Legal jargon can be difficult to navigate. A qualified professional can help break down complex terms and ensure that you understand what you are agreeing to.
Identifying Hidden Risks - Experienced solicitors and conveyancers know exactly what to look for and can identify risks or potential pitfalls that you might overlook, such as clauses that could disadvantage you in the long term.
Ensuring Compliance with Local Laws - Property transactions are subject to specific local laws and regulations. An expert can ensure that your contract complies with all relevant requirements in Tasmania.
Negotiating Terms - If there are any unfavourable terms in the contract, a professional can negotiate on your behalf to ensure a more favourable outcome. This could include adjusting deposit amounts, altering settlement dates, or modifying any restrictive clauses.
Peace of Mind - Signing a contract is a significant financial commitment. Having a legal professional review or even handle the contract on your behalf can provide peace of mind and avoid costly mistakes.
Conclusion: Take the Right Steps Before Signing
Filling out and signing a Contract of Sale in Tasmania is a major step in any property transaction, and the stakes are high. By carefully reviewing the contract, paying attention to critical details, and seeking professional advice, you ensure that your interests are protected throughout the process. While it may seem like an added cost to hire a solicitor or conveyancer, it is a wise investment to safeguard your financial future and avoid unexpected headaches down the line.
Before you sign on the dotted line, make sure you understand every term, condition, and potential risk. Your property transaction in Tasmania could be one of the most significant investments you ever make—ensure you get it right!