Contract

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This fact sheet is general information only. If you need a lawyer, try LawMatch™ a free service that matches you with a lawyer who meets your legal needs and preferences.

Making an offer

Often an agent will ask for a deposit before telling the seller that you have made the offer. Of course, if you make a successful bid at an auction, the deposit will be paid immediately after the auction.

What do I sign?

If the agent thinks the offer is worth sending to the seller, you will usually be asked to pay a deposit (or an amount of money less than the deposit) and sign a legal document that indicates your intention to offer e.g. a formal Contract, Contract Note, Offer and Acceptance, Offer to Purchase.

The procedure is different at an auction. If you are the successful bidder, you will usually be asked to pay a 10% deposit and sign the contract of sale.

Remember, in States where there is a cooling off period, it will not apply at an auction, so it is worth getting legal advice BEFORE the auction.

Bidding at an auction

Make sure you listen carefully to the auctioneer who will read the terms and conditions that govern the contract, which may include:

• The place of the reserve price.
• The sale to the highest bidder.
• The auctioneers right to refuse any bid.
• When the contract of sale will be signed.

Is an offer a contract?

Many buyers think that a formal offer communicated to the vendor e.g. Contract Note, Offer and Acceptance, Offer to Purchase (or similar) is nothing more than an indication that their offer is serious. This is not true! Do not under any circumstances rely on a promise that the Contract Note (or similar) has no legal significance. Whatever offer you sign may in fact (and probably will) be legally binding. Read the fine print - If in any doubt contact a lawyer before signing (or immediately after signing - there may be a cooling off period).

What's in a contract?

A contract, whether a formal Contract of Sale or an offering contract (e.g. Contract Note, Offer and Acceptance, Offer to Purchase), will contain a combination of some of these terms:

• The name and address of the seller.
• Detailed description of the physical dimensions of the land.
• A space that allows the chattels to be listed. Chattels are things not attached to the house, such as curtains. Fixtures are things like light fittings that are part of the building. Get advice about whether it is worth making a complete list of all the chattels and fixtures that are in the premises when you finish your inspection, and attach it to the Contract Note before you sign it.
• The purchase price, which is divided into the deposit and the balance. The deposit is usually 10% of the purchase price, but the agent will often ask you for a smaller amount of money when you sign the Contract Note or similar. Remember, this does not make the preliminary offer (e.g. Contract Note, Offer and Acceptance, Offer to Purchase) any less binding.
• Settlement details.
• Building inspection reports.
• The contract can be "Subject to..." a particular condition e.g. it may refer to tenancies that will continue after settlement. If there is a tenancy, you will not get vacant possession until the end of the tenancy. If the property is not sold with vacant possession, don't sign until you've got legal advice.
• The contract may contain information about a "cooling-off period". This should be read very carefully. For more information see our Cooling-off period fact sheet.

What is included?

It is far too easy to take it for granted that everything you see in the property will be included in the sale. This is not necessarily true. So how do you know? You can usually assume (but confirm it) that an attachment like the hot water system is part of the property that will be included in the sale price. The contrary is also usually true, so if its not attached it is more likely not to be included. In that case you will want to ensure that the item is specifically included in the contract as part of the sale. If there is any doubt about an item, attached or not, check first!

General Conditions

General Conditions are written in the standard Contract of Sale. They cover issues such as:

• loss or damage before settlement;
• what happens if there is a breach of the contract;
• how money is paid, etc.

Special conditions

These are extra conditions that are put in the contract by you or the seller. They can be about anything to do with the property. For example:

• that the contract is subject to you obtaining finance;
• that there will be penalties for a delay in the settlement;
• that the sale is subject to a tenancy etc.

If you have any questions about these conditions, get legal advice.