22 Apr Common Contract Conditions When Buying or Selling a House
Common Contract Conditions When Buying or Selling a House
Selling a property should be easy. You engage a real estate agent, set an asking price, hold a couple of open inspections, and the offers start pouring in. Right?
And buying a home should be just as effortless. You find a place you love, submit a reasonable offer and the Vendor accepts. Sure thing!
In reality, most purchase offers will contain conditions, and these can range from simple to complex. As Conveyancers, it is our job to understand the conditions contained in the offer, and the potential implications for both the Vendor and Purchaser.
As a Purchaser, you have the opportunity to make your offer subject to various conditions to protect your interests. The real estate agent may offer to draft these conditions for you but it’s important to remember they are acting on behalf of the Vendor, so we recommend asking your Conveyancer to write any offer conditions for you.
As a Vendor, you should also have your Conveyancer review the offer conditions to ensure you are adequately protected. Your Conveyancer may recommend making changes to the conditions of sale or the wording of any conditions if they are not in your favour or put you at risk.
When a contract includes conditions, it will also outline what happens if each condition is not met, including whether the Purchaser can cancel the contract and if any deposit is refunded.
Here are six of the most common contract conditions included in a purchase offer, and what they mean:
Subject to finance: This gives the Purchaser time to organise a loan for the property they are buying. It means that if their loan application is refused, they may choose to terminate the contract and not proceed with the purchase.
Subject to valuation: This is often included with a ‘subject to finance’ condition as loan approval is almost always dependent on the property valuation.
Subject to sale or settlement of sale: When the Purchaser needs to sell their own home to finance the purchase, this type of condition may be included. As a Vendor this means the transaction will only go ahead once the Purchase has sold their property, or once the property sale has settled, which could cause considerable delays.
Subject to building inspection and/or pest inspection: Building and pest reports can identify any problems with the property, ranging from minor issues like a cracked window to serious issues such as termites or structural damage which could end up being costly.
Fixtures and fittings: In most cases, fixtures and fittings are included in the sale but if there are specific items to be included or excluded, this should be set out as a condition in the contract.
Repairs or removal of rubbish: Sometimes the Purchaser will make requests related to specific repairs needed or tidying up required. Depending on the type of work involved, the contract may allow a claim for the cost of performing the works if not completed, rather than termination of the contract.
At Cornerstone Conveyancing SA our experienced and friendly team can help guide you through the process of buying or selling a property, and help you understand any contract conditions involved.
Our Certified Practising Conveyancer status gives you peace of mind, and you can rest easy knowing we are fully accredited and compliant with government registration requirements and with the Australian Institute of Conveyancers SA Division.
As a family business, we truly appreciate your trust in us and pride ourselves on providing exceptional customer service at every stage throughout your property transaction.
We would love to have a chat with you about your property sale or purchase and invite you to get in touch with any questions you may have.