Apart from the property and a great Agent, the Contract of Sale of Land is the most important component of the sales process because a sale simply cannot take place without one. Originating in Victoria, Contracts of Sale are now used in varying forms in all other Australian states except Tasmania and the Northern Territory.
A Contract of Sale of Land, sometimes referred to as a Contract of Sale, Vendor’s Statement or Section 32, is a legal document prepared by the vendor’s solicitor or conveyancer and must include all the information about a property’s title that may impact the state of the property, especially where the information could impact a buyer’s decision. As a legal document, a Contract of Sale must be accurate and complete, as any irregularities give the buyer an opportunity to withdraw from the sale – or even take legal action.
So, what does a Contract of Sale of Land contain? A Contract of Sale includes information that is not readily visible at inspection. First and foremost is proof of a vendor’s right to sell the property. The title and property plan details; confirmation of any mortgages held on the property; details of any building permits issued for any associated work undertaken on the property over the past seven (7) years, including owner/builder work; covenants, easements and other restrictions on the title; planning information including applicable zoning and overlays; a certificate of compliance if there is a swimming pool; owners’ corporation particulars if applicable to the property; services not connected to the property; Council rates; any notices or orders issued by government departments; whether the property can be accessed by road and whether the property is in a ‘designated bushfire-prone area’ for the purposes of building regulations. What’s not included is information on the condition of the property, or accuracy of measurements on the title. The responsibility still rests with the buyer to conduct the appropriate searches for those, including building and pest inspections; the outcome of those often carry the most weight when buyers weigh up whether to proceed or not. It’s possible to list and market some properties without a Contract of Sale, but it isn’t possible to either sign a contract or sell the property without this vital document. For a buyer to get out of a contract, the vendor must be shown to have provided false, misleading or inadequate information.
While it is expected that your legal representative will read the Contract of Sale thoroughly, I always suggest purchasers do the same. Taking the time to read the document will alert buyers to any inconsistencies. It will also protect the buyer from post-sale surprises relating to the property. Buyers should also be mindful that inclusions vary from state to state. Your property is probably your greatest asset. Research well.
