Purchasing property is an immense financial undertaking and it is essential that the contract for the sale of land meets all of the legal requirements to ensure that the process will proceed as smoothly as possible. Therefore, basic information beginning with the price, the parties to the contract, the property and the promise should all be featured within the contract.
Beginning with the opening page of the contract, generally speaking, the following particulars should be included:
- the selling agent – if there is one;
- the party purchasing the property and the seller;
- the price (obviously);
- the amount to be deposited;
- a full description of the property by the address;
- the nature of any improvements;
- any particulars that are included within the title;
- any furnishings or chattels.
In addition, the contract should also include a cooling-off period and a statement must be included within its prescribed form outlining that the cooling-off period lasts for three clear business days in Victoria, or five business days in New South Wales to name two examples. The absence of such a statement may provide the buyer with an opportunity to withdraw from the contract before the sale has been finalised.
Information that should be included within the contract
There are a number of things that buyers should be mindful of in relation to contracts dealing with the sale for residential land, such as a description to any improvements to the property, and anything excluded from the sale should also be clearly outlined within the contract. In addition, the settlement time should also be provided for in the contract, and can be between 30-90 days depending on the jurisdiction.
Once all of the particulars and the necessary disclosure documents have been incorporated, the contract is ready to be dealt with.
What must the vendor disclose?
Vendors under a contract for the sale of land should attach all disclosure documents, conditions, warranties, along with disclosing, and describing any serious defects in the title of the property that the purchaser must accept.
The documents that may be attached include:
- zoning or planning certificates;
- plans showing the position of sewer lines in relation to the land;
- a copy of the property certificate and the official plan of the land such as a deposited (subdivision) plan, or if the property is a strata title, a copy of the whole strata plan;
- any documents creating easements, covenants, and any restrictions shown on the property certificate;
- notice conforming to the legal requirements in relation to the wording and print size outlining the rights available to the buyer, and also the cooling-off notice;
- a certificate of home warranty insurance should also be attached to the contract by the owner, developer or builder.
Failure to include all the required documents may grant the buyer the right to cancel the contract within the specified time period which may differ according to the jurisdiction.
Warranties: Essential promises
Providing that the contract states otherwise, the seller at the date of the contract warrants:
- that the land does not contain any sewers that is the property of a recognised authority;
- the zoning or planning certificate outlines the true status of the land, which can include planning and zoning information;
- the land is not subject to any adverse affectation (eg a proposal by a public authority to acquire part, or all of the land).
Additionally, vendors are also required to include a warning that dwellings must be fitted with smoke alarms.
One of the things to bear in mind is that there is the possibility that a contract can be rescinded for breach of warranty: If the seller fails to disclose the matter; the buyer was unaware of its existence; and the buyer would not have entered into the contract if they were aware of the matter in question.