Real Estate Contracts
The Contract of Sale is the term used to describe the document prepared by a lawyer, and used to formalise the sale of real estate. However, the word "Contract" has more than one meaning:
| 1. |
Contract can mean an agreement; or |
| 2. |
Contract can mean the document that sets out the agreement. |
"Contract of Sale" as an agreement
When a person makes a promise to do something, and is paid by another person to do it, this agreement may be regarded as a "Contract".
For example, when you pick up a newspaper at a shop, place a coin on the counter, make eye contact and "get the nod" from the
proprietor as you walk out, you have both completed a "Contract" for the sale of the newspaper - a contract enforceable by law. Nothing has been written down anywhere to record the agreement, but the agreement itself is the "Contract".
"Contract of Sale" as a document
The
Instuments Act states that any Contract for the sale of real estate must be, and signed by the person against whom it is to be enforced.
This means that a simple verbal contract is not enforceable if it relates to the sale of real estate. To ensure that the parties involved in the sale of real estate know exactly what is being bought and sold, and the conditions by which the sale is to take place, a formal "Contract of Sale of Real Estate" document is used. This document is usually prepared by a lawyer, and is tailored to suit the parties and the circumstances of the sale. The document itself usually contains numerous conditions, that set out the "rules" by which the deal will proceed and eventually settle.
Who should prepare the Contract of Sale of Real Estate?
The contract should always be prepared by a qualified lawyer for one party, and carefully checked by a lawyer acting for the other. This is to ensure that both parties' interests are protected.
These days, however, "standard form" Contract documents are often used by non-qualified people, such as (who purchase standard forms from lawyers) and (who purchase pads of from their .
While and are not prevented from operating in this way, the desire to "get things done quickly" often creates problems for the parties involved, as neither nor estate agents are qualified to provide the legal advice that should always accompany a document.
Signing A Contract
The most important point to be made to both vendors and purchasers is that nothing is final unless and until a written Contract has been signed by both parties.
As a general rule, once the has been signed by the purchaser, and counter-singed by the vendor, a binding is created, and the matter is final. While it is possible to make changes to the Contract after it has been signed (for example, changing the settlement date, or extending a home loan approval condition) changes can be made only if BOTH parties (the vendors and the purchasers) agree. If either party disagrees, then the Contract remains as it was when first signed.
When it comes to the obtaining of legal advice, the best time is BEFORE the Contract is signed. If you buy or sell real estate through an estate agent, you will be encouraged to sign first, and seek advice later. This allows the agent to control the sale, but it places both the Vendor and the Purchaser at risk.
Vendors need to obtain legal advice before signing a Contract that has been altered or amended by the estate agent in any way. Purchasers should obtain legal advice on the AND the Contract before signing anything, and before paying any money to the agent.
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