> Consumer advice  > Buying or selling a home  > The contract

Two copies of the contract are drawn up for signature so that both you and the vendor receive identical copies. A binding contract does not exist until a written offer has been formally accepted by the vendor, signified by signing the contract.

The contract document outlines the terms and conditions of the sale and contains provision for:

• the name and address of the vendor

• your name and address

• details of the land for sale

• chattels included and excluded from the sale

• the sale price (including GST if applicable)

• deposits

• settlement date

• exceptions

• tenancy detail

• conditions of the sale (The most common examples are subject to obtaining finance, the sale of an existing property or the completion of a satisfactory building inspection. You may wish to include a pre-settlement inspection as a condition of the contract. )

When you sign a contract you may wish to insert a condition that the vendor sign the contract document by a certain date. If the contract is not signed by that date, the contract will not be valid. If a vendor countersigns a contract that you have already signed the agreement to sell the property will become legally binding. Once the contract is signed and an accurate Form 1 has been served on you, the cooling-off period will commence.

Deposit
The agent may require you to provide an initial deposit of not more than $100 when you offer to purchase a property. This is known as a holding deposit and is generally not required. That deposit will be returned to you if the offer is not accepted. However, if you sign a contract and then decide to ‘cool off' within the cooling-off period, the deposit is forfeited to the vendor.

A further deposit will be payable once the cooling-off period has expired or, in the case of an auction, a deposit may be required on the day of the auction. The amount of this deposit is negotiable but may be as much as 10% of the agreed sale price, particularly if the sale is by auction. The deposit should be paid to the vendor's agent, solicitor or conveyancer who will place the money into a trust account until the settlement date. Your cheque should be made payable to the appropriate trust account and marked ‘not negotiable'. Remember, if you change your mind after the cooling-off period has expired you can lose any deposit you have paid unless the vendor has breached the contract in some way. You may be required to pay further compensation for breach of contract.

Settlement date
Settlement is usually set between 30 and 90 days, but this period of time can be negotiated between you and the vendor. The agreed date is recorded in the contract.

Conditions
You can negotiate with the vendor to have the sale subject to certain conditions. The most common examples are subject to obtaining finance, the sale of an existing property or the completion of a satisfactory building inspection.

You may wish to include a pre-settlement inspection as a condition of the contract.

An auction contract of sale is generally unconditional. However, it is sometimes possible to negotiate the inclusion of particular terms (i.e. the amount of the deposit or period for settlement) through the agent prior to the auction

Tenants
If there are tenants currently occupying the premises on a lease, the period of lease details must be recorded in the Form 1. Depending on the agreement that the tenants have with the current owner of the property, you may be able to seek vacant possession as a condition of sale, but you must record the condition in the contract. For further information about residential tenancies contact the Office of Consumer and Business Affairs on 8204 9544.

Resources

Forms about buying or selling a home

Legislation for Real Estate reforms

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