The Fine Print

When it comes to purchasing a property, the fine print can be overwhelming. From offers to contracts, cooling off periods and auctions – it’s important to know exactly what’s required of you. Alicia from Next Legal and Conveyancing takes us through some of the most commonly asked questions from purchasers.

My offer on a property has been accepted, but I don’t know the next step of the process. The agent said they would send out a sales advice to my legal representative – what happens next?

The first point to note is that an offer is not legally binding until both parties have signed the contract and a deposit has been paid. Agents are also allowed to take multiple offers and accept a higher offer, even after you have had your offer accepted. This is why it is advantageous to hire a legal representative who is skilled in conveyancing transactions and can act promptly while ensuring your interests are protected at all times.

We often advise clients looking to purchase a property to engage, or at least liaise with us, prior to an offer being accepted to ensure efficiency and ease once their offer has been accepted. This means we can also ensure they are aware of any special conditions they need to put to the agent when making their offer.

In very simple terms, after your offer has been accepted, the real estate agent will prepare and issue a sales advice with all relevant particulars to the vendor and purchaser’s respective legal representatives. The vendor’s legal representative will then prepare the contract and issue the same to their client and the purchaser’s legal representative for review, negotiation and signing. Due diligence will occur including a detailed contract review and at this time you will simultaneously be organising finance, payment of the deposit and all relevant inspections. Once satisfied, the exchange of contracts will occur, settlement figures will be prepared and settlement will typically occur 28 to 42 days later. This is when the exchange of monies occurs, the property is registered into the purchaser’s name and the keys are handed over.

I’ve found a property I like and am keen to secure it, but the agent said they want me to waive my cooling rights and sign a contract – isn’t that risky and over the top?

By law, a purchaser has a legal right to a five business day ‘cooling off period’, which occurs once the contracts have been exchanged (signed and dated by both parties).

During the cooling off period, the purchaser is entitled to rescind or cancel the contract for a variety of reasons, including finance, a pest or building concern, change in circumstances or simply a change of mind. If the purchaser elects to rescind the contract during the cooling off period, they will lose their 0.25% deposit (also referred to as a ‘holding deposit’ which is required to be paid to the agent’s trust account prior to exchange), which the vendor is then entitled to retain. It’s worth noting that once contracts are exchanged, a vendor is totally committed to the contract. So until such time as contracts exchange, the vendor can accept other offers, which is why at times a sense of urgency is created.

Although the standard cooling off period is five business days, a purchaser can also negotiate a longer cooling off period – however, the vendor must agree and it is best-practice that this is included as a special condition in the contract. The vendor can also request the purchaser to waive their right to a cooling off period by requiring a section (66W) to be signed by their legal representative. This request is actually quite common and a purchaser offering to waive the cooling off period can signal your strong interest in the property and can help secure it among competing buyers. However, waiving your right to a cooling off period can be risky because this means you will be completely bound to the contract (unless a finance clause or other relevant special condition has been agreed). Therefore, the purchaser cannot rescind the contract if, for example, finance has not been granted or an issue has occurred after a pest and building inspection and they will be completely committed to purchasing the property.