The sale contract
Once you have decided to sell your property, and to enable your appointed real estate agent to commence marketing your property for sale, contact Penny Browne Conveyancing to arrange for a Contract for the Sale of Land to be prepared.
Within New South Wales, residential property cannot be advertised for sale until a Contract of Sale has been prepared.
In order for a sale Contract to be prepared, the law requires the Contract to attach all of the “prescribed documents”. Upon receipt of the vendor’s confirmation of instructions, a sale contract usually takes within 5 business days to prepare.
Contact us today to arrange for your sale contract to be prepared, to enable your listing agent to commence marketing your property for sale.
Vendor’s Disclosure Requirements
The law sets out the Vendor’s Disclosure Requirements and all vendors have an obligation to provide a sale contract which includes in the sale contract certain information and documentation and to make certain promises (known legally as “warranties”) about the property that they are selling.
Unless the contract for sale includes specific information that says otherwise, by putting the property on the market, the vendor is deemed to have made a number of promises about the property, including but not limited to that the land is not subject to any “adverse affectation”.
If a Vendor does not comply with the Vendor Disclosure Requirements and there is a problem with the property, the purchaser may be entitled to cancel the contract for sale.
The most common documents to be attached to a sale contract are:
- a copy of the Title to enable the purchaser to verify the ownership of the property;
- a copy of the registered Plans relevant to the land (ie Deposited Plan / Strata Plan)
- copies of any dealings, documents creating easements, rights of way, restrictions or covenants
- a current Zoning Certificate (aka section 149 certificate) issued by the Local Council and shows planning controls, zoning, permitted use for the property and other matters which may affect the property, such as heritage conservation or proposed road widening
- a copy of the drainage diagram / sewer connection diagram to enable the location of the sewer lines to be identified
- Land Tax Certificate (aka section 47 certificate)
- If the sale property is over $2 million an ATO clearance certificate
If the property for sale has a swimming pool or spa pool, one of the following must also be attached to the sale contract from 29 April 2016
- a copy of a valid certificate of compliance, or
- a valid occupation certificate (issued in the past 3 years) and evidence that the pool has been registered, or
- a valid certificate of non-compliance.
This requirement does not apply:
- to a lot in strata or community schemes that have more than two lots, or
- for any off-the-plan contract.
If you fail to attach one of these documents to the sales contract, the purchaser may be entitled to rescind the sales contract within 14 days of exchange, unless settlement has already occurred.
For more information regarding swimming pools please refer to ##
Vendor Disclosure as to Building Works
Where building works have been carried out to a property, either by the Vendor or a previous owner, it is important for a vendor to be aware of the legislative requirements imposed on a vendor to provide certain disclosure documentation relating to the building works.
When providing your instructions to Penny Browne Conveyancing to prepare a sale contract, we will ask whether or not any building works have been undertaken to the property, together with:
- Is there a building contract
- Was Development Approval obtained / required to complete the building work
- Was the work undertaken as an owner/builder
- On what date did the building work commence, and when was the building work completed (*due to legislative changes, the dates are important to determine which legislation applies)
- What was the value of the work (*this is important to determine whether or not a copy of the Home Owner’s Warranty Insurance Certificate needs to be attached to the sale contract)
- Whether or not there is any defects in the work to be rectified, and if the defects are of a structural or non-structural nature
- Is the Home Building Compensation Fund applicable (formerly home warranty insurance) (*due to legislative changes, the dates are important to determine which legislation applies)
- Has any building work been carried out on the property, which required Council approval, however approval was not obtained
- Has a Final Occupation Certificate been issued for the building works
Whilst these queries may seem onerous, the vendor’s duty to disclose forms part of the legislation, and providing the disclosure documentation also provides a prospective purchaser with a measure of certainty that the building works are compliant.
From 15 January 2015, an owner-builder must not enter into a contract for the sale of land on which owner-builder work has been done unless the contract includes a consumer warning stating that an owner-builder permit was issued in relation to the land (with the date of issue specified) and that work done under an owner-builder permit is not required to be insured under the Act. Licensed contractors working for an owner-builder will still need to provide insurance to owner-builders for all work over $20,000.
Care must be taken when compiling all disclosure material for a Contract for Sale of Land to ensure that the disclosure of any previous building works and the inclusion or exclusion of evidence of the Home Owners Warranty insurance is compliant with the Home Building Act 1989 (NSW).
Failure by a vendor to comply with its obligations under the legislation may result in statutory penalties and the Contract being deemed voidable at the option of the Purchaser.
Determining the date of completion of the building works:
Section 3B of the Home Building Act 1989 defines the meaning of practical completion of residential building work. This section only applies to the date of completion of residential building work. Section 3C provides for the date of completion of new buildings in strata schemes.
Set out in the sale contract is the vendor’s terms and conditions relating to the sale
Many of the conditions of the sale contract have been used for a long time, as they are considered within the legal fraternity to be fair and reasonable to both the vendor and purchaser.
However, it is important that when drafting your sale contract, the contract reflects the true status of the land and the vendor’s conditions of sale.
When providing your instructions to Penny Browne Conveyancing it is not only important that the sale contract complies with the vendor’s legal requirements but that it also reflects the vendor’s needs.
Prior to exchanging contracts, a prudent purchaser will arrange for the contract to be reviewed and will more than likely wish to negotiate some of the terms and conditions of the Sale Contract (for example, the settlement date).
Subject to the vendor’s further instructions, Penny Browne Conveyancing will negotiate with the purchaser’s solicitor/conveyancer to ensure that the vendor’s responses are communicated to the purchaser.
What is included or not included in the sale
Unless otherwise specified in the sale contract, the property is sold in its current state of repair and condition, which also includes fixtures.
Simply put, a fixture is anything that cannot be easily be removed by the vendor without causing damage to the property. For instance, stoves are usually fixtures as they are wired in, whereas a fridge is not because it usually only requires to be unplugged to be removed.
If there is an item which the vendor wishes to remove from the property and not include in the sale (ie special light fitting, shelving, mounted television, wall mounted clothes dryer, plumbed refrigerator, large potted plants, dishwasher, air conditioning, pool equipment etc), it is best for the vendor to identify these items as an “exclusion” in the sale contract.
In our experience, to save from any doubt as to whether or not an item constitutes as a fixture, this item should be noted in the Sale Contract as either an “inclusion” or an “exclusion”.
Failure to clearly identify an item as an “inclusion” or an “exclusion” could lead to a dispute between the vendor and purchaser, and it is always prudent for a vendor to ensure that the Sale Contract reflects what has been agreed between the parties, prior to exchanging contracts.
Unless otherwise specified in the sale contract, and in an effort to ensure a smooth settlement of the vendor’s sale, if there is a fixture which is to be noted in the contract as an “exclusion” and removed by the vendor prior to completion, any damage caused by the removal of the “exclusion” should be repaired prior to completion and at the vendor’s cost (including but not limited to repainting and plastering, the removal of any brackets, bolts, loose wiring, screws etc) in a proper and workmanlike manner, by licensed tradespersons (if applicable).
At the same time if there is a large amount of potted plants, building materials, old paint products or rubbish located on the property, we would also suggest that the vendor, at the vendor’s cost ensure that prior to completion these items are removed from the property (and not left on the side of the kerb awaiting Council clean up).
NB The information contained in this article (and its contents) is general information only and not to be considered as legal advice. Please contact Penny Browne Conveyancing should you have any queries or require legal advice regarding this matter.
Penny Browne Conveyancing