Are you thinking of selling your home? This post relates to individuals or partners selling their primary residence. It doesn’t apply to companies or trusts selling property or to investment or commercial properties.
The person selling a property is called the “vendor”.
Selling your home – Contract for sale
You must have a proper contract for sale ready before you put your property on the market.
Information that must be included
The contract for sale must include:
- Title documents that confirm that you own the property.
- A diagram of the property’s drainage showing the location of sewer lines.
- A zoning certificate (also known as a section 149 certificate) showing council planning restrictions and other plans that may affect the property such as road widening.
- Copies of any documents creating easements, rights of way, restrictions or covenants.
From 29 April 2016, if the property has a pool or spa, the contract for sale must also include:
- A valid Certificate of Compliance for the swimming pool.
- A relevant occupation certificate which is less than three years old and authorises use of the swimming pool.
- A valid certificate of registration showing that the swimming pool has been registered.
Strata title property
If you are selling strata title property, such as an apartment or townhouse, you will also need to include in the contract for sale:
- A copy of the property certificate for the lot (your apartment/townhouse) and common property.
- A copy of the strata plan showing the lot.
- A copy of any by-law change that affects the use of common property.
By putting your property on the market for sale, you have made certain warranties (promises) about it, unless your contract for sale says otherwise. These include:
- That the property and/or land isn’t subject to any ‘adverse affectation’, such as a government proposal that may affect the land.
- That the zoning certificate is accurate at the date of the contract.
- That the drainage diagram is accurate and complete.
A fixture is something that is difficult to remove from the property without doing damage. An example of a fixture is a stove that is difficult to remove. A microwave that is easily unplugged and moved isn’t a fixture.
Some things are harder to categorise as fixtures, such as blinds, curtains and removable flooring. It is best for you (the vendor) and the purchaser to negotiate what is included in the sale as a fixture and specify this in the contract for sale.
What happens if the contract doesn’t comply?
If the contract doesn’t comply with the relevant requirements, the purchaser may be able to rescind (pull out of) the contract and if relevant, you will have to return their deposit.
Selling your home – Private treaty or auction
There are two main ways of selling your home: by private treaty or by auction.
Sale by Private Treaty
Sale by private treaty is where the vendor puts the property on the market for a set price and prospective buyers are able to make offers and negotiate the sale price with you.
If you sell by private sale
- Prospective buyers will have to negotiate with you without knowing what other interested parties think the property is worth.
- You will have greater control over the sale.
- You will have time to consider offers.
- The buyer has a five day cooling off period.
Sale by auction is where prospective buyers bid for the property. The vendor sets a reserve price that is usually not told to the prospective buyers.
The highest bid above the reserve price is the winning bid. The purchaser who makes the winning bid must complete the sale and there is no cooling off period.
If the highest bid is below the reserve price, the property will be ‘passed in’. The vendor can either negotiate with interested bidders or put the property back on the market.
If the contracts for sale are exchanged after the property has been passed in but on the same day as the auction, there is still no cooling off period.
Contract exchange is where the vendor and purchaser sign their copy of the contract for sale and exchange them. This is when the purchaser pays the deposit.
When you sign the contract for sale, the vendor and purchaser usually agree to a settlement date, commonly six weeks after the date of exchange. The purchaser pays the balance of what they owe at settlement.
If you are buying a house as well as selling, it is important to try to make sure that both of your settlement dates are the same. This way you can avoid costly bridging loans or having to find somewhere to live temporarily.
If the purchaser cannot settle by the date stipulated in the contract, the vendor is often entitled to charge interest and in some circumstances to cancel the sale.
Who needs to be present at settlement
If you have a solicitor representing you, then as the vendor you may not need to attend settlement in person. Instead, your solicitor can represent you.
If you have a mortgage over the property that you’re selling, a representative of the lending institution will attend the settlement to receive the money owing on your home loan.
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