Prior to any property being marketed there must be a written contract in place. In Queensland, this is usually prepared by the agent, unless it is an off-the-plan property, in which case it is usually prepared by the solicitor acting for the vendor. Regardless of who prepares the contract, it should be provided to you before you sign anything. This allows our property and conveyancing lawyers to consider the contract before you sign.
The contract contains a large number of clauses which will determine your legal rights and obligations, including the amount of the deposit payable, and what happens if either you or the seller default on the contract. In Queensland the deposit is usually 5% of the purchase price. Once the contract is agreed the buyer signs the contract first, and the contract is then sent to the vendor to sign. Provided there are no conditions under the contract which need to fulfilled at a later date, such as a finance condition or a condition for pest and building inspection, the contract becomes unconditional once the seller signs it.
In Queensland, the risk passes to the buyer from 5pm on the day after the contract date. Therefore, you need to have insurance on the property from the date of the contract. Your lender will usually want their details included as an interested party on the insurance policy. Unless the property is bought at auction, it will usually have a five-business day ‘cooling-off’ period. The cooling off period will run from the time the buyer’s solicitor receives the vendor’s signed copy, and will expire at 5pm on the fifth business day. You can back out of the contract for any reason during the cooling off period but if you back out within the cooling off period you will lose part of the deposit paid, namely 0.25% of the purchase price.
You can extend or shorten the cooling off period, and simply need to negotiate this with the vendor.At the end of the cooling off period the contract becomes unconditional. Unless it is subject to a further condition, such as a finance condition. Often in Queensland a contract may have a ‘finance condition’ and a pest/council inspection condition, which would mean that you would have a certain amount of time in order to obtain finance or carry out inspections after you sign the contract. This allows you an opportunity to enter into the contract initially, but gives you a get out if you cannot get finance or if an inspection comes back unsatisfactory. The time allowed is usually between 14 and 21 days.
Once the contract is unconditional if you default on the contract you may lose your whole deposit. If you want to terminate the contract as a result of inspections or an inability to obtain finance you need to terminate the contract before 5pm on the date of the condition. Our property and conveyancing solicitors will diarise all events so you are never caught short.
In Queensland time is of the essence. This means that if you need to do something under the contract, such as obtain finance or carry out an inspection, it must be done by that date. If you fail to do it by the required date, you are in default of the contract and could lose your deposit. It is therefore vitally important never to miss a date. Our conveyancing solicitors will diarise all your dates to ensure that you never miss a date.
In Queensland, the buyer purchases the property searches after they have signed the contract. They are not attached to the contract. Our conveyancing solicitors will obtain these searches for you. The usual searches include:
- A Certificate of Title. This document is registered with Queensland Land Titles Office, and tells who owns the property, whether there are any charges against it, such as a mortgage, easement (a right over the land) or covenants (an agreement to do or not do something on the land).
- A local council search. This will tell you whether the council has any proposals in mind which will affect the property such as compulsory purchase.
- Land tax search.
- If the property is owned by a body corporate, by-laws will be attached which will show what is permitted and not permitted on the property.
Our property and conveyancing solicitors will go through the searches thoroughly and advise you exactly what you are purchasing and any potential dangers. It is advisable to carry out these searches before the contract becomes unconditional.
Settlement (the day on which you will legally own the property) is usually 30 days from the date of exchange, but this time period can be shortened or lengthened as agreed between you and the vendor during contract negotiations.