5 contractual terms you should know about before signing a written offer 

So you’ve found a property perfect for you after spending countless hours scouring the market. A contract was given to you but it’s long, confusing and filled with legal words that don’t make sense. We recommend looking out for these 5 terms that can help your decision-making. 

“I can end the contract if I want… right?” 

Included in every contract of sale, this 3-day cooling-off period is often missed by purchasers. This clause allows you to ‘cool off’ after making the purchase to re-evaluate your decision. However, it comes with penalty and conditions.  

A common condition is that you cannot use this cooling-off period if you purchased the property on auction day, 3 days before, or even 3 days after! The penalty for ending the contract is that not all your deposit will be refunded to you. Usually, 0.2% of the purchase price will be withheld from your deposit. For a $800,000 property, that’s $1,600!  

With increasing numbers of properties being sold through auction, make sure you don’t get caught up in the rush to make your offer. 

Can I move in on settlement day?” 

Most people assume that they can move into a property on settlement day. This is not necessarily true! The contract will indicate whether the property is leased out to tenants or vacant. If the property is subject to a lease, make sure you check the lease details to find out when you can move in!  

Will I be approved for a loan in time?” 

Contracts may not always be subject to loan. This means that if you are unable to obtain your loan for any reason, you must still proceed with the purchase. We recommend checking and requesting for the contract to be subject to loan so you may be able to end the contract if you cannot obtain financing. 

Did I do a proper inspection?”  

If you’re like us, you enjoy checking out properties you’re interested in purchasing. What most purchasers don’t realise is they are buying the property in the condition it is in as at the day of signing.  We recommend taking as many photos as possible of everything – decking, cooktops, hot water unit, fencing, wall stains etc.  

Most contracts have clauses stating that in signing, you agree that you have made proper inspections and you accept it in its present condition. Vendors may cause damage to the property before settlement that you may have to repair if you cannot show that it didn’t exist on signing day. 

“Are there any special conditions?” 

These conditions vary with each contract. The clauses are added by the vendor which can:  

  • Increase the penalty interest if you default on the contract; 
  • Prevent you from claiming costs if building regulations aren’t followed; and/or 
  • Add costs that you must bear if settlement is delayed. 

Do not sign a contract if you’re unsure of anything. Wealthsource Legal can review your contract and highlight these conditions, so you are clear on what you are agreeing to!