Understanding a contract of sale

Signing a contract of sale is one of the most important stages when it comes to purchasing your home. Reviewing your contract before your sign it will help you understand what it contains and what you’re committing to. Here’s a guide to get you started.

What is a contract of sale?

A contract of sale is a crucial requirement when engaging in property purchases. Not only is it legal protection for both buyers and sellers, but it ensures transparency in the terms and conditions including financing, inspections and special requests.  

What are the key elements in a contract of sale?

• Name of Vendor and Purchaser – this identifies the seller (vendor) and the buyer (purchaser)
• Property Address – make sure the contract of sale accurately states the address of the property being sold/purchased.
• Purchase Amount / Contract Price – the agreed-upon purchase price for the property.
• Deposit Amount – amount of the deposit required and the terms associated with it.
• Property Settlement Date - what date will the property change ownership?
• Solicitor Details – contact information for solicitors representing both the buyer and the seller.
• Financing Arrangements – an explanation of how money is to exchange between parties, and what happens if there’s a breach of contract.
• Possession Status – this determines whether the property will be available for vacant possession, or if it is subject to an existing lease or tenancy.
• Special Conditions – this will cover any requests that have been agreed upon by both parties. For eg: ‘subject to loan approval’, or ‘subject to tenancy’ clauses.
• Building and pest inspections – this could help you cover any specific concerns about the property’s condition.
• Cooling off date – which specific date can you exercise your cooling-off rights, if applicable.

These elements help form the basis of a Contract of Sale and familiarising yourself with a contract of sale can ensure a smooth property purchase process. Appointing a solicitor or conveyancer, who can review the details for you, can make it easier to understand your contract and next steps.

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This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.‍