Buying A Home -
The Contract For Sale Of Land

The contract is a legally binding agreement between you and the vendor, and contains all of the important information, about the home which is needed, to ensure you become the legal owner.

The contract also contains conditions of contract, which states what happens if there is a problem arising between you and the vendor, when buying a home, and how other things are to be done. These conditions are very important, especially if there is a dispute.

At law, a contract must contain certain information if it is to be legally binding. If all the information, as required by law,  is not attached, it might mean that you, as the purchaser can get out of the contract, if you have to.

SO WHAT IS IN THE CONTRACT?

The Contract contains the following information:

• The address and legal description of the home you are buying, and the names of the vendors.

• The number of days from the date of exchange (the date on the contract), until when you have to hand over the money, called settlement. Normally in NSW, it is 42 days, but you can ask the vendor to change this, or even nominate an agreed upon date, when buying a home, before exchange of contracts, as long as you and the vendor agree. This date can also be varied by agreement after exchange of contracts.

• The inclusions, and, any exclusions in the home you are buying.

• The sale price and deposit payable on exchange of contracts for the home you are buying. When buying a home, a deposit is usually 10% of the purchase price, and is forfeited if you default on the contract. You might also be liable for other damages if this was to occur.

• Whether you have to pay GST, or land tax. Even though when buying your home, you will not be liable for land tax, because you are entitled to an exemption, if the contract calls for it to form part of the purchase price or to be adjusted on settlement, you will have to pay a percentage of the land tax payable, if the vendor is liable to pay land tax on that property.

• Land tax is payable over a calendar year,so, if you complete buying your home on June 30, you would be liable for 6 of 12 months, or one half of the assessed land tax to be paid by the vendor on that property.

• If the land tax is not paid, you, as the land owner is still liable for any unpaid land tax, as it always owed by the owner of the land, even if you are entitled to an exemption. When buying a home, it is important this issue is resolved.

• The title search. This is an important document, as it describes who owns the home you are buying. It provides a legal description of the home called, a folio identifier.

• A folio identifier is the identification of a specific property by describing it as a lot number in a deposited plan. In NSW every subdivision is registered as a deposited plan which is allocated a specific number.

• The title search also notates if there are any covenants, easements or other documents which affect the land and ownership. These documents must be attached and they describe the affect they have on the home and its land.

• The Deposited plan which will show the lot you are buying. In NSW, land is described as lots, and each lot will belong to a specific plan number, known as a deposited plan. Usually, there will be a number of lots, depending on the number of lots when the property was first sub-divided. The area of the land will be shown on the lot, seen in the plan.

• Council zoning certificate. It provides a cross reference by the street address to the folio identifier, and provides important information about the zoning of the land, and other affects on the land from the Council perspective. If you have plans to do building or something similar, for the home you are buying, this certificate can provide important information. Ask the solicitor or residential conveyancer when home buying for advice on this document.

• Sewer diagram, which will show the main sewer line in regard to the property. If the sewer line goes through the property, it may have an impact if you want to build something near it.

• Conditions of contract, which are standard throughout NSW. In addition you will find any special conditions of contract which the vendor has inserted to cover certain situations.

It is rare for a vendor to agree to variations to any of the standard conditions of the contract. Usually this is not so in regard to other conditions of contract which have been inserted by the vendor or the solicitor or residential conveyancer.

The wtitten contract contains a wealth of information, and is an extremely important document. You should get proper advice on its contents.

Buying a home can be a stressful experience.

Let the professionals carry the burden.

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