Buying a property is a major financial investment. Whether it is your first home, an investment property or one of several properties in your portfolio, the commitment and impact of signing on the dotted line is not to be underestimated.
How do I make an offer?
Once you have decided on a property you would like to make an offer on, you might contact the listing agent to make a verbal offer, or you might email an offer through. The agent will need to present all genuine offers to the vendor for their consideration. To do this, the agent will send you a contract of sale and s32 to sign - by signing these you are making an offer.
In order for your offer to be accepted and legally binding, both you and the vendor will need to sign a contract and s32 statement. The contract will contain the following key terms of your offer:
the purchase price
the deposit payable (usually 10% of the purchase price)
the settlement date
any conditions you may wish to include - most commonly conditions making the contract subject to approval of finance and or the results of a building and pest inspection but you may wish to include other conditions such as a condition making the sale subject to the sale of your home.
When is my offer legally binding?
Once you and the vendor have signed and dated the contract of sale and s32, you are both legally bound by the terms. Unless you end the contract in reliance on a special condition such a finance or building and pest condition, you must complete the settlement or you risk losing the deposit you paid, and the vendor has the right to sue you if they end up re-selling the property at a loss.
What if my finance does not get approved?
If the contract contains a finance condition, you may terminate the contract and your deposit will be refunded if your finance is not approved by the due date specified in the contract but only if you follow the exact procedures set out in the contract terms and ensure notice is served within the time-frame specified in the contract (usually within 2 days from the due date for approval of finance). If you miss this date you lose the right to end the contract and risk forfeiting your deposit.
What if there are problems with the building and pest inspection report?
Most contracts will generally only allow you to end the contract if the reports show major structural defects or a live pest infestation affecting a structure on the property. Most people don't consider the wording of these conditions and the limited circumstances that must apply in order to end the contract until they have to rely on them.
If the inspection reports show problems with the property that may be relatively costly to fix (including the presence of combustible cladding, asbestos or other issues) but these problems are not ‘major structural’ defects you will have no right to terminate the contract.
Before you sign the contract you may wish to consider negotiating the inclusion of a special condition drafted by your lawyer or conveyancer that will ensure you can end the contract if you are not satisfied with any aspect of the building and pest inspection reports.
Before you make an offer
Before you make an offer on a property, it is a good idea to:
Ensure you have pre-approval for finance
Get legal advice on the contact and s32 before you sign
Consider the conditions you would like to include specific to your circumstances (subject to finance, building and pest inspection or a condition making the contract subject to the sale of your current home if necessary)
Have a building and pest inspector lined up and ready to go
All information provided is general in nature and does not constitute legal advice, nor is it intended to be taken as legal advice. While all care is taken to ensure information on this website is accurate and current, we make no warranties as to the accuracy or reliability of any information provided. Users of this website must make their own inquiries and must seek their own legal advice specific to their own circumstances and not act or rely on any of the information on this website.