What Is The Contract Process In Queensland?
Buying a property in Queensland is often different from other states so the purpose of this article is to summarise the process to help property buyers understand the steps involved. While buying at auction has its own set process whereby you are buying unconditionally on auction day, the purpose of this summary is to provide guidance on the contract process when buying a property listed for sale by private treaty.
Making an offer
Once you have found a property to buy, it is best to put your offer in writing because then the Real Estate Agent has an obligation to present your offer to the Seller. The most powerful way to do this is to ask the Real Estate Agent for a copy of the Contract of Sale.
The information that is necessary for a Contract to be completed accurately includes the following:
- BUYER – The Name must be the full legal name in which the property will be purchased
- BUYER’S SOLICITOR – Details of the conveyancing firm that will be completing the conveyancing for the purchase
- PURCHASE PRICE – The amount you will be offering to purchase the property for
- DEPOSIT – This is usually broken down into two parts:
- Initial Deposit – The amount payable once a contract is accepted
- Balance Deposit – The amount payable once a contract becomes unconditional
- FINANCE – Whether the contract will be conditional to obtaining final finance approval and if it is, then details of the number of days required for this approval must be completed
- BUILDING & PEST INSPECTION – Whether the contract will be conditional to a building and pest inspection and if it is, then details of the number of days required for this purpose
- SPECIAL CONDITIONS – Any other special clauses that you wish to insert (best to get legal advice about this)
- SETTLEMENT PERIOD – The number of days between acceptance of a contract and settlement.
If all of these particulars are provided on a contract that is signed by the buyer and presented to a seller, it is very easy for a seller to see the entire offer, and not just consider the purchase price as often the conditions that accompany an offer can influence a seller’s decision to accept a particular offer or not.
It is best to present your offer in Contract form so that the Seller has the opportunity to sign immediately when your offer is presented to them, which creates a legally binding contract, or alternatively, the Seller may choose to put forward a written counteroffer back to you to consider further. This is a powerful way to enter negotiations as each party can see very clearly what the particulars are in relation to the purchase.
Once your offer is accepted by the Seller, then the Real Estate Agent will date the contract and it then becomes legally binding. This is the time when the initial deposit will become due and payable. Usually, you will receive instructions from the Real Estate Agent in relation to where the deposit money needs to be transferred.
Queensland law provides a five business day cooling-off period when you sign a real estate contract for the purchase of a residential property (excluding sales by auction). This commences when the buyer receives a copy of the contract signed by both parties. If you wish to cancel the contract during the cooling-off period, then the seller may deduct a penalty of up to 0.25% of the purchase price from the deposit paid.
If a contract is entered into, conditional to finance, building and pest inspections or other special conditions, then these items must be actioned within the timeframe prescribed in the contract (often within 14 days but this can sometimes be longer or shorter because it is as negotiated between the parties).
You will need to book a building and pest inspector to complete the inspection on your behalf. Access is coordinated with the Real Estate Agent.
Your bank or mortgage broker will also coordinate the necessary steps to obtain final approval on finance if the contract is conditional to this. Sometimes this includes a valuation of the property, which again is coordinated with the Real Estate Agent.
Regular communication with your solicitor or conveyancer during this period is important to ensure you are complying with your obligations under the contract.
Once you are satisfied with the outcome of any conditions under the contract, your solicitor will notify the Seller’s solicitor that you are satisfied with the conditions and at this time your contract will become unconditional.
The balance deposit prescribed by the contract will become payable when your contract becomes unconditional. During this period final searches will be conducted to make necessary arrangements for settlement. The bank will liaise directly with the conveyancer to arrange the transfer of funds and to ensure settlement can be booked on time.
It is always important to conduct a pre-settlement inspection on the morning that settlement is due to take place to ensure that the property is empty and in the same condition as when you initially inspected it. If there are any problems with the condition of the property it is important to discover this BEFORE settlement – not after.
The property settlement is the final stage of a property purchase whereby the seller receives payment of the contract price and the buyer takes legal possession of the property. You can collect keys from the Real Estate Agent once Settlement has been completed as the property ownership has officially transferred at that time.
There are many stages in the contract process when purchasing a property in Queensland and this article has outlined them in detail. Of course, some contracts may be a lot more complex with special conditions and therefore legal advice is recommended in these circumstances.