Selling Property

If it is intended to avoid delays in selling a property then the contract should not be drafted in such a way that it is so one sided in favour of the vendor that purchasers are reluctant to agree to its terms. Of course the contract should provide the vendor with sufficient protection without loading the document up with unnecessary or onerous special conditions. Some contracts for sale of land can be seen to be drawn with an excessive number of special conditions most of which are heavily biased to the vendor however this often leads to delays in getting the contract exchanged while the purchasers attempt to negotiate out the unfair terms. The delay in getting to exchange increases the chance that the purchaser will lose interest in the property.

Potentially costly problems can arise when a property is listed by more than one selling agent. If not handled properly the question of agency can resolve in the vendor being liable for paying more than one sales commission. To avoid the problems appropriate terms must be included in the contract for sale and appropriate enquiries made before exchange of contracts.

The time between the vendor and purchaser reaching agreement on price and the Lawyers exchanging contracts can be a worrying time for both vendor and purchaser. It may be in your best interest that this period be kept to a minimum to reduce the risk of the other party electing not to proceed. The time between exchange of contracts and completion is normally six (6) weeks however this is completely negotiable between the vendor and purchaser.

Normally if you are putting your property on the market with the intention of purchasing another property then we recommend that the completion period be specified as either ten (10) or twelve (12) weeks in order to improve your chances of finding a new property before completion of the sale of the property you are selling.

If you are selling a property that is not residential then it is crucial that during the negotiations you are aware of whether you are negotiating a GST inclusive or GST exclusive price. In fact it is best that you clearly establish your GST liability before deciding whether to put the property on the market, and certainly before you decide on the asking price.

Generally you will improve the chance of a smooth sale if you make appropriate disclosures about the property in the sale contract. The general principle is that once contracts are exchanged the purchaser cannot make objections or claim compensation in relation to anything that is disclosed in the contract. For this reason you would be advised to disclose in the contract matters such as improvements that were constructed without Council approval, fences that are a long way off the boundaries, swimming pool fencing that does not comply and any favours you may have done for your neighbours such as allowing them to lay drainage pipes through the land.

Generally purchasers will obtain their own pest and building reports on the property prior to exchange of contracts. However if you have regularly had pest inspections it may be useful to provide the selling agent with copies of the pest inspection certificates. It is not appropriate however that these documents be included in the contract for sale.

If you are selling a property that is not your principal place of residence then you should ask your accountant to determine your liability for land tax, capital gains tax and GST as these will greatly affect your net return from the sale.

If you are selling a property that has a tenant then you must consider whether you wish to sell with vacant possession or subject to the tenancies. Some properties sell best with a tenant in place with a long term lease. For example commercial premises and factories. On the other hand residential properties are generally more likely to be attractive to a wider range of prospective purchasers if they are being sold with vacant possession.

When you decide to sell your property you should at that time decide on the list of inclusions. Inclusions can be divided into fixtures and fittings. Generally fittings must be taken away from the property by you prior to completion unless they are specified in the contract as inclusions. On the other hand fixtures must remain at the property unless they are specified in the contract as exclusions.

Prior to signing an Agency Agreement with the selling agent you should consider carefully the terms of the Agency Agreement including the amount of commission payable on the sale, whether the property is to be sold by auction or private negotiation through the agent, the amount to be paid to the agent as a marketing budget and the ways in which that amount will be spent. You should also consider the appropriate term of the "exclusive agency period".

Normally the deposit paid by the purchaser on exchange will be retained by the selling agent in their trust account pending completion. In appropriate circumstances you may be able to negotiate release of the deposit to you prior to completion however this is normally only agreed to on the basis that you will only use the deposit as the deposit on the purchase of another property within in New South Wales.

The prospective purchaser may ask you whether you will accept a deposit bond or bank guarantee in lieu of a cash deposit. You may also be asked to accept a deposit in an amount of less than 10% of the purchase price. In these cases appropriate special conditions should be added to the contract.

You may be asked to allow the purchaser to have access to your property prior to completion. If the property is vacant you may be asked to allow the purchaser to move in or commence refurbishing or alterations. You may also be asked to allow the purchaser's tenant to move in. Generally it is our recommendation that the purchaser not be given any access to the property at all prior to completion except for a final inspection shortly before completion.