The legal stuff + the signatures
Let’s take out the intimidation. Understand the important stuff.
In NSW, there are 2 ways to exchange contracts: agent exchange or solicitor exchange.
- This happens where the buyer signs the contract with the agent and pays a minimum deposit of 0.25% of the purchase price.
- The vendor also signs the contract.
- Once both parties have signed the agent then exchanges the contract by dating it.
- At this point the seller cannot pull out or sell to another party (i.e. no possibility of ‘gazumping’).
- The buyer however has a 5 day cooling off period in which to do their due diligence (i.e. pest and building reports, solicitor checking the contract, finance valuation if required).
- If the buyer withdraws from the sale during the cooling off period, they will forfeit 0.25% of the purchase price.
- Please note: in this instance, the buyer’s solicitor will still review the terms of the contract prior to exchange.
- When this occurs, the agent will forward the buyers details to the seller’s solicitor to prepare the contracts.
- Once received, the buyer’s solicitor will usually review the contract, organise any required inspections and finance arrangements.
- Once due diligence is complete, the buyer will sign the contract with their solicitor and forward back the seller’s solicitor ready for exchange. In this situation, no deposit is paid until exchange of contract.
- In the instance that another offer is made, the agent, by law, must present other offer to the seller, even if they have already accepted an offer. The owner is entitled to ‘Gazump’ the first buyer as contracts have not been exchanged.