Purchasing a Property: 3 ways to exchange Contracts
Purchasing a property is one of the biggest decisions you will ever make. Did you know that there are 3 different ways to exchange Contracts for the purchase of property in New South Wales?
At Selvaggio Lawyers, our property lawyers have put together a comprehensive list of the 3 ways you can proceed to exchange on the Contract for Sale and Purchase of Land in NSW:
Exchange of Contracts at an Auction
If you are the successful bidder at an auction (or on the same day following the auction if the property is passed in) then you will sign the Contract after the auction has concluded. Exchange of Contracts will occur then and the purchase will be unconditional. The Contract cannot be subject to finance or bank valuation and you will be locked into completing the Contract from the date of the auction. You will need to ensure that you have carried out all of your due diligence on the property prior to the auction (such as obtaining your pest and building report, strata report and/or community title report, if applicable). You should also ensure that your solicitor has reviewed the Contract prior to auction and sought any requested amendments to the Contract prior to the auction.
Exchange of Contracts under a Cooling Off Period
If your offer to purchase a property is accepted the vendor may, through the Agent, state that they want you to exchange Contracts under a “cooling off period”. This cooling off period is 5 business days from the date of exchange of Contracts. If more time is required then this can often be extended by negotiation if required. When you exchange Contracts to purchase a property under a cooling off period you are required to pay 0.25% deposit to the Agent with the balance of the deposit payable before the end of the cooling off period (i.e. Before the end of the 5th business day after exchange).
During the cooling off period you (the purchaser) would need to obtain your unconditional loan approval from your lender (if obtaining finance), and undertake your due diligence such as obtaining a pest and building report and/or strata report or community title report (if applicable). If for any reason the due diligence is not satisfactory or if you simply change your mind about proceeding with the purchase, you have the ability to rescind the Contract before the expiry of the cooling off period, however if you do this you forfeit the 0.25% deposit already paid to the vendor of the Property.
For vendors exchanging Contracts under a cooling off period, they have no “cooling off rights” like a purchaser does and before agreeing to proceed on this basis, the vendor should be completely satisfied with the sale price, as although the purchaser can withdraw during the cooling off period and the vendor cannot.
Exchange of Contracts with a Section 66W Certificate
If your offer is accepted by a vendor another way to exchange Contracts is with a Section 66W Certificate. Normally a Sales Advice is issued by the Agent to the vendor’s solicitor and the vendor’s solicitor will then issue the Contract to your solicitor for review and approval. Similar to proceeding at an auction you (the purchaser) should obtain your unconditional loan approval (if obtaining finance), carry out all due diligence matters (such as pest and building report, strata report and/or community title report, if applicable) and ensure all required amendments are made following your solicitors review of the Contract prior to signing the Contract and proceeding to exchange on this basis. When you are ready to exchange you then sign the Contract and pay the full deposit. Your solicitor will then provide what is called a “Section 66W Certificate”. It states that there will be no cooling off period following the exchange of Contracts and has the effect of making the Contracts unconditional from the date exchange.
If you are about to purchase a property or would like to learn more about the ways in which to purchase a property then we can help. The Property Law team at Selvaggio Lawyers are always available to assist you. Contact us today on 02 9899 9677 to schedule a consultation.Back