Learn the ins and outs of a contract while you are selling a house.
Whether you are a buyer or a seller, you need to educate yourself in order to know your rights. Being familiar with your rights makes the trade process easier and smoother. A buyer needs to know what he needs to avoid and be careful of. You, as a seller, also have that option. It helps you avoid critical mistakes that might cost you some financial repercussions. Therefore, you should have an expert on board to clarify the legalities and the requirements you need when selling a house.
One of the things that you should be aware of when you want to sell your property is the contracts of selling a house. Aside from the land title, are there any other documents that you need to get ready before you put your house up for sale in the market?
Contracts can be a headache. Just thinking of all the legal jargons you have to endure reading and understanding is enough to put someone in a stressful situation. However, you cannot run away from this fact when you are selling your house.
The laws might be different from state to state, but you still have to undergo the correct processes when selling your property. And one of these processes requires you to prepare a contract with the help of your solicitor. There are different types of contracts which can be categorized into two parts – the relevant contract and the non-relevant contract. The difference between these two types of contracts is the provisions included in them.
If a contract is considered a relevant contract, a cooling off period is applicable. It also states the repercussions and the amount of penalty should the contract be terminated during the cooling off period. A relevant contract also states that if the seller is a property developer and the buyer suffers monetary loss while dealing with the seller, he cannot make a claim.
An irrelevant contract, on the other hand, is not subject to a cooling off period. Furthermore, it recommends that the buyer should seek independent legal advice.Back to top
What’s in a contract?
When you decide to sell your house, the first thing that will be requested from you is to prepare the contract which is subject to inspection by would-be buyers. The contract must bear your name as the owner, the terms and conditions of the sale and the things which are included in the sale such as lighting and fixtures.
Aside from the contract, you might also be asked to supply some documents and warranties that the buyer might want to examine. The absence of these documents and warranties give the buyer a right to cancel the contract and get a refund for his deposit within 14 days from cancellation.
- Required documents
- Zoning certificate obtained from your local council
- A sewer or drainage diagram which indicates where the sewer main is located. This plan can be obtained from your local authority in charge of the drainage system.
- A comprehensive title search showing any interests or restrictions, such as easements and covenants, on the property.
- Required warranties
- The property for sale is not affected by adverse matters, such as proposals from the government that might affect the property
- The zoning certificate shows the real status of the property
- There is no matter relative to the development that would validate a demolition or upgrading order.
Mortgage and insurance
If you still have remaining balance from your mortgage, it should be settled otherwise, the loan agency will not release the title documents. Your solicitor will take care of this process by requesting a discharge of mortgage upon settlement. Your loan company will then prepare the discharge including the total payout you need to pay from the proceeds of the sale.
In terms of insurance, your solicitor will advise that you maintain the insurance until settlement since the property is still under your name. If your policy needs to be renewed before the final settlement, you can renew the policy and request for rebates after.
Conditions of contract
When you and the buyer decide to exchange contracts, there are certain terms and conditions in the contracts that define your rights and obligations. These terms and conditions can be divided into two, namely general conditions and special conditions.
General conditions are common provisions in all types of contract which basically includes the loss or damage before a settlement is made, steps to be taken and penalties incurred if there is a breach of contract and the method of payment.
Special conditions, on the other hand, are specific requests made by the buyer or the seller that includes a wide range of matters such as house repairs, building inspection, or penalties for delays.
There is no limit how much special conditions or extra clauses there are in your contract. However, these are still subject to agreement with your buyer. More so, these special conditions should be put into writing to avoid any misunderstanding in the future.
You might still have some questions regarding the contracts and the documents you need to prepare before selling your house. The best way is to talk to your solicitor to give you advice what to do and clarify things that you do not understand.Back to top