March 7, 2022

Draft Contract Buying a House

Draft Contract for Buying a House: Understanding the Key Points

Buying a house is one of the most significant investments you will ever make in your life. It is a complex process involving multiple steps, and one of the most crucial documents involved in the process is the draft contract. A draft contract is a legally binding document that outlines the terms and conditions of the purchase agreement between the buyer and the seller. In this article, we will discuss the key points of a draft contract for buying a house.

1. Property address and description

The first thing you will find in the draft contract is the property address and description. It should include details about the size, location, and boundaries of the property, as well as any fixtures and fittings included in the sale. You should also check that the details match what you viewed during your property inspections.

2. Purchase price and payment terms

The purchase price is one of the most important terms in the draft contract. It should include the total amount to be paid, the deposit amount, and the payment schedule. Make sure that the payment terms are clear, and you understand when and how much you need to pay.

3. Title and ownership

The seller should have a clear title to the property, meaning they have the legal right to sell it. The draft contract should state that the property is freehold or leasehold, and there should not be any outstanding loans or legal disputes attached to it. If there are any restrictions, such as easements or covenants, they should be clearly stated in the contract.

4. Conditions of sale

The draft contract should outline any conditions that need to be met before the sale can be completed. For example, the contract may be subject to finance, building inspections, or a satisfactory pest inspection. You should be aware of any conditions and make sure they are met within the specified timeframe.

5. Settlement and key dates

The draft contract should have a settlement date, which is the date when the property becomes legally yours. This date should be agreed on by both parties, and it is essential to ensure that everything is in place to complete the sale by that date. You should also be aware of other key dates such as the date for inspection reports and loan approvals.

6. Cooling-off period

In most states in Australia, there is a cooling-off period of three to five business days after the exchange of contracts. During this time, you can change your mind and withdraw from the contract without penalty. However, if you decide to withdraw within this period, you will forfeit a portion of your deposit.

In conclusion, a draft contract for buying a house is a legally binding document that outlines the terms and conditions of the purchase agreement. It is essential to read and understand the contract thoroughly before signing it, and if you are not sure about any of the terms, seek professional advice. Remember, buying a house is a big investment, so take your time and make informed decisions.