Things to be aware of before you exchange property sale contracts

Purchasing a home and land package in Australia is an exhilarating journey, but it comes with its share of paperwork and due diligence before you can raise a celebratory toast.

If you’re in the process of buying, it’s tempting to quickly sign the contract for your dream home and land package without a second thought. However, it’s crucial to scrutinise what you’re agreeing to.

Before you commit to a home and land package in Sydney or any other location, take a moment to familiarise yourself with the key aspects of exchanging contracts.

1. Review Your Contract Thoroughly

When purchasing a home and land package, you’re essentially acquiring a vacant block ready for construction or one that will be prepared for building soon. Typically, you’ll be signing two separate contracts: one for the land purchase and another for the construction work. Even though you’re paying one consolidated price for the package, these contracts are distinct.

For the Land-only Contract:

• Ensure you understand the conditions of the sale, including financing details and required inspections, along with the deadlines for completion.
• Verify that both parties’ names are correctly listed.
• Double-check the contract date and the land’s address.
• Be aware of the deposit amount and the deadline for its payment.
• Confirm the sale price and settlement date.
• Determine whether the land will be vacant at the time of settlement.
• Check if there’s a specific date by which you must start building your home.

Remember that the contract is a comprehensive document, covering items like taxation specifics and financial information. Depending on the sale, it might also include sections related to foreign investment approval and other variables. Read the contract meticulously and consider any additional clauses you may want to add.

For the Construction Contract:

The contract for building your home is referred to as a Home Building Contract/Agreement.

When purchasing a home and land package, you’ll need both this contract and the land contract mentioned above.

This construction contract is more complex than a standard land or home purchase agreement, as it spans an extended period due to the construction work involved. Refer to the checklist available on the Fair Trading NSW website to understand what to anticipate from a Home Building Contract/Agreement.

Ensure that your builder is licensed and insured and represents a reputable new home construction company with a strong track record. Review aspects like cost variations, builder warranties, and the consequences of contract termination. Some contracts specify a fixed price for the build, while others do not, so pay careful attention to this detail to avoid unexpected expenses.

2. Comprehend the Cooling-off Terms

There is technically a five-day cooling-off period before a contract of sale becomes ‘unconditional.’ However, this period is often waived in NSW with the help of a Section 66W certificate.

Before you sign as part of a purchase agreement, be aware that, in cases where Section 66W applies, the option to back out and reclaim your deposit is nearly non-existent. To safeguard your interests, arrange a building and pest inspection before your offer is accepted rather than afterwards.

While you may be able to negotiate a five-day cooling-off period, keep in mind that it allows the seller the same privilege. If either party has a change of heart during this time, a minor fee will be imposed.

3. Time Is of the Essence

Given the competitiveness of the Sydney property market, you’ll be expected to sign your contract swiftly after your offer is accepted. Allocate dedicated time in your day to focus on this task to prevent any oversight of critical details.

4. Seek Professional Assistance

Engaging a licensed conveyancer or solicitor to help you navigate the land package or Sydney house and land purchase contract is a prudent decision.

These experts possess the knowledge to thoroughly review documents, including plans and site specifications. They can identify potential issues, such as code violations for decks or swimming pools. Moreover, professionals can assist you in adding clauses to the contract and taking necessary steps to ensure that your builders are reputable and trustworthy.