The Potential Pitfalls associated with the Contract of Sale

You might think contracts of sale are a mere formality, only serving to shore things up after the deal has been done and the hands have been shaken. But don’t think all you have to do is sign’em and swap’em. The contract of sale for any property is a serious legal document, with potentially nasty consequences if you’re careless. The old maxim is caveat emptor, or “buyer beware,” and that goes for sellers as well: those entering into property transactions are expected to take responsibility for their own actions, and take reasonable care.

So if you don’t read the contract closely, or fail to make proper enquiries, don’t expect the law to help you out when things go wrong. If you’re inclined to dismiss such an argument as lawyerly scaremongering, you would be well advised to note the misfortunes that have befallen the careless in the past.

The terms of the contract

Every contract should include certain terms and information, such as the identity of the transacting parties, the details of the property and its condition, the agreed price, and the date of settlement. Most contracts of sale contain standard conditions of sale, the interpretation of which has been firmly established by precedent. For this reason, it’s most unwise to draw up a contract yourself. Without the certainty of these standard terms, you might not adequately convey your intentions.

The details of the property

Obviously, this is going to identify the property on sale. But purchasers, be aware that it’s your responsibility to check exactly what property you’re getting. That’s what the High Court told a couple of disappointed buyers recently, who found the agent’s description of the property didn’t match what they had actually bought. Instead of the property extending to the edge of the river, as a map on a brochure offered by the agent appeared to show, the couple found they didn’t have title over the edge and so couldn’t construct a jetty??

The details of all properties in Queensland are recorded in official government register of land, so the buyer is expected to go and check them to see what they’re getting and make sure there aren’t any hidden nasties on the land, such as a demolition order on the property, etc. The register will also display any other interests in the land, such as lessees or mortgagees. If you don’t check the register, your purchase of the land may be challenged. You may not be able to legally acquire the land, or may only own it subject to these other interests.

Vendors, however, also have a duty to disclose any defects they are aware of, if these might influence the purchaser’s decision to enter into the contract. If you don’t divulge, and something comes out later, the purchaser could be able to have the transaction set aside.

Once you’ve entered into a contract

Although this can’t pass title of the property in law (the new owner has to be registered), the purchaser will still be able to sue to have the property handed over. So vendors should be aware that once they have signed a contract, they’ve committed themselves.

Purchasers, however, still have limited rights to rescind, or pull out of the contract. In Queensland, statue allows for a five-day “cooling off” period over residential property, in which the buyer may change their mind - but this does not apply to properties bought at auction.

Avoiding pitfalls

If you’re starting to worry about all the things you might be letting yourself in for when you sign a contract of sale, relax. There is a simple way to make the process less hairy: consult an experienced property lawyer. At Collas Moro Ross, we can spot the hidden dangers, we understand the legalese, and we’ll carry out any necessary checks. So just because there are pitfalls associated with contracts of sale, it doesn’t mean that a handshake is a better bet. With the help of a lawyer, that contract will give you legal certainty.

Back to Articles