How serious should the vendor take the vendor disclosure obligations and the contract of sale?
The preparation of a contract of sale and the vendor disclosure material requires just as much careful planning and consideration for the vendor as the due diligence process requires for the purchaser.
For many years, it has held true that the greater the effort and consideration applied to the drafting of the contract and vendor disclosure material, the easier the conveyancing process shall be.
A contract of sale cannot be signed by a purchaser until the Vendor Statement has been completed. As some information can take up to 2 or 3 weeks to be received, we strongly encourage our clients to commence the preparation of the mandatory disclosure material as soon possible, so that any issues involved with your sale can be considered proactively. If a purchaser is required to wait several weeks for the Vendor Statement to be completed, it is possible that they purchaser may decide to buy another property.
The sale process of First Point Legal & Conveyancing Wodonga encourages clients to identify the issues which require careful consideration.
Failure to properly satisfy the vendor disclosure requirements can have severe consequences. In many instances the purchaser may be able to avoid the contract. In some instances, civil penalties of up to $10,000.00 may apply.
In the event a purchaser is able to avoid the contract, due to the vendor’s failure to comply with the vendor’s disclosure requirements, then the selling agent is still be entitled to the agent’s commission.
What other important issues should be considered before selling?
Other important considerations include but are not limited to the following issues:
- Tax implications which may arise from the sale i.e. GST and Capital Gains Tax.
- Selling agent’s fees. Does the fee include GST and/or advertising costs?
- Mortgagee’s discharge of mortgage fees.
- The time required by your mortgagee to discharge the mortgage. Usually a vendor will not submit the discharge of mortgage request to their bank until the point in time that the purchaser obtains finance approval. Therefore, if your mortgagee requires, for example, 28 days to discharge the mortgage, is there sufficient time between the date that the contract becomes unconditional and completion of the contract?
- Which goods are to be included in the contract and which goods should be marked as exclusions? Disputes often arise between the parties to a contract when there is a misunderstanding about whether garden ornaments, built in barbeques, garden sheds and dishwashers are or are not included in the sale.
- What settlement date is appropriate? Moving homes takes many clients a lot longer than expected. Vendors should ensure that they have sufficient time to move out of the dwelling.
When should a vendor discuss the sale of their property with their mortgagee?
Before signing an agency authority, a vendor should discuss the proposed sale of property with their mortgagee, especially if the vendor has more than one property acting as security for a loan.
The reason for this is that the mortgagee may not be satisfied with its position after a property is sold and may refuse to prepare the discharge of mortgage. This would result in a vendor being liable for breach of contract and liable for an agent’s commission.
Mortgagees quite often charge discharge of mortgage preparation fees and legal costs which a vendor may not be aware of.
It is important to ensure that after the payment of outstanding rates and charges, selling agent’s fees, legal costs that the balance is sufficient to discharge the mortgage.
How much of a deposit should a vendor demand from a purchaser?
The deposit is the amount which the purchaser will forfeit in the event they substantially breach the contract and fail to remedy that breach.
Historically all vendors would demand that a 10% deposit be paid by a purchaser upon the exchange of contracts.
In the last 5 years, it has become more common for vendors to accept a 5% deposit. The reason being that many purchasers are able to borrow 95% of the purchase price and/or whilst the purchaser may be asset rich they may also be cash poor and therefore unable to pay more than a 5% deposit.
Whatever deposit amount the vendor accepts, it is important to keep in mind that in the event the purchaser substantially breaches the contract and fails to remedy the breach, then the selling agent is still entitled to payment of commission. Subsequently in most instances if a 5% deposit is accepted upon exchange then in the unlikely event that the purchaser breaches the contract and fails to remedy that breach, the balance remaining for the vendor is very small.
What condition is a vendor required to leave the property on the completion date?
Generally, the contract of sale requires a vendor to leave the property in the same condition as the property was when it was sold, subject to fair wear and tear. There is no obligation imposed upon the vendor to professionally clean the dwelling and/or the carpets, unless there is a special condition in the contract requiring for this to occur.
On the basis that the vendor is required to provide the purchaser with vacant possession, then all items must be removed from the property.
What standard fees do First Point Legal & Conveyancing Wodonga charge?
Our standard fee estimates are as follows:
Victoria Sale Matters
Sale of a dwelling: $1,100.00 (including GST and standard disbursements)
Sale of a residential block of vacant land $990.00 (including GST and standard disbursements)
Sale of a residential dwelling by auction: $1,200.00 (including GST and standard disbursements)
Sale of rural property: $1,200.00 to $1,400.00 (including GST and standard disbursements)
New South Wales Sales
Sale of residential dwelling: $1,287.00 (including GST and disbursements).
Sale of residential vacant land: $1,187.00 (including GST and disbursements)
Sale of a residential dwelling by auction: $1,387.00 (including GST and disbursements)
Does First Point Legal & Conveyancing Wodonga charge a fee for the preparation of a Vendor Statement (Victorian Property) or Listing Contract (NSW property)?
Unless the property is sold by auction and subject to our usual standard terms and conditions, First Point Legal & Conveyancing Wodonga does not charge professional fees for the preparation of the Vendor’s Statement (Victorian Property) or Listing Contract (NSW property). We provide this service as part of our commitment to our long-term relationships with our clients.
In the event the property is not sold within 3 months, we will issue an invoice for the cost of the disbursements required for the preparation of the documents. This ranges from $100.00 to $200.00 depending upon the location and nature of the property.