Preparing the Contract
of Sale - the Seller must 'bare all'
This information has been provided by
Australian law firm, Australian Conveyancing Services and is applicable in New South Wales
only.
There is complex legislation in force in NSW requiring vendor disclosure in any contract for the sale of residential property (including strata units). The purpose of the legislation is to have a contract with all relevant particulars and attachments at the point of sale, to shorten the time for a formal exchange of contracts, once a buyer is located.
Before you may legally list a residential property for sale (namely, invite offers or advertise), privately or through an agent, or auction a property, you must prepare a draft listing
contract. That listing contract must have attached to it the following documents, relating to the land:
A zoning certificate (obtainable from the Local Authority);
A drainage diagram plan (obtainable from the authority responsible for water, sewerage and drainage);
A copy of the title (and, in addition, for strata lots, a copy of the title of the common property) and registered plan (obtainable from the Department of Land & Property Information);
A copy of any document which burdens the title (easement, restriction on user, covenant) obtainable from the Department of Land & Property Information);
Failure to attach any of the required documents will mean that the purchaser has the right to rescind the contract and recover the deposit within 14 days of the exchange of the contract.
The legislation also imports into any contract a prescribed term permitting rescission of the contract and recovery of the deposit by a purchaser in the event of any encroachments (except dividing fences) by or upon the property. To avoid the risk of loss of a contract, it is therefore most important to ensure that there are no encroachments by or upon the land (discoverable by survey by a licensed surveyor), or if there are, that they are clearly disclosed in the contract, and the purchaser is precluded from objecting.
Finally, the legislation imports implied terms in the contract by the vendor that the land is not:
To ensure that your contract is binding, it is important that you disclose to the Buyer in the contract any matters of which you are aware about the property. Consider also attaching a survey certificate and building certificate to guard against a termination by the Buyer should they discover an encroachment by or upon the property, or improvements having been erected without approval.
subject to any adverse affectation (defined to cover a wide variety of matters, basically proposals by Governmental Authorities affecting the land); or,
there is no matter relating to the improvements that would justify the making of an upgrading or demolition order by the Local Authority (being issues relating to the erection of improvements without approval, or in breach of certain acts).
