What to expect when you’re expecting … to sell a property
30 Oct 2018
By Amanda Brady, Registered Legal Executive, Aspiring Law
Following on from last week’s blog exploring some of the key considerations when buying property, this time we’re looking at some of the important factors vendors have to stay across.
Before you sign
Talk to us before you sign an agreement to sell your property. You have obligations to the purchaser under the agreement that you need to be aware of.
- First up, will you be receiving sufficient funds from the sale to cover the likes of:
- Any loans you may have to discharge the mortgage (if any)?
- Your tax obligations (if any)?
- Commission to the agent?
- Any outstanding rates or other outgoings (e.g. water and/or body corporate levies, disclosure statement costs)?
- Legal costs?
Secondly, is the settlement date realistic:
- To enable you or your tenants (refer below to “Existing tenancies”), if any, to vacate the property in time so that vacant possession of the property can be given to the purchaser (if required) on the settlement date?
- Does the selling entity (trust, company, individual(s)) have an IRD number? If not, is there enough time to obtain one before the settlement date?
Some key factors you need to be aware of if the purchaser has conditions to meet in the agreement:
- The purchaser (via their solicitor) has up until the date and time (if specifically noted) of the condition date to confirm the condition or otherwise. The purchaser is not obliged to confirm a condition before expiry of the condition date.
- If the purchaser does not confirm a condition by the due date and time, you may cancel the agreement.
- The agreement remains live until either party cancels it, when they are legally entitled to do so (for example, non-fulfilment of a condition by the due date). Important: Talk to us before entering into another agreement to make sure the prior agreement is not still active.
- The LIM condition is covered under the General Terms of the Agreement. Unless otherwise specified, the condition is due 15 working days (excludes weekends and public holidays) from the date of the agreement.
- The building report condition is also covered under the General Terms of the agreement. Unless otherwise specified, the condition is due 10 working days (excludes weekends and public holidays) from the date of the agreement.
The deposit (if any) is usually paid to the agent who holds it as stakeholder for the statutory period of 10 working days. The deposit may be released earlier if both parties agree to its early release. If the property is part of a subdivision where title has yet to issue, the deposit will be held in trust until issue of title.
If the property is a “unit title” – for example, part of an apartment complex – there are further special considerations, including:
- You are obliged to obtain and provide to the purchaser a Pre-Contract Disclosure Statement at your cost. This is to be provided to the purchaser before they sign the agreement.
- The purchaser may request an Additional Disclosure Statement at their cost. The statement must be provided within five working days of the request. You may be required to pay this cost up front to ensure the statement is released by the Body Corporate and provided to the purchaser within the statutory period.
- You are also obliged to obtain and provide a Pre-Settlement Disclosure Statement to the purchaser at your cost. Unless you advise otherwise, we’ll obtain this statement on your behalf to ensure the document is provided to the purchaser within the required timeframe before settlement date. You may be required to pay this cost up front to ensure the statement is released and provided to the purchaser in time.
If the property you are selling has existing tenants, you need to consider whether the tenancy is a fixed term or periodic tenancy and give relevant statutory notice of the sale to the tenants.
- If the property is a fixed term you cannot cancel the tenancy before the expiry of the fixed term, therefore you cannot give vacant possession to the purchaser, and the property must be sold with the tenancy in place. You are still required to give the tenants notice of the sale of the property and advise other details.
Things we need to know
To help us to provide the best possible service to you, please let us know:
- If you receive a back-up offer for the property.
- If the property is tenanted.
- Your IRD number(s) and tax residency status.