At what point can a property be considered sold?
It doesn’t seem long ago that a handshake sealed the deal and both parties regarded the matter as final, even if they had second thoughts afterward.
Unfortunately, that’s rarely the case these days.
So, at what stage can you regard your property as “sold” or “bought”?
The legal answer is not until the contract is complete or “settled”. But let’s go back a bit for an overview of the process.
For properties being sold by private treaty, a potential purchaser makes an offer on the property, and the vendor (the seller) accepts the offer if they agree. This is the “handshake phase”, so to speak. Our advice at this stage is for both purchaser and vendor to remain cautious as the sale is a long way from being a done deal!
The details of the sale are then provided to the vendor’s and buyer’s solicitor/conveyancer so they can finalise the contract to everyone’s satisfaction. This can be a precarious time as the sale hangs in the balance – at this point either party can withdraw without penalty.
The purchaser will pay the deposit (usually 10% of the purchase price) into the agent’s trust account as the next step, but this does not secure the sale.
Each party then signs the contract and the legal representatives “exchange” the contracts. In nearly all cases, this is time to celebrate and plan for the post-sale future as significant penalties apply if either party does not complete the contract. But the property is still not legally sold.
The contracts are usually completed 42 days after exchange; however we have seen settlements occur more than 12 months later on some rural properties. This is the point when the property officially changes ownership.
As the saying goes, it’s not over until the last whistle. Whether you are selling or buying, don’t get too excited at the handshake stage. Many sales have fallen over after there has been an offer and acceptance, so it is best to keep quiet and concentrate on ensuring your legal representative gets you to the exchange of contract stage as soon as possible.
by Michael Guest in Latest News
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