Key Clauses That A Property Sale Contract Must Have
The housing market is expected to grow to 2.75% and 3.5% in 2020 and 2021, respectively. This is the right time to contact a conveyancer and invest in the hot property market before it becomes too expensive to do so. A conveyancer will help you find the right property at the right price. A conveyancer will also handle the paperwork on your behalf, including the property sale contract. Unfortunately, this is where new property investors go wrong since they don't bother to look at the contract agreement. Part of the reason you should go through a contract is to confirm whether it contains these three important clauses. Read on.
Reservation Agreement -- Property purchase agreements between a buyer and seller don't always go according to plan. Either party can pull out of the contract at any time, but it leads to loss of time and money. Therefore, it is important to protect yourself from such eventualities. The presence of a reservation agreement in a contract is enough to protect your interests. While a reservation deposit is not new to buyers, a reservation agreement commits both parties. It means a seller and a buyer have to contribute towards the reservation deposit pot. Any party that pulls out of the transaction for a trivial reason will forfeit the reservation deposit. A contract without a reservation agreement gives a seller the leeway to pull out of the sale without consequences.
Cooling Off Period -- Regretting the purchase of a product is not new in business transactions. It happens even in property transactions. The phenomenon is called buyer remorse. However, it is one thing to regret buying a couch and another to regret purchasing a house. Both are at different levels, primarily because of the amount of money involved. A reasonable contract should include a cooling-off period clause. It is a two-day buffer period from the date of purchase that gives a buyer time to think about their purchase. You can change your mind within these two days, but the seller will charge you a fee.
Seller Assist Clause -- Closing costs are expenses a seller and buyer have to incur to get a deal done. The charges can range from title search fees and transfer taxes to title insurance. Sometimes property buyers cannot fund these expenses. Notably, most sellers don't have a problem absorbing these costs, but the buyer has to put it as a request through a seller assist clause. However, you need to be careful about the terms since seller assist is considered a form of credit by the seller.
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