When a standard REIWA Contract of Sale is signed, all of the clauses in the Joint Form of General Conditions apply to the contract. We have summarised some of these key conditions below (applicable in Western Australia).
Deposit
A buyer is required to pay a deposit when the seller accepts an offer to purchase a property. The buyer must pay the deposit to the deposit holder at the times shown in the Contract. The deposit is generally paid to the Seller’s agent who deposits it into a Trust account. The Deposit holder will hold the Deposit until a party becomes entitled to it.
Parties entitled to receive the deposit is:
– The seller if the contract settles;
– The buyer if contract is terminated without default by the buyer;
– The seller if the Contract is terminated owing to the buyer default
Encumbrances
The seller sells the property free of any encumbrance except for a specified encumbrance and where the land is a strata lot, interests and notifications. Encumbrances include a Mortgage, easement, restrictive covenant, title restriction, caveat, memorial and rate encumbrance and includes any right an interest a person has in relation to the property. A Specified encumbrance is an encumbrance specified in the contract subject to which the property will be transferred.
Electronic Conveyancing
From 1 December 2018, all new eligible stand-alone transfers must be lodged electronically. Property Exchange Australia Ltd (PEXA) is the online platform for completing settlements.
Transfer documents
The buyer must arrange for the transfer to be prepared. The transfer is the instrument required to transfer the land to the buyer in a form acceptable for registration by Langate subject to signing by all parties.
Verification of identity
The Buyer and Seller must be identified in accordance with the verification of identity practice. The practice has 2 main requirements. The first is a person transacting on a property should be able to produce current identity documents preferably with photographs. The second is a visual certificate or face to face is required which involves checking that the photograph on the identity document is of the person being identified.
Place for settlement
Where the contract specifies a time and place for settlement, then settlement must occur at the time and place specified. With PEXA settlement won’t take place in a physical location but in a virtual office. If Foreign Transfer duty is payable settlement can’t take place through PEXA must take place at a physical location.
Delay in settlement
There is no penalty for a delay in settlement less than 3 business days. If its longer than 3 business days, interest becomes payable by the buyer and seller at a prescribed rate of 9% per annum from the day of settlement up to the day the settlement actually occurs. The interest will only become payable when the party not in default gives notice to the other party that they’re willing and able to complete settlement.
Inspection
The buyer is entitled to inspect the property and the seller must grant buyer access to do so within 5 business days before possession date. The purpose of inspection is to ascertain before settlement whether the property is in the same condition it was in immediately before the contract date. The buyer may only undertake 1 pre-settlement inspection unless they identify items that require rectification by the seller.
Possession and rent
Unless property is sold subject to a lease, buyer is entitled to Vacant Possession. Before possession the seller must remove all vehicles, rubbish and chattels other than the property chattels included in the contract. If the property is the sellers principal place of residence, the seller may remain in occupation til 12 noon on the day after settlement.
Rent
If the property is rented, the seller is entitled to all rent due up to and including the earlier of the possession date or settlement and the buyer is entitled to all rent due on and from the day after the date. Any rent paid to the seller that the buyer’s entitled to must be paid to the buyer on settlement or on possession.
Outgoings
Outgoing means all rates, taxes, charges (including fixed charges) and other similar expenses payable in relation to the property and if the land is a Strata lot, each strata contribution and any money payable periodically under a lease, license or other agreement. The seller is obliged to pay the outgoings up to and including the day of possession and the buyer becomes liable for the outgoings up to and including the day of possession.
Land tax
Land tax is an annual tax based on the ownership and usage of land owned at midnight on 30 June. Its levied in respect of the financial year immediately following that date.
Risk
Risk passing to the property passes from the seller to the buyer on the first of the following events:
– The purchase price is paid in full
– The buyer is entitled to possession of the property
– The buyer is given possession of the property
Electricity / underground power
If before the contract date the land has not been connected to the electricity supply, the buyer is responsible for the expense and connection to the electricity supply.
Sewer/Septic tank
When sewerage connection becomes available in an area, there’s an obligation on the homeowner to connect to the sewerage mains and to decommission any septic tanks or other sewerage apparatus.