If you’re about to start your journey up the property ladder, it is important to understand the key aspects of residential contracts.

This document covers all the details of your property exchange. When you sign, it will be legally binding, which is why you need at least some idea of what is included in the fine print.

Here’s an overview of what to look for before you sign a residential contract in Queensland and why you need a conveyancer/property lawyer to help you navigate the process.

1. Purchase price and payment terms

The first thing you’ll notice in any residential contract is the purchase price—how much you’re agreeing to pay for the property. The contract will also set out the payment terms, which include details such as the deposit amount and the dates when payments are due.

Make sure the payment schedule fits your financial plan and borrowing arrangement as missing a deadline could lead to penalties or even cause the sale to fall through.

2. Inclusions and exclusions

One common area of confusion during property transactions involves what’s included and excluded in the sale. Inclusions could be anything from appliances and light fixtures to built-in wardrobes. Exclusions, on the other hand, are items the seller will take with them, such as furniture or garden ornaments.

Make sure everything you expect to stay with the property is clearly listed as an inclusion. If something like curtains or blinds aren’t mentioned in the contract, you could end up disappointed when you move in and find them missing.

3. Cooling-off period

A cooling-off period is the specified number of days after signing the contract, during which you can change your mind and withdraw from the deal. The length of this period varies depending on where you live, but in Queensland it’s typically around 5 days.

During this time, you can reconsider your decision without facing hefty penalties or losing your deposit. However, you may still be liable for a small cancellation fee. Make sure you know how long this cooling-off period is and what happens if you decide to pull out.

This is a clause your conveyancer or property lawyer will review with you. The seller may want the cooling-off period waived, so ask your lawyer if this is a good idea.

4. Property description

The property description section of a residential contract provides important details about the home you’re buying. It includes information such as the size of the land, boundaries, and whether there are any legal restrictions, like easements or encumbrances.

Easements, for example, may give someone else, such as a utility company, the right to access part of your property. It’s important to understand these restrictions before you sign, as they can impact how you use the land in the future.

5. Conditions and contingencies

Residential contracts may include conditions and contingencies—certain things that must happen before the sale is final. For instance, you might want to have a building inspection done or secure finance approval before the contract is binding. If these conditions aren’t met, you should be able to withdraw from the contract without facing penalties.

These safeguards are there to protect you as a buyer, ensuring you’re not stuck with a property with major issues or that you can’t afford. However, be aware that the vendor may push back (this is why you need an experienced Queensland property lawyer on your side).

6. Settlement date

The settlement date is when the property officially changes hands. On this day, when the funds are deposited in the buyer’s account (usually by your lender), you’ll receive the keys to your new home. It’s important to ensure the settlement date suits your circumstances, particularly if you’re juggling the sale of your current home or need to vacate the place you’re in on a certain day.

Be mindful of any delays in securing financing or meeting other contract conditions, as this could push back the settlement date and disrupt your plans.

The settlement date can be negotiated before you sign the contract if you need more time than the standard 12 weeks. Ask your conveyancer from NPR Law what this involves.

7. Title and ownership

One of the most critical aspects of the contract is ensuring that the seller has the legal right to sell the property. The contract should guarantee that you’ll receive clear title to the property, meaning that no one else has a legal claim to it.

In most cases, your conveyancer or solicitor will perform a title search to confirm that there are no issues, such as unpaid mortgages or disputes over ownership.

8. Special conditions

Sometimes, there are special conditions written into residential contracts. These are additional requirements that must be fulfilled before the sale goes through. For example, you might agree that the seller must complete certain repairs or cleaning before the settlement date.

Make sure any special conditions are clearly written into the contract, so there’s no confusion later on. If the seller doesn’t fulfil these conditions, you may have the option to delay settlement, take action to ensure requirements are met or even pull out of the sale.

9. Warranties and disclosures

In some cases, sellers are required to provide warranties or make disclosures about the property’s condition. These might include details about any past repairs, known issues like termites or problems with plumbing or electrical systems.

These warranties and disclosures give you a clearer picture of what you’re buying so you can make an informed decision. Be sure to go through these carefully, as any undisclosed issues could become costly problems later.

10. Penalties for breach

Finally, the residential contract will include penalties for breach, which apply if either the buyer or seller fails to meet their obligations. For instance, if you don’t settle on time and pay the money you have committed to pay, you could lose your deposit or face financial penalties.

A final point; make sure the name you include on the residential contract matches what’s on your ID and loan document. Even a letter of difference can cause confusion on settlement day.