When signing a contract of sale to purchase a property, it is crucial that you understand if the contract is unconditional or conditional. This is to avoid unnecessary disagreement with the vendor or being locked in by the contract.
Once you sign an unconditional contract, generally, you are committed to the purchase of the property or face penalties such as forfeiture of your deposit and payment of damages to the vendor. Unless you are certain about the purchase, having made all reasonable enquiries regarding the property and receiving written approval of loan funds, you should avoid signing an unconditional contract.
The question is then, how do we make the contract conditional? Standard contracts of sale nowadays include a section for parties to allow the contract to be conditional on receiving finance approval, pest inspection and building inspection reports. These sections should be correctly completed so that the contract is conditional on satisfying these conditions before you are required to proceed with purchasing the property.
Apart from finance and inspection reports, contracts can be made conditional for other reasons provided the parties agree. It is recommended that you seek legal advice from your legal representative regarding any other conditions you wish to impose on the contract before signing the contract.
If the contract is conditional and you are unable to satisfy a condition, you may elect to end the contract and receive a refund of the deposit. In this case, you must ensure that suitable notice is served on the vendor to end the contract.
This information is intended as a guide only. For further information. We always recommend that you seek legal advice regarding a contract before signing it.
Have a question regarding your contract? Contact us at 03 9111 0078 or email us at info@scottlegal.com.au for any of your conveyancing needs.
Liability limited by a scheme approved under Professional Standards Legislation.
© Scott Legal 2021
