Buying a house in Queensland — contracts and you
There’s a lot that happens before you actually decide to buy a house. The decision to make a purchase in the first place, thinking about what your needs are, and then actually going out and finding somewhere that makes your heart sing — or at least checks most of the boxes — is daunting. But once you’ve committed and found a property that speaks to you, the less-fun part of your home-buying adventure begins: the purchase itself. Just for kicks, we thought we’d outline the sales process for when a buyer approaches a seller via private treaty (i.e. through a real estate agent or agency) to make an offer for a property in Queensland. Please note that if you were to purchase through auction or private sale, some of these steps would be different.
Making an offer
Once you find a property that you like the look of, you will decide to make an offer. You’ve likely seen a lot of movies where this is done over the phone, but the best way to make an offer is in writing. Not only is having important financial information in writing always preferable, but this will also ensure that your terms are clear. This offer should also outline the conditions under which you will — or won’t — complete the sale. We’ll talk about this below.
The Queensland Government states that a contract should contain:
- The parties involved in the sale (full legal names if entities are involved in the purchase)
- Your offer for the property (as a dollar value)
- How and when you will be paying your deposit (usually paid in two parts)
- When the settlement will go through (and the date/time thereof).
It should also contain any other conditions that will affect the sale, and ideally a timeframe for expected completion. Some examples of typical conditions are:
- Whether you are successful in securing finance
- Whether the property passes various inspections (such as pest or building inspections)
- Whether you can sell the property you are currently in
- Any other conditions you want to impose on your offer.
Not only is this helpful for you to make sure that you’ve thought about the most common contingencies that might affect your ability to purchase, but it also prevents problems down the line. A date in writing will save a lot of wasted time arguing if something goes awry.
Having an offer accepted
The other benefit of creating a comprehensive offer is that it doubles as your contract. A contract that contains all of this information can be signed almost immediately by the would-be seller if they agree to the terms. If they agree, the contract is handed over to their agent and dated, and then becomes an official contract of sale. From this point, the sale moves to the cooling-off period. This is also when the first part of the deposit is typically due.
Buyers must be given a five-day cooling-off period. This is usually a period of five business days given as a ‘last chance’ for the buyer to change their mind and cancel the purchase. There is often a penalty of 0.25% of the total sale price to be paid by the buyer if they choose to not go ahead with the sale.
The contract MUST include information about the cooling-off period. According to the Queensland government website:
You must include a warning statement about the cooling-off period. This must be:
- on the contract itself
- clear and readable
- directly above the place where the buyer signs the contract.
- The warning statement must use the exact text below:
The contract may be subject to a 5 business day statutory cooling-off period. A termination penalty of 0.25% of the purchase price applies if the buyer terminates the contract during the statutory cooling-off period. It is recommended the buyer obtain an independent property valuation and independent legal advice about the contract and his or her cooling-off rights, before signing.
Please note: Buyers can choose to waive the five-day waiting period, but a seller cannot force them to. They may choose to do so in order to make their offer more competitive, or to speed up the purchase process. However, even if this period is skipped, the conditions agreed upon in the contract must still be met.
After the five-day period passes, the sale moves to the conditional period.
Meeting the conditions
If there are conditions listed in the contract, they should be met by the timeframe outlined in the document — i.e. during what is called the ‘conditional period’. If there are no dates specified, then ideally all conditions should be met within two weeks of the contract being signed. Of course, if buyers and sellers agree that something can take more than two weeks — or that it should take less — this can be discussed and mutually agreed on.
Paying the balance
Once the conditions of the contract have been met, the sale moves to the unconditional period. This is when the balance of your deposit becomes due, and the legal processes to transfer property ownership begin. Paperwork will be filed by the relevant parties and payment should be finalised and made to the seller.
Once the unconditional period has passed, the property moves into the settlement stage, which is usually around two weeks after the unconditional period starts. Now is when payment is finalised and property ownership legally moves from one party to the other. Keys are swapped, and the buyer legally becomes the homeowner. Time for champagne!
The property contract process is simultaneously straightforward and complicated. It might feel overwhelming to try and anticipate all of the conditions you need to in order to be cautious without being unreasonable, but like many things, it’s for the best. It helps ensure that you’ve thought of what you need to complete the sale, and what you need the seller to do as well. It makes your life much easier if you accept the complexity and risks involved with buying a house, and ensure you’re working with professionals who can help you navigate that process. If you have any questions about property purchases, sales or management in Queensland, please don’t hesitate to get in touch with us (MetroCity) via our contact page.