Contract for Sale

Contract for Sale

Introduction

The Law Society of NSW (Law Society) and the Real Estate Institute of New South Wales (REI) recognise that solicitors and real estate agents need to work together to ensure an efficient conveyancing process for residential property transactions.

The parties acknowledge their intention to abide by the terms of this protocol as far as possible but agree it is not intended to give rise to legally enforceable obligations on their part or on the part of their members.

Appointment of Real Estate Agent

The vendor appoints a real estate agent (agent) to market, promote and sell the property. The terms of that appointment are set out in an agency agreement between the vendor and the agent.

Instruction of Solicitor

Where the vendor instructs a solicitor to act, the solicitor shall:

  • use best endeavours to obtain particulars of title to the property;
  • make all necessary applications to obtain all of the prescribed documents (other than those which the agent has agreed to obtain).

The Contract

If the agent obtains any of the prescribed documents, the agent shall immediately on receipt forward the original of that document to the solicitor for consideration and annexure to the contract.

Unless there are compelling reasons otherwise, agents and solicitors are encouraged to obtain certificates which include:

  • title and ownership of the land;
  • local council planning certificate;
  • sewerage and drainage diagrams;
  • deposited or strata plans;
  • pool certificate. 

The vendor's solicitor shall prepare the contract as soon as practicable after the solicitor has obtained the prescribed documents and has sufficient information and instructions to do so.

If the solicitor has been instructed by the vendor that the sale is by auction or that the agent is authorised to participate in the exchange of contracts, the solicitor shall forward to the agent the contract in two counterparts.

If the solicitor has not been instructed in accordance with the terms of Clause 4, the solicitor shall email to the agent a complete copy of the contract for exhibition and marketing purposes ("proposed contract").

The agent and the solicitor must at all times uphold the copyright of the Law Society and REI in relation to the contract.

Sales advice

If the agent introduces a buyer, negotiates a sale and is not authorised to participate in the exchange of contracts, the agent shall as soon as practicable forward a detailed sales advice to the vendor's solicitor.

The sales advice shall, to the extent not provided in the proposed contract, as a minimum provide details in relation to the following:

  • name of vendor;
  • address of property sold;
  • full name, address and telephone number of the purchaser(s);
  • ABN/ACN of the purchaser where applicable;
  • name address and contact details for the purchaser's solicitor/conveyancer;
  • sale price;
  • deposit paid and the identity of the stakeholder;
  • any changes to the settlement date and time;
  • any inclusions in and exclusions from the sale;
  • whether the sale is with vacant possession or subject to an existing tenancy;
  • whether the deposit is to be invested and if so by whom;
  • information of any negotiations that requires the vendor's solicitor to draft additional conditions.

As soon as practicable after receipt of the sales advice the vendor's solicitor shall obtain any necessary further instructions from the vendor and shall complete the preparation of the contract and shall:

  • forward a counterpart contract to the purchaser's solicitor;
  • advise the agent of the submission of the contract to the purchaser's solicitor;
  • make timely appropriate arrangements for the vendor to execute a counterpart contract.

Tenanted Properties

If the property is tenanted and the agent is the managing agent then the agent shall provide to the vendor's solicitor as quickly as possible a copy of the:

  • Residential Tenancy Agreement;
  • details of the current rent; 
  • details of any rental bond or guarantee that the tenant has paid; and
  • condition report. 

If the property is tenanted (and the agent is also the managing agent) but is to be sold with vacant possession, the agent and solicitor shall mutually co-operate to ensure that the appropriate termination notice is given to the tenant in sufficient time to comply with the requirements of the relevant legislation and the provisions of the contract in relation to the settlement date of the contract.

Exchange of Contract

By Agent

The agent may:

  • write the purchaser's name, address and description, solicitor's details, purchase price, deposit and date on the contract;
  • insert or delete the description of inclusions to be included in the sale;
  • participate in the exchange.

The agent must ensure that the execution pages of both counterparts of the contract, any special conditions and all annexures to the contract are executed properly. For example:

  • if one of the parties is a company, the company must execute the contract in accordance with Section 127 of the Corporations Act 2001.

Any deletions or other alterations and additions to the contract must also be initialled.

On exchange the agent must date both counterparts of the contract and receive the agreed deposit payable under the contract and, if so instructed, a Section 66W certificate. If either the vendor or purchaser is present at the time of exchange the agent shall hand to the purchaser the counterpart contract executed by the vendor and shall hand to the vendor the counterpart contract executed by the purchaser and where applicable, the Section 66W Certificate.

If the counterpart contracts have not been dealt with in accordance with the above clause, immediately after exchange the agent shall:

  • cause the counterpart contract executed by the vendor to be delivered to:
    • the purchaser; or
    • where the purchaser has notified the agent or it is apparent from the contract that a solicitor acts for the purchaser, to the purchaser's solicitor.
  • cause the counterpart contract executed by the purchaser and Section 66W certificate where applicable to be delivered to:
    • the vendor; or
    • where the vendor has notified the agent or it is apparent from the contract that a solicitor acts for the vendor, to the vendor's solicitor; and
    • confirm the total deposit paid and held.

By Solicitor

If an exchange of contract is effected by the vendor's solicitor without the participation of the agent, the solicitor shall within two business days of exchange notify the agent in writing of the date of exchange.

If the stakeholder of the deposit is the agent, the solicitor shall remit the deposit to the agent at the same time.

If the stakeholder of the deposit is someone other than the vendor's agent or if a bond has been used to pay the deposit or if the deposit has been released or paid direct to the vendor on exchange, the notification to the agent under Clause 7.5 shall include confirmation in writing of the solicitor's understanding of the arrangements made by the vendor for the payment of the agent's commission on settlement.

Deposit held by an agent as stakeholder

If any part of the deposit is dishonoured or not met on presentation, the agent shall immediately notify the vendor's solicitor.

The agent shall confirm in writing the amount of deposit held by the agent as stakeholder as soon as possible after exchange.

Prior to Settlement

The agent and the vendor's solicitor shall consider the following matters and mutually co-operate to make appropriate arrangements to ensure:

  • a pre-settlement inspection by the purchaser is carried out, if required;
  • that vacant possession will be available at the time of settlement (if applicable);
  • that sufficient information is available to make necessary adjustments and arrangements on settlement for the property's outgoings, rent and rental bonds (where applicable);
  • the parties are aware of the location of all necessary keys and security devices at settlement; and
  • that the deposit or part of it is available, if required, at the necessary time to be released by the agent upon reasonable notice to be used as part of the balance of purchase price at settlement.

Settlement

The vendor's solicitor shall notify the agent as soon as possible after settlement occurs to authorise the release of the keys and the agent shall, on receipt of this authorisation, release the keys. The vendor's solicitor shall confirm such authorisation by email as soon as practicable after settlement.

The vendor's solicitor shall forward to the agent the order on the agent.

Failed Settlement - Purchaser Default

The vendor's solicitor and the vendor's agent acknowledge that in the event that the deposit is held by the vendor's agent, the agent holds the deposit as stakeholder on behalf of both the vendor and purchaser and that the agent is not permitted to account for the deposit to one of the parties without the written authority of the other party or court order.

If the purchaser fails to complete the contract and the vendor becomes entitled to the deposit, the solicitor and agent will mutually co-operate to obtain a written authority from the purchaser or the purchaser's solicitor to account for the deposit. After the required notice and termination provisions of the contract are issued and not complied with by the purchaser.

If the agent and solicitor are unable to obtain the necessary authority to account for the deposit from the purchaser or the purchaser's solicitor, the solicitor will advise the vendor of the possible need to obtain an order from a Court of competent jurisdiction.

Communications

Agents and solicitors are encouraged to utilise the most appropriate means of communication which will include telephone, mail, facsimile and email, depending on the circumstances.

Choice of means of communication will depend on factors such as speed, accuracy, certainty of delivery and confidentiality.

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