Exchanging contracts may seem a straightforward administrative process, but you may be surprised how often mistakes are made, liberties taken, and the legal problems that may result for the vendor and purchaser.
Our property lawyers and conveyancing team have identified the seven most important things to check when you are involved with exchanging contracts, particularly relating to ensuring the contracts are identical and the addition of special conditions.
Both copies of the contract must be identical. Please check that:
- Both front pages to make sure that the details are the same;
- The special conditions are the same and any alterations are identical in both contracts;
- The search date of the title search in both copies of the contract is the same;
- The date of the 149 certificate is the same in both copies of the contract;
- None of the pages of any of the certificates are missing:
- check the page numbers on the 149 certificate;
- check that all pages of the deposited plan, 88B instrument and other LPI dealings are in the contract. The numbering is usually in very small print at the top of each page on the right-hand side and will say seq 1 of 3, seq 2 of 3, etc.
Caution: If any of the pages are missing then at any time either party can rescind the contract with no penalty.
- Both contracts have exactly the same pages overall – put both contracts next to each other and flick through each page one by one to check that they are exactly the same.
Again, if any of the pages are missing then at any time either party can rescind the contract with no penalty.
Adding special conditions to the contract:
- Do not add special conditions to the contract without a solicitor checking them first. Examples of invalid or problematic special conditions that we have seen real estate agents add to contracts include:
- shortening the completion date to 28 days when there is a tenant in the property who needs to be given 30 days’ notice to vacate;
- adding a 14-day finance clause and there is a tenant in the property who cannot be given notice until 14 days have expired;
- letting the purchaser take access to the property following exchange to carry out renovations;
- including a finance clause but not completing the details of which bank and the amount they are borrowing, which can make the clause void for uncertainty; and
- changing the deposit on the front page to $1.00, with the mistaken belief that the vendor could still somehow recover the 10% deposit on default.