What does Under Offer mean? Do you know your rights?
There shouldn’t be any confusion around this area of selling or buying a property. Sometimes agents can take it for granted that we all understand our rights and don’t really explain this part of the process very clearly.
There can be risks involved and it’s important to know what each of these mean.
When a property is advertised as Under Offer or Under Contract it means that the written offer or the Contract of Sale has been signed by both parties however there are Special Conditions that apply to that contract. Once those Special Conditions have been met the Contract is then unconditional and the property is SOLD.
If you are selling by Private Sale, Sale By Set Date or any other method apart from Auction, the purchaser has 3 clear business days to Cool Off under consumer law. During this time if the purchaser has a severe case of buyer remorse or feels like they have made a mistake, they are within their rights to withdraw from the contract of sale. They must give written notice to the seller, the seller’s agent or the seller’s legal representative.
The first day starts the day after the buyer signs the contract. It does not matter what date the vendor signs.
If a buyer does Cool Off there is a financial penalty that is payable to the vendor. This figure is 0.2% of the full purchase price or $100 (whichever is higher). This amount will be deducted from the initial deposit paid by the buyer. If the initial deposit is not enough to cover the cooling off fee, the agent will seek the balance from the buyer.
This amount must be provided to the Vendor in full. There is no commission payable on this amount to the agent.
The cooling off does not apply when:
the property was purchased at a public auction or within three clear business days before or after a public auction
the property is used mainly for industrial or commercial purposes
the property is more than 20 hectares and used mainly for farming
you previously signed a contract for the same property with the same terms
the buyer is an estate agent or corporate body.
Once the cooling off period has expired, termination of the contract can only be in relation to other terms and conditions that have been agreed upon and written into the Contract of Sale.
This may be Subject to Finance, Subject to Building & Pest Inspection or other special conditions that have been agreed upon. There should always be a time period for each of these conditions and if an extension is required it must be agreed upon.
When signing a contract of sale it’s important for both parties to understand you are entering into a legally binding document and you should always have good legal advice and support to fully understand your obligations and rights.
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