Situation When Seller Can Back out?

Hi guys,

My parents are negotiating the house price at the moment (I am happy with the agent's price though). We've been having a discussion on the contract enforcement. It's outside business hours so I cannot ask my solicitor for advice. My question is, if I am to pay 10% deposit tomorrow (skip the 0.25%), and sign the contract, will the seller be able to back out if they haven't signed and contract has not been exchanged? I am based in NSW by the way.

And how does the exchange of contract work? Say if I am to sign the contract tomorrow Friday evening, can I push the vendor to exchange the contract by Saturday morning?

Many thanks

Comments

  •  

    http://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owner...?

    Specifically - http://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owner...?

    Paying an expression of interest
    Once you have made an offer, you may be asked to pay an initial deposit as an expression of interest. This won’t mean that the property is yours or that it gets taken off the market. It only proves to the seller that your offer is serious. The seller or agent can take as many preliminary deposits as they like for the one property. However, when you pay this deposit, the agent must provide you with a receipt and tell you in writing that:
    * they have no obligation to sell the property to you
    * you have no obligation to buy the property
    *they will refund your deposit if you don't end up entering into a contract to buy the property.

    The agent must also tell you if someone makes a later offer on the same property, as soon they become aware of it.
    Remember that the agent selling the property is not working for you, but for the seller (or owner) of the property.

  •  

    Thanks for your reply. However, my situation is different. I will be paying a 10% deposit PLUS signing the contract tomorrow. Will the seller be able to back out if they haven't signed and contract has not been exchanged?

    • +2 votes

      a contract is only binding if both the buyer and vendor signs. the buyer cannot force a vendor to sell without a contract.

    • +1 vote

      Yes, he can back out, he hasn't signed the contract. Just because you sign it, doesn't make it binding.

      •  

        hongco1990, you should be altering the contract so that the deposit is only payable once the seller signs the contract. The contract governs, amongst other important things, the ways in which you can get that deposit back!

  •  

    I recommend you reed the site:

    Before exchanging contracts, the seller may negotiate with other buyers for a higher offer, even if you have made an expression of interest payment. If the seller accepts another offer and exchanges contracts with that party, any prospective buyer who misses out on the property (despite a verbal agreement) is gazumped.

    So as I understand, you have agreed on a price. But haven't paid anything or signed anything. In the meantime, the real estate agent can call around, tell every other potential buyer he has an offer, and see if they want to pay more. Then you might get a call saying they have a better offer. Hence why r/e agents are up there with the likes of lawyers and used car salesmen.

    Even if you provide a deposit, the seller hasn't signed. So there is no agreement. So you just have to cross your fingers and hope everyone is honest.

    I have been burnt before - r/e agent shakes hand, tells me it is mine, I bring the deposit the next day, and then tells me if I want it, it is going to cost me more. Another time, the agreed price is what we exchanged. So good luck with it. But it sounds like you are on the right track.

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    Also, isn't there a cooling off period for contracts?

    •  

      Not for the seller. And once exchanged, not for the buyer either.

      • +1 vote

        Not for the seller. And once exchanged, not for the buyer either.

        this residential property is in nsw. nsw buyers have a 5 business day cooling-off period.

  •  

    Also paying a higher deposit than required doesn't make the seller have a lower chance of not being able to back out of the deal. Considering the seller hasn't signed anything, he isn't even backing out of anything.

  •  

    Thanks guys. So is it a common practice if I ask my solicitor to put a clause in the contract, saying if after I sign contract, vendor does not sign within 24 hours, my offer will lapse? This is to prevent real estate agent delaying the exchange process to seek higher offer

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