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A contract for the sale and purchase of land (Contract) comprises three sections: The first being the substantive contract, usually the standard contract drafted by the Law Society of New South Wales and the Real Estate Institute of New South Wales, containing general conditions; the second being the special conditions drafted by legal representatives; and the third being the disclosure documents informing parties of the details of the property.

The first step before preparing the contract is to ensure that the client has a contract with the lawyer for legal service, and that funds have been provided to the lawyer in order to purchase the disclosure documents from databases. After the formal procedures are set, the standard contract and special conditions can be prepared by legal practitioners any time, and the special conditions can be tailored to suit the needs and negotiated outcome of every vendor and purchaser. The special conditions are drafted by the vendor’s solicitors first before marketing, then amended by the purchaser’s solicitors to the agreement of both parties during the negotiation process before signing. However, a drafted contract cannot be used to market a property until it contains all prescribed disclosure documents, and lawyers must ensure these documents are appended to the first and second sections of the Contract before the Contract may be provided to the estate agent for marketing purposes.

Legal requirements for the preparation of the Contract may be found in section 63 of the Property and Stock Agents Act 2002 (NSW):-

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(2)  A real estate agent must not offer residential property for sale unless the required documents are all available for inspection at the real estate agent’s registered office by a prospective purchaser or agent for a prospective purchaser at all times at which an offer to purchase the property may be made (or at such other place or at such other times as may be prescribed by the regulations).

…

(4)  The required documents for the purposes of this section are—

(a)  a copy of the proposed contract for the sale of the property (excluding particulars of the purchaser and purchase price), and

(b)  the documents required by section 52A of the Conveyancing Act 1919 to be attached to the contract before signature by the purchaser, and

…

“Required documents” include the prescribed documents to be disclosed in the Contract. Section 52A of the Conveyancing Act 1919 (NSW) refers to prescribed documents found in regulations made under the act. These prescribed documents can in turn be found in Schedule 1 of the Conveyancing (Sale of Land) Regulation 2017 (NSW). As we can see, unless the estate agent already have the prescribed documents from lawyers (albeit might be at their office instead of at the open house appointment), they cannot market the property or indicate that the property is for sale.

If prescribed documents are not found in the Contract, the purchaser of the property may be able to withdraw from the contract to the vendor’s detriment after executing the Contract. Therefore it is important that the prescribed documents are prepared and that it is ensured to accompany the other sections of the Contract when the Contract is to be used in marketing and shown to third parties.

These prescribed documents are generally bought through electronic systems these days, and lawyers acting for the vendors can purchase the documents from their computers. It should be noted though that there is still a time difference between the time lawyers order the documents and the time they receive them, due to processing time in the respective databases of government institutions and public utility companies. Therefore some time is always needed between the start of the preparation of the Contract to the time when the lawyers provide the estate agents the draft contract for marketing purposes and may begin to market the property. This time difference should be taken into consideration when clients make their decisions and plans in selling a property.

We often meet clients who want us to act for them as vendor's lawyers and prepare relevant legal documents and draft contracts, such that estate agents may launch the property into the market in time for sales. We understand that time is of the essence for clients and agents, but the above legal and documentation requirements render it necessary for us to issue a complete contract of sale, which may take time of two weeks or even a month. It may even take longer in special circumstances. In this case, some estate agents or clients may request that the terms and conditions of the contract be prepared first in order to carry out marketing work, but such requests (incomplete disclosure documents) may result in risks on the vendor ’s contractual rights and intermediary agents to comply with relevant legal regulations from a compliance perspective.

Prudentia Legal is equipped with many years of real estate/conveyancing legal experience and may provide clients with comprehensive and professional legal services. We may protect clients’ legal interests, ensure compliance of documents and transactions, facilitate marketing work, cooperate with all parties, and provide a smooth transaction process during the selling of a property to maximize our clients’ interests.

Should you require legal services on selling your property, please approach Prudentia Legal.

Please note: The content of our publication is intended for general information purposes only, and should not be construed as legal advice on any matter. Please contact our firm for discussion of your particular circumstances.