When a property is sold, and the buyer is allowed to move in prior to paying the whole purchase price, what is referred to as a “terms contract” is needed?
Usually, the total purchase price will be paid off over a number of years, at the end of which the title will be officially transferred to the buyer.
This is different from the vendor’s mortgage, where the property is transferred, and the buyer just pays off the agreed payments, like they would a bank loan. Both types of contracts tend to be more common in rural areas where banks are not always willing to lend.
Terms contracts have their own set of rules and legalities, which both the seller and buyer need to be aware of. From the seller’s perspective, a terms contract can often carry more risk. For example, if the purchaser is paying off the price of the house in instalments and then defaults, they may end be allowed to stay in the property for at least four weeks without paying rent, as this is the minimum term to issue an eviction notice.
Despite some risks, terms contracts are a legitimate way to purchase a property and our professional team can assist you in completing a transaction where a terms contract is involved. There are several strategies to minimise the risk and keep the transaction completely above board, despite the unconventional methodology.
Being aware of the prospective buyer’s financial ability prior to agreeing to sell, insisting that the contract calls for a substantial deposit and ensuring that the contract states the final due date for payment are all useful measures to protect the seller.
A private contract is a different variety of contract again. When a property is sold to a buyer without being listed with a real estate agent, this is a private contract. In these situations, there is still a significant amount of legal documentation required. This includes
In most cases, it is best for the buyer and seller to engage separate conveyancers to avoid any conflict of interest.
Even if you’re going about the sale of your property without the assistance of a real estate agent, we can assist you in completing your entire legal obligation in the sale of your property.
Where the sale is more complex and involves multiple mortgages, caveats, and guarantees we will be able to advise you on what is legally required for you to sell your property or business.
We can provide you with a blank REIWA Contract for Sale/Offer & Acceptance as well as Joint Form of General Conditions which outlines both the buyer and seller obligations. Further to this, our years of experience in handling these types of transactions means we have a wealth of knowledge and resources available to you to assist you in completing your private transaction.
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