Checking Contracts for Sale

Brian Cannan: We're here today with Greg Jemmeson from Jemmeson Fisher Solicitors and Accountants. Good afternoon Greg.

Greg Jemmeson: Hi Brian.

Brian: Well we're going to talk about contracts and we're going to talk about what an agent should look for when they receive a contract.

Greg: Okay Brian it's an essential seeing that an agent cannot market a property for sale unless they first have a complete copy of the contract in their office for marketing purposes.

Brian: Complete?

Greg: Complete. Quite often they will receive something from a solicitor saying this is for marketing purposes and we're going to obtain the section 149 in due course, I haven't yet received the swimming pool compliance certificate we will forward it to you when it comes to hand. That is not a complete contract. Agents need to have a process in their office that when a contract comes in they are thoroughly checked. Now when I mean that they need to get the contract and match it up first against their agency agreement they need to check that the vendor's name on the agency agreement is the same as the vendor on the contract. That the property on the contract is the same property on the agency agreement. I've quite often seen where you have authority to cell number 2 Smith Street but the contract comes in for the sale of 4 Smith St so we need to look at those sorts of things. We need to look at who is the agent nominated on the contract? You may have taken over the listing from a previous agent so if a dispute arises out of commission we want to have our name on the contract as the new agent. Okay, now we check the face of a contract so that all the particulars are correct then we need to go and ensure that the standard pages are there from the normal contract of sale of land whether it's the 2005 or the 2014 edition then we have the requirement to have all of the statutory documents attached and the agent needs to become aware of what those are. The first document we would look for is the certificate of title, now when you look at the certificate of title it will tell you types of things that would affect the property. It will tell you who the owners are it will tell you whether there's a mortgage, whether there's a caveat, whether there's an easement whether there are covenants. Now that's quite easy it might say there's two easements and one covenant and one caveat, that then means the agent needs to ensure that there are two easements attached to the contract there is one covenant attached to the contract and one caveat attached to the contract. So that gives us a starting point to see what should be attached. Also we need to have a deposited plan which shows the property, we need a sewerage diagram and most importantly as was discussed earlier we need to have proof of swimming pool compliance and registration and of course the section 149 which is the instrument from the local council setting out development regulations, things that affect the land in the local area. Now those documents are essential and without those documents all attached to that contract the agent proceeds to exchange a purchaser has up to 14 days from the date of exchange to then withdraw from the contract because one of those statutory documents is not attached.

Brian: A lot of agents are getting contracts from solicitors with this stamp on called "draft". Are you comfortable for them to be able to market the property, not exchange but market the property.

Greg: Certainly market the property if it has all of the attachments that are required. Now of course solicitors make mistakes, conveyancers make mistakes, things get lost in the process, photocopiers occasionally eat a document here or there. As I said solicitors are not infallible they will make mistakes and occasionally will send a contract that is not complete. The problem for the agent is though when they market that property they then accept responsibility for that mistake and particularly if they proceeded to exchange the agent then becomes negligent. Yes the solicitor can be sued as well but the agent puts themselves in the firing line for a damages claim if they then exchange a contract that is not complete.

Brian: Well Greg, thank you very much. That is most informative about contracts.

Greg: Thank you Brian.