Best practice
What are we talking about?
Jim Lourandos & David Dundas REIV Information Officers
REIV Information Officers David Dundas and Jim Lourandos, address some of the current common questions from Members. When is it “sold”? Ever been caught out by marking it “sold” too soon? There are some simple steps to avoid this: • Present the offer to the vendor in the form of a Contract of Sale signed by the prospective purchaser and detailing the amount of deposit already paid. • If the vendor accepts the offer, have them sign the Contract of Sale and leave a copy with them. • Have the vendor sign and date a separate document acknowledging they have received a copy of the contract signed by them and the purchaser. • Deliver to the purchaser a copy of the Contract of Sale with their signature and that of the vendor. • Have the purchaser sign and date a separate document acknowledging they have received a copy of the contract signed by them and the vendor. After completing these steps, it is safe to inform people, including the vendor and the purchaser, that the property has been sold subject to the terms of the Contract of Sale including any cooling rights. The filling out of a Contract of Sale by an agent or agent’s representative is permitted by section 53A of the Estate Agents Act, contrary to what some members of the legal profession, particularly in non-metropolitan areas may suggest. Contracts prepared by the Law Institute of Victoria and the REIV are available for purchase at low cost from the Institute. Having a contract and section 32 statement at commencement of marketing avoids the risk of one or both of the parties changing their minds and jeopardizing a sale while waiting for the vendor’s legal representative to prepare a contract.
Taking a deposit at the time of obtaining the purchaser’s signature is not a legal requirement, but there are some practical reasons why it should be done. (Refer to the next item about the importance of a deposit).
The interests of your client will be protected as well as your entitlement to commission.
The process satisfies the requirements of section 126 of the Instruments Act, which specifies that an agreement for the sale of land must be expressed in writing and be signed by the parties to the agreement. While a barrister will argue it is possible for the agreement to be on other than a contract of sale, there is no point creating the grounds for such an argument by not using a contract. The interests of your client will be protected as well as your entitlement to commission. The exchange of contracts and the signing of acknowledgements satisfies
the requirements of section 53 of the Estate Agents Act.
Using a contract in the negotiation of a sale avoids being frustrated by either party agreeing to the terms of the sale but later retracting the agreement before signing the contract. Also, asking a prospective purchaser to make their offer by signing a contract will confirm their intention to genuinely make an offer.
The importance of a deposit The sale of real estate does not always proceed smoothly to settlement, sometimes buyers exercise a cooling off right and in other instances may fail to settle. Both circumstances are unpleasant, but they can be less so if a substantial deposit has been collected at the time of taking an offer. CONTINUED ON PAGE 16
The Estate Agent – AUGUST 2022 | 15