Summary of what we will learn in this webpage:
- How much deposit should a purchaser pay on Exchange
- Where should a purchaser sign on the contract
Step 4: After reading the contract (Contract + Special Conditions + the required documents like the Deposited Plan, s10.7 Planning Certificate and sewer diagrams), if we are still satisfied, we will now be able to sign on the first page of the Contract, pay the required deposit and exchange. At this stage, we should at least have pre-approval ready from the bank, if not unconditional loan approval.
1) The deposit could be 0.25% of the price, and this normally gives the purchaser 5 business days cooling off period, during which the purchaser can change his/her mind and not proceed to buy the property but forfeit the 0.25% to the vendor. If by 5pm on the 5th business cooling-off day, the purchaser is still happy to proceed with the purchase, s/he will need to top up the balance of the deposit to either 5% or 10% of the price and give it to the vendor or the vendor’s real estate agent.
During this 5-days cooling off period, we can order a pest report, a building report or both. (If this is a strata unit, we can order a strata report.) Depending on the result of these reports, we may or may not proceed with the purchase.
We will also try to get the bank to give us unconditional loan approval during this cooling off period. Sometimes, the bank may not be ready to do so, in which case we may ask the vendor’s solicitor to extend the cooling off period by another 5 business days to allow us more time to get the unconditional loan approval.
Needless to say, it is very important to get unconditional loan approval during this cooling off period, because it means that we will have the loan funds needed for completion/settlement. Imagine unconditional loan approval is rejected after expiration of the cooling off period, then potentially we could lose up to 10% of the purchase price because we weren’t able to proceed to completion on an exchanged and on-foot contract.
2) Or the deposit could be 5% or 10% of the price, and the purchaser does not need a cooling off period (though he can choose to still have the cooling off period).
Signature and Exchange
In either case, the purchaser would sign on the first page of the Contract, on the line where it says purchaser and a witness will sign on the line where it says witness (beside the purchaser’s line).
The vendor will also sign an exact identical copy, but he and the witness will sign on the line where it says vendor and witness.
Then, we will exchange the contracts – we will give our signed copy to the vendor, and s/he will give us his/her signed copy.
Now, completion is as per Date for Completion (unless we have chosen to just pay 0.25% of the price and buy ourselves 5 business days cooling off period, and we rescind by 5pm on the 5th business day and not proceed to settlement).