What Is An Unconditional Contract Of Sale?

A conveyancer is guiding the client on where to sign on the contract.

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What Is An Unconditional Contract Of Sale?

An unconditional contract is a contract where there are no conditions attached to the sale.

When an unconditional contract is signed, the buyer and the seller are legally obliged to follow through with the sale and the purchase price negotiated. Effectively this means that once the buyer signs the contract, they have chosen to forgo their rights to terminate the contract and therefore must proceed to settle the contract.

An unconditional contract is not subject to any type of inspections due diligences, finances or conditions. The buyer must be therefore be 100% certain that they are satisfied with the condition of the property and confident in their finance approval and situation, as once signed the buyer will not have the ability to terminate the contract even if finance is not approved.

As a seller, an unconditional contract gives you peace of mind the sale of your home is certain to go through.

This certainty makes unconditional contracts very attractive to sellers.

An unconditional contract also allows the buyer in a competitive marketplace to stand above other buyers. Buyers often submit unconditional offers of sale in an effort to make their purchase price offer more attractive than others. In some cases, the seller may accept a lower offer or different settlement terms, to try and get an unconditional contract. This is a great negotiation tool for the buyers.

What Is The Purpose Of An Unconditional Contract? 

Contracts and their clauses are part and parcel of buying and selling property, and for good reason. They protect all parties and allow  the due process to check there are no hidden issues with the property.

Unconditional contracts could work for a select group of people but caution is needed as buying a property unconditionally can be risky, but there are some situations where it may work for some people.

If you as the buyer have an appetite for these risks, then an unconditional contract can be powerful in the purchasing process.  The buyer needs to weigh up the risks as traditional conditions in contracts are there for a reason. If the buyer can satisfy those potential risks and possible worst case scenarios then for the right buyer at the right time, it can be a good strategy.

The Risks Of An Unconditional Contract And Helpful Hints To Overcome Them

The process of unconditional contracts has intense highs and lows. If buyers take it slow, think it through and talk about the options with professionals in the field, the process may be less daunting.

For example, you may have been house hunting for a long time and keep losing at auctions, and you start to get impatient and frustrated, this can cause problems especially if your real estate agent puts presuure on you and suggests that ‘going unconditional’ will make your offer more attractive to the seller. If you do not do your due diligence and upon final inspections you find issues and damages you didnt see or forsee. These issues now become your concern and obligation to rectify, which can be costly. 

In another scenario, the finance falls through and you cannot go ahead with the purchase. Under an unconditional contract, you may lose a 10% deposit and risk being sued for damages, whereas a conditional contract would alleviate this fear. There is also no cooling-off period, so you lose that safety net as well.

But, if you are the type of person that has weighed up the risks and wants to proceed with an unconditional contract, you can still mitigate the risks to yourself by following a few helpful hints. Unconditional contracts still have some protections for buyers.

But at the very least you should do your own due diligence and have your own checklist followed. You may want to look at the following at the least:

  • Get a proper pest inspection done.
  • Get a proper building inspection done.
  • Ensure that you have rock solid pre-approval of your finance from your lender.

  • Have the vendor’s contract of sale documents reviewed by your solicitor or conveyancer. (Select Legal)

  • If there is a body corporate it would be important to speak with the manager to get some understanding of the background on the committee and building.

  • An independent valuation by a qualified valuer to determine the fair value of the property can also be done if you do not have a good grasp of the market values yourself.

Summary

For a variety of reasons, buyers are often tempted to put forward an unconditional offer to snatch up their dream home, rather than a standard conditional contract. If you’re attending an auction or thinking about putting in an unconditional offer to buy your dream home or next investment property, it’s important to understand exactly what you’re getting into when you sign the contract.

Contracts and the contract process are long and complex documents prepared by professionals who are paid a great deal of money to ensure they’re correct. They’re written to protect those involved and removing these protections can leave you open to serious financial trouble. However, if you’re prepared and have done your homework, there may be some instances where an unconditional contract may work. Consider consulting a lawyer as well as a financial adviser for expert advice before making any offers.

Get A Free Conveyancing Quote

Regardless of whether you are planning to buy or sell a property, Select Legal is ready to assist with the process, including accessing contracts, whether they be conditional or unconditional.

Our knowledge of the process and attentive service (as shown in our Google Review history) is what sets us apart from others in this field. Depending on the needs you have, Select Legal’s expert legal advice is ideally qualified to handle your needs through all the required legal checkmarks.

Contact Select Legal today for all your property needs or conveyancing related needs or request a quote which will only a few minutes.

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Conveyancing fees from $990*

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