You have researched locations and have just found the perfect property that suits your budget and criteria. So, what do you do now?
STEP 1
The Instruction to Proceed (ITP) Form
This is a simple form, which is sometimes called an Expression of Interest (EOI). This is not a legally binding document, but a signal of good faith between the seller and purchaser. You submit this form to the sales person in order to:
- Indicate your intention to purchase the property
- Indicate you are ready to proceed to the next stage of the process
- Formally put in writing any special conditions and your offer for the property
- Indicate to the seller your desire to proceed with the preparation and signing of the contract
STEP 2
Initial Holding Deposit
Once the ITP is signed, the seller requires an initial holding deposit. This is again a sign of good faith that you are seriously entering negotiations for the property, and the developer will put the property on hold for you.
The amount will vary, but is generally $1,000 or $2,000 and is paid into the trust account of the seller’s solicitor, NOT directly to the developer.
The property is removed from the market once your ITP and initial holding deposit have been received, and is now reserved for you while your contract is being prepared.
Your initial holding deposit will be fully refunded if you are unable to, or do not wish to proceed with the purchase of the property.
STEP 3
The Contract
Once you have agreement on any special conditions and the purchase price, the contracts are prepared and generally sent to your solicitor.
Your solicitor will examine the contracts on your behalf to ensure its accuracy, and prepare a summary of the contracts, highlighting all the key details, and bringing specific requirements to your attention prior to signing.
The contract and summary is sent to the purchaser for signing and should be signed only after you have reviewed the summary by your solicitor, and once you are comfortable with the contents of the contract.
You will need to return the contracts to your solicitor within seven days
The property is not legally secured until the contract is signed by both parties.
The seller is legally entitled to sell the property to someone else if:
They feel you are taking an unnecessary amount of time to complete the contract.
You have not provided a reasonable explanation for the delay
The buyer signed Contract is forwarded to the seller, or their solicitor, for signing.
You will have a ‘cooling-off’ period for 5-days after you have received the signed contracts if your circumstances change and you can no longer proceed with the purchaser, you can cancel the contract within these 5-days
Once the deposit is paid and the cooling off period is finished, your contracts are now legally binding.
STEP 4
The Deposit
You will need to pay the remainder of the deposit once you have signed the contracts, the terms for payment of your deposit will be outlined in your contract.
The deposit is typically 10% of the purchase price, minus the initial holding deposit.
It is held in the trust account of the seller’s solicitor until settlement. This is an important protection for you, the purchaser, as it means that the developer can not access this money until settlement
At Which Property we specialise in tailored property solutions for investors and owner-occupiers alike. We can help you understand your goals and find property solutions suited to you. Contact us today for more information.
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