Making an offer on a house: Contract Note explained

by Chris Lang on September 16, 2008

To make an offer on a house in most cases people use a document called the Contract Note (in Victoria). It looks pretty simple and only has 2 pages but defines every aspect of your purchase – which is why you would want to understand it completely.

It all starts when you have found a house you’d like to buy and want to make an offer. You call the estate agent and let him know what your offer is and (usually) he fills the Contract Note and you only need to sign it. My (non-professional, but based on experience) advise is – check every word of that document before you sign it and here is why:

  • Your name and the vendor’s name can be misspelled and that may cause problems later on
  • The dates and the amounts can be mixed up and that may also cause problems later on
  • You don’t get another chance to fix anything in that document and once a vendor signs it – you are bound by it, getting out won’t be easy and might cost money.

Contract note consists of little sections; you will find below an explanation and example for every section:

First, there is a cooing-off period when you can cancel the contract for any reason. It starts from the date you have signed the contract and lasts for 3 business days, this post explains more about the cooling off period and exceptions to it.

THE ESTATE AGENT

In this section the real estate agent fills the name of his agency, its ABN (Australian Business Number) and his own name. Here is what it looks like:

Offer on house Estate Agents Details

THE VENDOR

This section should have the vendor’s name and address, and if there is more than one (a husband and wife, for example) then it needs to list all of them. All of the names should be written in full version – not using initials. Have a look:

Offer on house Vendor Details

THE PURCHASER

This section should list all of the purchasers and their addresses, also full names not initials.

Offer on house Vendor Details

THE PROPERTY

In this section the property need to be identified in the same way as in Section 32 document.

Offer on house Property Details

THE CHATTELS

This section should say what will remain in the property when it passes to the purchaser. The best advice I could give you – do not assume that something will stay there, write it down in this section, whatever it is – a dishwasher, a dryer, a bench, write it down.

Offer on house Chattels Details

THE PRICE, THE DEPOSIT, THE BALANCE

The price you will be paying should be specified here, broken down into the deposit and the balance, so that Price = Deposit + Balance. Also, one of the phrases “Plus any GST” and “Which includes any GST” must be crossed out. The dates of when you will pay every part are very important, double check to make sure no mistakes were made there. Pay attention in “The Balance” there are 2 options, a) and b) and one of them must be crossed out.

Offer on house Price Deposit Balance Details

SUBJECT TO

This section specifies the conditions that must be met, otherwise the contract is ended.

Paragraph 1 is only filled in those cases when a tenant will continue to live in the house after the settlement date. Otherwise just leave it empty.

Paragraph 2 has 2 options, of which one must be crossed out. If you want to get an empty house on settlement date, cross out the “receipt of rents and profits of the property” and leave the “vacant possession” in.

Paragraph 3 basically says that you have applied for the loan and should specify what bank/finance company will be your lender, how much are you borrowing and by when your loan should be approved.

Offer on house Subject To Details

OFFER BY PURCHASER

Here you need to fill in the dates when your offer is valid. If the vendor wants to accept it, he’ll need to sign before the “will lapse” date. And, of course, a signature (yours or of your power of attorney).

Offer on house Purchaser Signature

VENDOR ACCEPTED

If you receive the offer back and the vendors have all signed this section – you are under contract. The vendor doesn’t have a cooling off period and that means that if you won’t breach or end the contract – the house is yours, just pay the money 🙂

Offer on house Vendor Signature

VENDOR’S SOLICITOR and PURCHASER’S SOLICITOR

This section has a misleading name – you don’t have to hire a solicitor, you can only have a conveyancer. Confused? This post here explains the difference between solicitor and conveyancer.
The details you provide here will be used so that your estate agent could link both parties’ lawyers to handle the deal.

Offer on house Solicitor Details

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