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Why You Need Legal Advice Before Signing Sales & Purchase Agreements


Have you ever agreed to the terms and clauses without actually reading them?

This is not a trick question – most people accept terms of agreements without reading them. It’s a risk that most of us believe is worth taking. However, not all contracts are the same, nor are the risks equal.

Indifference To The Terms Of Agreements

For some agreements like your mobile plan or agreeing to the terms of use of your personal data most of us don’t read the fine print. We happily quickly agreed to them without much thought.

However, applying the same indifference to the terms and clauses of some contracts can get you into a lot of bother if the terms are called into action. For example, if you agree to the terms of a loan or the sale of your home if everything is plain sailing, then whether you read the terms or not doesn’t matter much.

Default Implications

However the same can not be said if circumstances change and failure to keep your end of the deal is called into question. With loans, if you default on repayments the stakes could be high including:

  • Downgrading your credit rating
  • Penalty payments
  • Debt collection repossessions
  • Bankruptcy

Today, contract terms cover everything from lender and borrower requirements, repayments, penalty fees, and other special conditions; however, you’re none the wiser if you’ve not read them.

You may not look at the contract again unless something goes wrong.

Selling Your Home

Selling your home is another time when the sales and purchase agreement needs more than a glance before adding your signature.

The challenge for both sellers and buyers is removing emotion from the deal. It’s a highly emotive time selling or buying a property, especially when it’s a home for you, not a rental property.

If the price is right…

The price can motivate you to get the deal done when you’re the seller. If the price is right, then nothing should stand in the way of making the sale happen!

Homebuyers can also experience the same single-minded focus. The seller accepts the price, and the house can now be mine!

If all that mattered were the price, then there’d be no need for much more than a sentence or two saying the buyer agrees to pay and the seller agrees to accept the tidy sum of $… for the property. Thankfully there is a lot more to it.

Sales & Purchase Agreement – a collection of negotiations

The sales and purchase agreement has many clauses and terms to protect both the seller and the purchaser. Many have been added over the years to prevent fraudulent activity and misunderstanding of the obligations of both parties.


Investopedia eloquently describes the sale and purchase agreement as a collection of negotiations between the buyer and seller. When you view it in this light, it’s evident that the price is just one negotiation, and both the buyer and seller need to have their wits about them to get the best deal on all the requirements for the agreement to work successfully.

Who Regulates Real Estate Sales?

Most countries have an organization responsible for regulating real estate agents.

  • USA – NAR (National Association of Realtors)
  • UK – NTSEAT (National Trading Standards Estate Agency Team)
  • Australia – REIA (Real Estate Institute of Australia)
  • New Zealand – REAA (Real Estate Agents Authority)

Real Estate License, Code of Conduct, Complaints

These organizations issue the Real Estate license and enforce the licensing law. They also create and manage the code of conduct and investigate customer complaints.

Any adult can buy or sell a home at any time. They don’t need to be educated or have specific knowledge or training. No wonder many home sales go wrong!

Example – Sale Gone Wrong

In our PropertyTalk forums, a discussion worth reading is of a home seller upset the sale of her home didn’t go through. The seller did not fully understand the sales and purchase agreement, and the ‘or nominee’ condition caused no end of grief.

So what happened? Well, you can read the discussion in full or this summary. When the purchaser signed the sale and purchase agreement, the seller believed they had a deal i.e., her home was sold. So with much delight, the sellers went researching for a new home and eventually found it. They signed the sale and purchase agreement and went unconditional – which means there’s no backing out. They paid the deposit and checked that the settlement date for their new home was planned to occur after the settlement of their existing property. They needed the funds from selling their existing home to settle on their next property.

‘Or Nominee’

However, unfortunately, when they signed the agreement to sell their existing home, the sellers were unaware the purchaser signed the sale and purchase agreement with ‘or nominee’.

Then strange things started happening – the sellers saw that their existing home had sold again! How could this be happening? And that it sold another couple of times before the settlement date, which had been arranged to happen 12 weeks from signing the sales and purchase agreement.

Creating a discussion on PropertyTalk, the sellers soon found out why they were seeing their home sell multiple times before they’d handed over the keys to the purchaser. Revisiting the sales and purchase agreement revealed the oversight – that the purchaser had circled and signed with the ‘or nominee’ special condition.

Sometimes property sales settle with the ‘or nominee’, and as such, the sellers may or may not be any the wiser. Only when things go wrong do sellers realize the error they’ve made – i.e., signing the contract without knowing the risks of ‘or nominee’.

The purchaser never did settle, and the seller could not buy their next property. They have incurred penalties for late settlement and stand to lose their part or all of their deposit probably.


Who’s at fault for the failed sales transaction?

Was it the real estate agent, the seller, the purchaser, or the lawyers?


Probably all of them – some more so, given it’s their duty of care for their client.

More questions that need answers….

Was the purchaser going to purchase the property and use the ‘or nominee’ as a fallback? Or was the purchaser just a middleman hoping to make some money like a finder’s fee from finding someone who will buy it?

Did the real estate agent explain the ‘or nominee’ to their client?

The real estate agent should have let their client know what it is and its implications. This is just the standard duty of care part of the code of conduct expected of a licensed agent or an agent working for an agent with an REAA license.

Another gatekeeper should be the seller’s lawyer. Had the seller presented the sales and purchase agreement to a property lawyer for review before signing it, the ‘or nominee’ would have been discussed as it is usually crossed out.

Accepting a sale with ‘or nominee’ is risky, but you can mitigate the risks with the purchaser’s proof of ability to purchase. The purchaser is not let off the hook with the ‘or nominee’ condition in the sales and purchase agreement.

There are two sides to every story, and this discussion in our forums presents one side – the sellers. Our forum users provided as much support as possible, and the seller appreciated it.

Unfortunately, a failed settlement means there’s more work to do. The seller has a home to sell and another one to find.

Plus, the seller can make a complaint with the REAA and use the law to seek remediation from the purchaser. For example claiming the payment of expenses, penalties, and costs associated with the failed settlement. Plus, the additional costs of starting the sales process again with remarketing their home for sale.

Summing Up

Our example demonstrates the need to read the fine print of contracts and agreements. For more risky deals like property sales and purchase transactions and any loan agreement, always make sure you understand what you’re signing. Get a professional to go through the contract and present anything that errs from normal or requires acknowledgment of the terms, for example, if payments are missed.


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