[BUYING AND SELLING REAL ESTATE IN AUSTRALIA]
18
more difficult for a purchaser to renegotiate the contract. Expression of Interest vs Tender There are methods of gauging interest in a property without a public auction or directly negotiating with a purchaser straight away. Such methods may involve an expression of
tender and attaches a copy of the contract of sale. The tenderer must deliver the tender to the tender box in a sealed envelope. The tender documents include the signed tender form, signed contract documentation, including guarantee and a cheque for the deposit. The key difference between a tender and an EOI is that each tenderer who lodges a tender is deemed to have made an irrevocable offer to purchase the property for the tender price and on the terms and conditions of the tender and the contract of sale. The offer made by the tenderer remains open for acceptance by the vendor for a certain period and it cannot be revoked before that time by the tenderer. Tenders can be complying, or non-complying and a vendor is free to accept either. The vendor is under no obligation to accept any tender, which is not lodged in accordance with the terms of the tender and is not bound to accept the highest tender. This method of selling is usually undertaken for large residential and commercial properties, like shopping centres, where the vendor prefers to keep the sale as private as possible. If a tender is accepted, there will be a binding contract between the parties. DOCUMENTATION Sale Documents to be in Writing Each State and Territory has its own specific legislation, which requires that a contract for the sale or disposition of an interest in land must be in writing and signed by the person to be charged. Contracts of Sale are typically signed electronically. Contract of Sale Each State and Territory has available its own standard contract of sale which is in a form approved by the relevant peak body for lawyers (e.g. applicable Law Society or Law Institute) or real estate agents (i.e. the Real Estate Institute
interest or a tender. Expression of Interest
The vendor of the property invites potential purchasers to submit an expression of interest (“ EOI ”). This is a common method of sale for high end or more bespoke properties. The EOI form may be prepared by the real estate agent or by the vendor’s solicitor. It contains details of the purchaser, price and terms such as the deposit, settlement period and special conditions. The terms of the EOI make it clear that the submission of an EOI does not create a contract for the sale of the property. It is not binding. Therefore, no legal rights or obligations except those contained in the EOI document are deemed to arise until a contract of sale is executed and exchanged and the full deposit is paid. The vendor may accept or reject any EOI in its absolute discretion without giving reasons and the vendor is not bound to accept the EOI with the highest price or any EOI received. EOIs can be complying, or non-complying and a vendor is free to accept either. Once the parties are close to agreement on commercial terms, a contract of sale must be entered into to effect a binding transaction. With an EOI, purchasers can be more casual with their proposal. Tender The vendor invites offers from tenderers for the purchase of the property. The tender document, which is usually prepared by the vendor’s solicitor, sets out the terms of the
ILN Real Estate Group – Buying and Selling Real Estate Series
Made with FlippingBook Online newsletter