The Things Worth Checking in a Contract of Sale Before You Settle

Most people read a contract of sale for three things. The price, the settlement date, and whether the fridge is included. Then they sign it.

That is understandable. It is a long document written in language nobody enjoys. But there is a handful of items in there that decide whether your finance actually works, and a mistake in any of them is far cheaper to find before you sign than three days out from settlement.

Here is what is worth slowing down for.

The contract records a deposit. Your lender uses that figure. It goes into the funds to complete calculation, it forms part of the evidence that you have the money you said you had, and it sits in the file as a statement of fact.

So when the amount recorded on the contract and the amount actually paid are different, the file has a problem. Not a moral one necessarily. Usually it is just a variation that got agreed verbally, or an early release, or a figure that was updated in one document and not the other.

But a lender reconciling the contract against the deposit receipts will stop on that gap, and it will want an explanation before it goes any further. Finding it yourself and explaining it up front takes ten minutes. Having it found for you at the assessment stage costs days.

This one is less obvious and matters more than people expect.

If the deposit was paid by someone other than the buyer, the lender is going to ask why. Not out of suspicion. It is because the answer changes the file.

A parent paying it makes it a gift, and gifted funds usually need a signed statutory declaration confirming it is non refundable and not a loan. A related company or trust paying it raises a question about who actually has an interest in the property. A third party holding it as part of an estate or a legal arrangement is something else again.

Every one of those has a straightforward path. But each one needs a document, and documents take time to get. Knowing which one applies before the loan goes in is worth a lot more than working it out later.

The seller named on the contract should match the registered owner on the title. When it does not, there is a reason, and the reason usually adds time.

A transfer that was never registered. A name change after a marriage or divorce. A company that was deregistered. Or an estate, which is the big one.

If the person selling has died, or died partway through the sale, the contract does not simply disappear. Generally it remains enforceable, subject to any special condition that deals with the death of a party, and many contracts do contain one.

What changes is who can actually complete it and how long that takes.

If the property was held as joint tenants, it passes to the surviving owner by survivorship, and it is a matter of lodging a notice of death and the death certificate with the land registry. That is comparatively quick.

If it was held solely or as tenants in common, the deceased's share forms part of the estate. The executor has to apply to the Supreme Court for a grant of probate, or if there is no will, an eligible person applies for letters of administration. Then a transmission application is lodged with the land registry before the property can be transferred.

If you are buying into that situation, and plenty of good purchases are estate sales, the thing to sort out early is what happens to your finance approval and your rate lock if settlement slides by two or three months. Approvals expire. Fixed rate locks expire. Cooling off and stamp duty timeframes have their own rules. None of that is a reason to walk away from the purchase, but all of it is a reason to have the conversation before you are in it rather than after.

Look at the settlement date, then look at what the contract says about extending it and what it costs.

Penalty interest for a late settlement is normal and it is usually charged at a rate set out in the contract. Know the number. Know who wears it if the delay is not yours.

Also worth checking whether the contract allows either side to extend at all, and on what notice. Some do. Some do not, and then you are negotiating from a weak position.

The front page is standard. The special conditions are the bit somebody wrote specifically for this transaction.

Check the finance clause. Is there one, what date does it fall due, and is that date realistic given how long the lender you are using actually takes at the moment. A finance date set five business days out is a problem you can see coming.

Check the building and pest date. Check whether the contract is subject to the sale of another property, and what that means if yours does not sell.

Check what has been listed as included and excluded. And check the adjustments clause so you know what you are being charged a share of at settlement.

None of this is exotic. It is just detail, and detail only gets found when someone sits down and reads the document properly instead of skimming the price and the date.

Your solicitor or conveyancer will read it. That is their job and a good one is worth every dollar. But you are the one signing, and there is a real difference between someone who has read their own contract and someone who has not. The first person asks questions early. The second one finds out late.

Read it before you sign it. If something in it does not match what you were told verbally, that is not a small thing, it is the thing.

Ever caught something in a contract that made you go back and read it twice?