The real estate market and the legal-sounding jargon can be confusing for everyone, from first home buyers to experienced property owners.
One term that causes a fair amount of confusion is the saying “under contract”.
It would be safe to say that everyone has seen the words "under contract" displayed across the signboard out the front of a property, in the window of a real estate agent's office or even online. But what does that actually mean?
“Under contract” means the seller and prospective buyer have agreed on a purchase price and signed a contract. When the seller and buyer enter into a contract, there are usually conditions that form part of the contract, and that can leave the door slightly open for others if something goes wrong.
Generally speaking, these conditions are designed to protect the buyer, and can be written into the contract in a special condition called “subject to”.
Once the buyer and seller have signed, the contract becomes legally binding unless there is legitimate reason to withdraw. Some examples of this could be that:
the contract is subject to a building and pest inspection report however the building didn’t pass the building and pest inspections;
the contract is subject to finance however the buyer couldn't secure finance approval; or
the buyer decides not to go ahead under their "cooling off" rights.
Once all conditions within the contract have been satisfied and settlement has gone through, that is when the property is completely “sold”.
Our recommendation is that if you see a property that you really like however it is marked as “under contract”, you should contact the sales agent anyway. You never know what your luck will be!
This is general advice only, for specific legal advice speak with our team today on 07 3009 6555 for an initial consultation on any property-related matter.