Part 2 Legal Loopholes
2. All Parties To Sign
With multiple buyers or sellers it is vital to realise that if all parties have not individually signed the contract of sale, then there is no contract. For example, in the case of four sellers, namely two couples, each of the two couples (i.e. four people) must specifically sign the contract.
As an investor you should also scan all of the signatures and initials on the contract and if, say, there are four sellers who are selling the property, check there are four full signatures and four sets of initials alongside all of the alterations to the contract. Contracts usually also provide for there to be a witness to all signatures. This however, is not essential and failure to have a signature witnessed will not be fatal to the legality of the contract. The purpose of having a witness is just to have back-up evidence or corroboration so that if one of the parties whose signature appears in the contract denies they actually signed it and claims their signature was forged, the person who witnessed their signature could come forward to confirm they actually saw them sign it on the day.
Can a husband sign for his wife and vice versa? There is no law that says a spouse has authority to sign a contract of sale for their partner without there being in existence a registered Power of Attorney or specific written authority where, for example, mum authorises dad to sign the contract on her behalf. An exception to this rule is where the parties have bought the property in partnership (a “partnership” is a legal term and simply buying a property jointly with someone else does not by itself constitute that purchase as a partnership).
3. Area Of The Land
Most contracts of sale contain a provision for the area of the property to be inserted.
Great care must be taken in completing this provision of the contract and in most cases, unless you are perfectly certain what the area is, it is best to leave it blank.
What licence does the law allow to forgive an error in the completion of the area? If, for example, the true area is 1000 square metres, however the contract was incorrectly completed as 1100 square metres, does this entitle the buyer to terminate the contract of sale or bring an action against the seller for compensation (or threaten to bring such an action in an attempt to lever down the price)? In Queensland, for example, the contract provides that where any area is completed in the contract of sale, the seller guarantees this is the area (more or less).
The case law allows a discrepancy of between two to five per cent and forgives an error of this magnitude, but not more.
The reality is that in practice the error is usually much greater than two to five per cent, so it is worth checking any area shown in the contract with information on the title deed for the property contained at the Titles Office. A discrepancy of even well under two per cent of the area of a property can be fatal in some cases.
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