KEY TAKE OUTS:
- What is an Agent Exchange?
- What is a Solicitor Exchange?
- Everything you need to know about exchange of Contract
Both the Real Estate Agent and the Legal Representative of the parties can perform an exchange of Contracts. Where Contracts are exchanged by the Real Estate Agent, this is commonly referred to as an ‘Agent exchange’ and where Contracts are exchanged by the Legal Representative of one of the parties to the Contract, this is commonly referred to as a ‘Solicitor exchange’.
So what is the difference?
Agent exchange
As the name suggests, an Agent exchange is an exchange of Contracts performed by the Vendor’s Real Estate Agent. The parties to the Contract, being the Vendor and Purchaser, will sign the Contract with the Agent and then the Agent will exchange the Contracts. Except in circumstances where the land size is over 2.5 hectares or the property is of a commercial nature, a cooling off period applies to this type of exchange. Only the Purchaser receives the benefit of the cooling off period. The Vendor is locked in on exchange. Given this, the Purchaser will typically conduct their due diligence during the cooling off period. This includes things like getting inspection reports, getting advice on the Contract terms, negotiating the Contract terms and obtaining unconditional loan approval. Signing the Contract and having the Agent exchange Contracts shortly after the Purchasers offer is accepted, allows the Purchaser to lock the Vendor in and take the property off the market. Prior to the Agent exchanging the Contracts, they will require the Purchaser to pay a holding deposit representing 0.25% of the agreed price. This is forfeited to the Vendor if the Purchaser rescinds (cancels) the Contract during the cooling off period.
Common misunderstanding about exchange of Contracts where a cooling off period applies…
The cooling off period forms part of the Contract completion period. If the Contracts were exchanged with a 5 day cooling off period and a 35 day completion period, the completion date is 35 days after the exchange date (date Contract were exchanged). The completion date is not 35 days after the cooling off period has expired.
Solicitor Exchange
A Solicitor exchange is an exchange of Contracts performed by the parties legal representatives. Usually, the Vendors Solicitor or Conveyancer. On exchange, the Purchasers Solicitor/Conveyancer will provide the Vendors Solicitor/Conveyancer with the Purchasers signed Contract and a Section 66W Certificate. The Section 66W Certificate waives the cooling off period. The full deposit is paid and Contracts are unconditionally exchanged. Both parties are then locked in. As such, the Purchaser would conduct their due diligence before signing the Contract and exchange. This includes getting inspection reports, getting advice on the Contract terms, negotiating the Contract terms and obtaining unconditional loan approval. Until the Contract is exchanged, the property remains on the market and the Vendor can accept offers from other prospective Purchasers.
It is important to note that whilst a Solicitor exchange is typically performed upon receipt of a 66W Certificate and is therefore unconditional, the legal representatives of the parties can exchange Contracts subject to a cooling off period. This occurs where the Agent is unwilling or unable to exchange, the parties agree that a cooling off period will apply and no Section 66W Certificate is provided.
CONCLUSION
Coutts have a team of experienced Solicitors and Conveyancers that can provide you with sound advice as well as guide you through the buying or selling process. For sound advice, please contact our office for assistance.
ABOUT MELINA COSTANTINO
Melina joined the Coutts team in 2010 working as a Licensed Conveyancer within our Property & Conveyancing team, based out of our Campbelltown office. Her commitment to client services saw her progress further and into the role of a Senior Licensed Conveyancer in July 2022.
She graduated with a distinction in the Advanced Diploma of Conveyancing and is accredited with the Australian Institute of Conveyancers NSW.
For further information please don’t hesitate to contact:
Melina Costantino
Senior Licensed Conveyancer & JP
info@couttslegal.com.au
1300 268 887
This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.
