Settlement is largely dependent on the Offer and Acceptance. We’ve talked about the O&A on this blog before – things you should include, why clauses are important, and how incomplete O&As can jeopardise settlement.
But if you’re a buyer or a seller, there’s more you need to know about the conditions and warranties of Offer and Acceptances – known as clauses.
Here’s three basic, but important, facts about Offer and Acceptance clauses:
1. They’re legally binding
Once the buyer’s Offer is accepted by the seller, the Offer and Acceptance becomes a contract. That means you’re legally bound by the clauses on that Offer – so write them carefully!
2. They can be whatever you want
Which clauses are included on the O&A is up to the buyer and seller. It’s wise to include clauses that help the sale proceed in your best interest. For example:
- Buyers often include property inspection clauses that allow them to officially check that the property is in good condition before settlement, and
- Clarification of items that aren’t included with the purchase help the seller avoid conflict with the buyer over chattels.
While the buyer will naturally want to include clauses that ensure the transaction goes smoothly, too many seemingly unnecessary clauses may deter the seller from accepting the offer.
3. You need to take action
If settlement is to proceed, the clauses of the O&A need to be met. But some important clauses – namely, the finance clause and any clauses requiring property inspections be carried out – have an expiry date. If you don’t carry out the action specified by these types of clauses, you can – and often do – forfeit the benefit of the clause! If it’s an inspection clause, settlement may proceed without inspections, or if it’s a finance clause, the contract may be cancelled altogether.
Familiarise yourself with the clauses and their expiry dates before making or accepting an Offer. Knowing how clauses work and fulfilling your contractual obligations promptly will increase the likelihood of settlement proceeding smoothly.