Step by Step Guide To Buying A House – The Agreement
This is the long awaited sequel to the Step by Step Guide to Buying A House. In our previous article, I have discussed the pre-purchase steps which a buyer of a house should take. In this article, I will share with you what are the common understanding between the vendor and the buyer which are reduced into writing in the form of a Sale and Purchase Agreement.
A Sale and Purchase Agreement (SPA) will contain salient information like the vendor and the buyer’s personal details as well as a detailed description of the house being sold. It will also stipulate the total purchase price which is made up of the deposit payable and balance purchase price. The timeline for payment of the total purchase price is also stated in the SPA and it is not uncommon for the timeline to be based on 3 months plus an extension of a further 1 month.
Apart from the identities of the parties, description of property, pricing and timeline, the SPA will also include the rights and obligations of both parties during the course of the SPA. There are many things which the parties may need to do. Taking our earlier example wherein the house is currently charged (mortgaged) to a bank, the vendor will be obliged to obtain a Redemption Statement cum Undertaking from his bank in favour of the Purchaser or the Purchaser’s Bank. This Redemption Statement will indicate the amount which is payable to redeem the property by reason of the loan taken by the Vendor. The SPA will also include various warranties by the Vendor eg, that the property is not subject to any acquisition by the relevant authorities, that the quit rent and assessment has been duly paid and that the Vendors are not undischarged bankrupts.
With so many terms and conditions present on the SPA, it is highly advisable that each party appoint his own solicitor to look after his interests. As explained in one of my earlier articles on the scale legal fees for sale and purchase of properties, a solicitor may not act for both vendor and purchaser in the same transaction.
After the vendor and buyer are satisfied with the terms of the SPA, the SPA is then executed by the parties and subsequently stamped at the Stamp Office. Time begins to run and the parties would be guided by the SPA on what they need to do before the property is ultimately registered in favour of the buyer’s name and keys are passed.
