When navigating the real estate market in Western Australia, understanding the nuances of offer and acceptance contracts can save buyers and sellers from unnecessary stress. One of the key contract variations in WA is the "subject-to-sale" contract, often accompanied by the "48-hour clause."
What Is a Subject-to-Sale Contract?
A subject-to-sale contract is an agreement where the buyer’s purchase of a property is conditional on selling their existing home. This arrangement benefits buyers who want to avoid owning two properties simultaneously and the financial strain that can come with it.
While subject-to-sale contracts can be a practical solution, they inherently involve a level of uncertainty for the seller. To mitigate this, these contracts are often paired with the 48-hour clause.
The 48-Hour Clause Explained
The 48-hour clause, included in REIWA’s standard annexures, allows sellers to continue marketing their property while the buyer works to sell their existing property. If the seller receives a competing offer, the clause gives the original buyer 48 hours to either:
Remove the subject-to-sale condition, typically by securing alternative financing or selling their property under very tight timelines, or
Withdraw their offer, allowing the seller to proceed with the competing offer.
This clause ensures that sellers are not locked into an uncertain contract indefinitely while still providing a fair opportunity for the buyer to complete their sale.
Benefits and Risks of Subject-to-Sale Contracts
For Buyers:
Benefits: Offers a financial safety net by making the purchase conditional on selling your current property.
Risks: Competing offers could force you to act quickly, sometimes under less-than-ideal conditions.
For Sellers:
Benefits: The 48-hour clause provides flexibility to entertain other offers while giving the original buyer a chance to finalise their sale.
Risks: The buyer’s failure to sell their property could delay the sale of your property.
Best Practices for Buyers and Sellers
Clear Communication: Ensure all parties fully understand the terms of the subject-to-sale contract and the implications of the 48-hour clause.
Realistic Timelines: Buyers should have a realistic plan for selling their property and obtaining finance.
Seek Professional Guidance: Use REIWA’s standard contracts and work with experienced real estate agents and settlement agents, like Adaptive Settlements, to ensure all terms are clear and binding.
Due Diligence: Sellers should vet competing offers carefully, particularly when the 48-hour clause is triggered.
How Adaptive Settlements Can Help
Navigating the intricacies of offer and acceptance contracts, especially with subject-to-sale terms and the 48-hour clause, requires professional expertise. At Adaptive Settlements, we specialise in ensuring all documentation complies with Western Australian real estate laws while safeguarding our client’s interests.
Whether you are buying or selling, we’re here to provide clarity and streamline the settlement process. Contact us today to learn more about how we can assist with your real estate journey.
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