Real estate purchase price, deposit and finance term

The standard contract for buying real estate in Western Australia is often called an offer and acceptance contract. The offer and acceptance contract is in two physically separate, but equally important parts. The titles of each part of the contract are listed below.

  • Contract for Sale of Land or Strata Title By Offer and Acceptance–we’ll call this part the 'O & A contract'.
  • Joint Form of General Conditions for the Sale of Land–we’ll call this part the 'General Conditions'.

The O & A contract is produced by the Real Estate Institute of Western Australia (REIWA) and the general conditions booklet is produced jointly by REIWA and the Law Society. It's best to use the most up-to-date versions of the contract.

There may be other contracts used in the marketplace.

As mentioned earlier, contracts are made up of a number of terms (you could call them rules or conditions). When each party signs the contract, they agree to all the terms of the contract. It is important to remember that the law in Western Australia does not require that contracts for the purchase of property contain a cooling-off period. If the contract does not include a cooling off period, you cannot get out of a contract to buy a property because you have changed your mind.

Purchase price

When making an offer to buy a property, you indicate the price that you are prepared to pay for the property on the O & A contract. Generally, the price will be the subject of negotiation between you and the seller. Make sure any final agreement about price is clearly written at the relevant part of the O & A contract.


You will need to indicate on the O & A contract the amount of a deposit, if any, that you are willing to pay up-front (that is, when your offer is accepted by the seller). The amount of any deposit you offer when buying a property is negotiable between you and the seller.

One of the purposes of the deposit is to show that you are serious about purchasing the property. So what happens to the deposit?

If your offer to buy a property is accepted, the deposit is used towards the purchase price of the property you are buying.

If the contract remains in force but you don’t go ahead with the deal, the seller may seek to keep the deposit and you may have to pay other penalties.

If the contract does not proceed for valid reasons, for example, if you are genuinely unable to get a home loan, the deposit must be refunded.

The deposit is usually held in the trust account of the seller’s real estate agent. The agent is called a 'stakeholder' and can only release the deposit from the account with the permission of both the buyer and the seller or in accordance with a court order. Other persons, such as lawyers or settlement agents, could act as stakeholders by holding the deposit in a trust account on behalf of the buyer and seller.

Finance term

The finance term in the O & A contract states buyers must try their best to get a home loan. If you need to borrow money to buy a property, do not cross out this term–it will protect you if lenders refuse to give you a home loan.

Some financial conditions may be written to suggest that if you are offered a loan then you have been granted finance and the O & A Contract becomes binding. To avoid having to agree to an unreasonable loan, you should talk to a lender about getting a loan before you make an offer on a property and to find out how long the approval process may take. Make sure the terms of the loan, for example, the interest rate, fees and charges, are reasonable.

On the O & A contract, it is recommended you specify the financial institution you want to borrow from. 

Delay in settlement

Bonita was in the process of buying her first unit in Inglewood and was very excited about the prospect of moving in. When putting an offer on the unit, Bonita requested a settlement date in two weeks' time. She couldn’t wait to move out of home. The sellers accepted Bonita’s offer.

Bonita needed to arrange finance to buy the unit. It took longer than Bonita expected before the bank approved her application for a loan. There was so much paperwork to organise. Bonita also employed a settlement agent. The settlement agent got to work immediately on her file and was alarmed by the short amount of time he had to arrange the settlement. The process was made even more difficult as the bank’s lending section was located in Melbourne. The settlement agent persisted with calls to the bank to highlight the urgency in processing the mortgage documents so that settlement could proceed on the date nominated by Bonita on the contract.

Bonita had also placed some special conditions on the purchase, such as getting a termite inspection and report done on the property and a general building inspection was also required.

The settlement agent made enquiries with the relevant utilities about the property, made sure that rates and taxes were adjusted correctly and ensured all paperwork was filled out and signed. The settlement agent was working under significant time pressure and there was little time to deal with any unexpected surprises.

The settlement date arrived and it became clear that Bonita’s bank would not be in a position to settle.

Bonita wondered what would happen, now that settlement would not take place. She asked her settlement agent for advice. The settlement agent told Bonita that because she was unable to settle at the time stated on the contract, she would have three business days before she was required to start compensating the seller. The daily amount she was required to pay is written in the General Conditions – part of the contract she signed to buy the unit.

After repeated requests by the settlement agent, the bank was able to settle late the following week. Bonita had to pay some compensation to the seller. This payment could have been avoided if Bonita had employed the settlement agent earlier and got some advice about choosing a more realistic settlement date before signing the contract.



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