As leading Ipswich conveyancing lawyers, we’ve seen it plenty of times when people rush into a home purchase without knowing a few things. We hope the following information is of use to you and will help minimise the risk of you doing what others have done.
The most common forms of contract used by most real estate agents and law firms when preparing contracts for the sale of residential properties, are the Queensland Law Society approved R.E.I.Q. standard form of contracts and the ADL Forms contract. The standard terms of these two different contacts are not identical but are very similar. Some of the most important issues relevant to the standard conditions of these contracts are:-
The buyer often becomes responsible for the risk of the property being sold almost immediately from the date of the contract.
A Buyer should ensure that they take out appropriate insurance cover for the subject property as soon as possible after they sign the Contract. If a Seller does not sign the Contract the Buyer can easily cancel any insurance they may have put in place.
Provision for Buyer’s finance approval is a standard condition.
If a buyer is relying on finance approval to complete settlement the finance condition in the contract must be completed regardless of whether a ‘pre-approval has been received by the buyer.
Buyers should be aware that a ‘pre-approval of finance’ is not a sufficient form of approval to enter into a contract that is not subject to finance approval. A Buyer should not consider their finance application approved until the financier issues formal written approval on terms satisfactory to the buyer and all conditions of the approval (in particular valuations of the security property etc.) are satisfied.
Building and Pest Inspections and Pool Inspections
These standard conditions must be completed in the Contract if the Buyer wishes to obtain and rely on the outcome of any inspections. Such inspections can reveal issues of a structural nature and also issues re pest infestations such as termites and are ‘worth the expense’ as the Buyer has rights to terminate if unsatisfactory reports are obtained.
Building and Pest and Pool Inspections do not provide any protection to a Buyer in respect of council approvals and inspections.
The issue of the status of building approvals for improvements on properties is not covered under the Building Inspection provisions or the standard contract conditions unless certain notices have been issued by Council prior to the date of the contract. A seller is not obliged to have all improvements Council approved with final inspection certificates issued or to give specific notice to a buyer in this regard prior to execution of a Contract.
Any Buyer who wishes to be satisfied that Council approvals and inspections have been completed satisfactorily in respect of improvements must ensure a specific special condition is inserted in the Contract prior to it being signed by the parties.
The last thing any buyer would want to occur after they sign a contract and complete settlement is for issues regarding building approvals to arise and find they have no ‘quick fix’ and necessary expenses to rectify the situation will have to be paid by them. It certainly is not a pleasant surprise to find you have purchased a property together with existing building approval issues.
Seller’s Disclosure when purchasing a unit or lot in a group title complex
There are certain requirements for the Seller to give to the Buyer formal disclosure of matters relevant to Body Corporate issues prior to entering into a Contract. The buyer may have rights to terminate the contract if the seller’s disclosure does not satisfy the requirements under the relevant legislation.
The disclosure the Seller must give prior to entering into the Contract is not required to include body corporate issues or matters that may prejudice or impact the buyer. The only way a buyer can protect themselves in this regard is include a special condition in the contract before it is signed making the contract subject to a satisfactory formal inspection of the Body Corporate records.
Such inspections may reveal problems such as body corporate record keeping problems, low balances in administrative or sinking funds, insurance claim problems, common property issues, building/structural problems, maintenance issues etc. Any of these problems could lead to increases in levies or the need for issuing of special levies.
In short, even though you may be signing a ‘standard’ commonly used contract, it is always the case that a Buyer should seek the advice of their solicitor before you sign the Contract. That consultation with your solicitor may save you a lot of angst and expense in the long term.