Buying a property is one of the most important financial decisions you will ever make. It’s easy to get swept up in emotions when you think you’ve found “the one”, especially when you’re a first home buyer or you’ve been searching for ages. But it’s very important to carefully consider the legal and financial implications before you sign a contract. Thorough research could save you a fortune and ensure you avoid a serious mistake.
From the hundreds of real estate contracts she’s read during her career, guest blogger and Melbourne property lawyer Kate Ashmor from Ashmor Legal shares three legal tips to keep in mind when you’re considering a purchase:
1. Carefully inspect the property and check the condition of EVERYTHING before you sign the contract.
A standard clause in the contract makes the vendor (or seller) only responsible for delivering the property to you at settlement in the condition it was on the day of sale, fair wear and tear excepted. So if the central heating wasn’t working on the day you signed the contract or there was a leak in the bathroom, bad luck. Turning on all appliances and checking all light fittings beforehand will give you an accurate picture of the state of the property; you may be able to negotiate on price if something like an oven or garage door isn’t working.
2. Consider obtaining building and pest inspections.
Older period homes may have hidden issues with foundations and roofing, as well as termite infestation. Newer homes can have waterproofing and drainage issues. Investing in a building and pest inspection report could save you a fortune if you avoid buying an issue-plagued home. If relevant, read the Owners Corporations Annual General Meeting minutes carefully – will you be required to contribute to major capital works in the future? Look out for the condition of driveway concrete, fences and stairwell carpets too.
3. If you buy “subject to building and pest inspection” ensure the special condition is broadly worded.
You can insist on your wording of the special condition in the contract, so there’s enough wriggle room to terminate the contract if the inspection picks up any issues, regardless of their seriousness. Avoid the word “major” before ‘defect” and “live” before “pest infestation”. It’s your offer and you’re entitled to insist on your wording, regardless of what the selling agent says. But remember: when you purchase at auction, the contract is not subject to anything (it’s unconditional), so you’ll need to arrange your building and pest inspection to occur before auction day.
Note: the above is general information and should not be considered as legal advice.
© Ashmor Legal Pty Ltd 2016, all rights reserved.
Here’s how to contact Kate for assistance with conveyancing: