For most people buying a property is the most significant transaction they will enter into in their lifetime, both from an emotional and financial point of view. There can be detrimental consequences if it is not done properly.
We can help you navigate the process and will ensure that you get good title to the property you are buying and that there are no restrictions on the property that you are not aware of before you buy. We do this in part by considering whether your purchase contract needs special conditions or whether any existing special conditions are suitable.
Why do “due diligence” enquiries?
When buying a property there are some statutory obligations on the seller to disclose to the buyer certain things about the property before the contract is signed.
However, there is no obligation on the seller to tell you everything about the property or any of its defects and many enquiries about the property are not done until after the contract is signed or becomes unconditional. Furthermore, the old saying “Buyer Beware” applies as the contract may not protect against adverse search results in all circumstances.
Inserting a condition into the contract allowing a buyer to conduct “due diligence” enquiries will help a buyer to find out if the property is affected by any current or known future plans or licenses issued by government or by inclusion on any registers such as heritage listing or environmental management. A due diligence condition can provide a buyer with additional protection or rights in relation to adverse search results.
It’s important to remember that where the contract has already been signed there is generally no opportunity to add special conditions. In some limited circumstances it may be possible to negotiate amendments to the terms of the contract if there is a cooling off period or while the contract is still conditional.
Other important things to remember in considering whether to add a “due diligence” special condition: it is important to factor in the extra cost of these enquiries as the relevant Government bodies and authorities will charge a fee for the required report. Furthermore, it could well be that some of the results of the enquiries will not be through within the stipulated due diligence period, requiring your solicitor to ask the seller for an extension of time if required.
Other special conditions – avoiding the traps
Your lawyer can include special conditions in the contract, before it is signed, to deal with specific issues, not covered by the standard form contract, which may arise from searches or the property that you are purchasing (for example a pontoon may be attached to the property).
A special condition can provide a buyer with additional protection or rights in relation to adverse search results. For example, the contract could be made subject to satisfactory searches, work to be completed or can oblige the seller to compensate the buyer as a result of adverse search results.
Where the contract has already been signed there is generally no opportunity to add special conditions. In some limited circumstances it may be possible to negotiate amendments to the terms of the contract if there is a cooling off period or while the contract is still conditional.
Examples of useful special conditions
If you are buying a property that requires repairs or maintenance then you may wish to make the settlement conditional upon the completion of specified work and a satisfactory inspection before you are ready to settle the purchase.
If there is a special condition in the contract a buyer may be able to delay or refuse to settle if the issues are not rectified.
Another example of a special condition that a buyer may require is making completion subject to the successful sale of the buyer’s other property.
If you need assistance with a conveyancing matter (either buying or selling) or would like more information, please call us on 07 5480 6200 or email [email protected].