Purchasing a property is a very big investment so Purchasers should do their due diligence prior to signing the Contract for Sale (“Contract”) and also during the purchase process.
Here are some issues which could arise but can be avoided if you engage a solicitor or conveyancer to carry out the transaction for you:
Not having loan approval received in writing
It is absolutely critical that Purchasers obtain formal unconditional loan approval before the expiration of the cooling off period. Purchasers should not rely upon any verbal confirmation from their lender or broker that their finance is approved. Purchasers should ask for their loan approval in writing. This approval confirmation should then be provided to their solicitor so that it is checked to ensure that there are no hidden conditions of the approval.
If a cooling off period has expired and a Purchaser has not received written confirmation of their loan approval, they will be required to pay the full 10% deposit plus the vendor may be able to claim for damages, costs and expenses arising out of the Purchaser being in breach of the Contract.
Therefore, it’s really important that Purchasers obtain their loan approval in writing and not accept anything less.
Not obtaining inspection reports
Purchasers need to ensure that they have obtained a Pest and Building Inspection Report carried out by a qualified Inspector. If a unit is being purchased, then a Strata Inspection Report would be recommended in addition. Without these inspection reports, a Purchaser is not able to get an understanding as to the structural condition of the property. A Pest Inspection Report will also check for past or current termite activity in the property which a Purchaser would not be able to identify when doing their own inspection of the property as pest inspectors have specific devices which detect any termite activity behind walls etc. Purchasers must ensure that the inspection reports they obtain complies with Australian Standard AS 4349.1 – 2007 Inspection of Buildings.
For a unit purchase, it is important to obtain a Strata Inspection Report as this will advise a Purchaser what the current levies will be after settlement and also if there are any special levies payable. If there are any special levies owing, the report will advise why the levies were raised e.g. replacement of the cladding to the whole of the unit complex. This could be a major expense if not picked up in the Strata Report. The strata inspector will also provide the Purchaser with information on the books and records of the Body Corporate and will also check that the strata insurance is in place. These are just a few points which are outlined in a strata report.
One example of why inspection reports are critical is that we obtained a Building Report for one of our clients recently and were able to ascertain from the report that the property contained asbestos. Our clients were then able to make a decision as to whether they wanted to proceed or pull out of the contract.
Not doing a final inspection prior to settlement
Not carrying out a final inspection prior to settlement could leave a Purchaser with any unwanted items and rubbish which the Vendor has left behind. If settlement has taken place and no final inspection of the property was carried out by the Purchaser immediately prior to settlement, then the Purchaser is stuck with anything which the vendor has left behind.
An example of this situation took place when one of our purchase clients carried out their final inspection of the property on the morning of settlement and found a large skip bin full of the vendor’s rubbish. The vendor had fully vacated and left the property. Our clients informed us before settlement proceeded and we were able to negotiate some funds being held back from the deposit held by the agent to cover the cost of removal of the skip bin therefore our client was not left with the cost of removing the vendor’s left behind rubbish.
Another example which we experienced with a purchaser was that on the morning of settlement, our client carried out their final inspection of a property and found that the vendor had left holes in the walls from removal of brackets etc. We were able to negotiate (prior to settlement) some money being held back from the deposit to cover the repair work to patch up the holes.
Therefore, it is important that Purchasers carry out a final inspection of the property preferably on the morning of settlement to ensure that the Vendor has left the property completely vacant especially if the Contract is marked “vacant possession.” A solicitor acting for a Purchaser should not proceed with settlement until they have received advice from their client that they are satisfied with the condition of the property on the morning of settlement.
The above points are just a few areas in a conveyancing process which solicitors and conveyancers should work closely with their client to provide a level of assistance to protect their investment or potential loss of a deposit.
If you have further questions please contact us at email@example.com.
This is not legal advice.