Recent client experiences in the current competitive housing market made us think it was a good time to write an article about the importance of wording on Sale & Purchase contracts when buying or selling property. It is important to remember that the Sale & Purchase document is a legally binding contract and as such needs to be looked at in detail before signing to avoid any potential pitfalls as buyer or seller.
The first thing to make sure is covered is that the contract is able to be viewed by your solicitor, so that they can give their approval to the form and content of the contract. We have seen a lot of contracts where the buyers have had a clause requiring approval by the solicitor regarding certificate of title, but this is only an acceptance that there are no issues with the legal aspects of the nature of the property, such as boundaries or plans on the council file. You should also be mindful of any required dates on the contract for finance and settlement, making sure that they line up when you can get your hands on any other funds required to complete the purchase.
When choosing the conditions that are to be included on the contract you need to be aware that they are there for the protection of both parties. A building inspection is a good idea, as is the purchaser obtaining a LIM (Land Information Memorandum) report which is available from the council and details items such as the zoning of the property, building consents, storm water arrangements, rates owing and any potential hazards. Also, becoming more of a requirement is obtaining a Meth test for the property to be purchased, to make sure that the home being purchased hasn’t been previously contaminated. Your solicitor will be able to advise you whether they think these conditions need to be put in place.
There can also be conditions out of your immediate control that have to be finalised before the sale can proceed, such as the sale of another property or conditions to obtain suitable finance. To approve a loan for the purchase, the bank needs to be satisfied with the location, condition and value of the property being purchased and offered as security against a loan. It is important for the person selling to know that the price agreed is going to allow sufficient funds to clear any debt owing (Including break costs if the loan is on a fixed rate), as well as covering real estate and legal expenses.
There are many more conditions that can be entered on a Sale & Purchase document, but obviously the more clauses that are placed on a contract, the weaker any offer is going to be. So, whether buying or selling, know what is required on the contract and get the right advice to avoid any disappointments. Your successful sale or purchase will be conditional on it.
