If you are about to enter into a contract to buy a property – whether it is residential or commercial property – there are things that you should look out for before you sign so as to better protect your own interest.
There are consumer laws in place in South Australia and these will, to some extent, protect you. But they can only go so far. Ultimately the best person to look after you is you.
So, what should you look out and do before you sign contract for purchase of a property?
Here are some:-
- Satisfy yourself – as far as you can – that you are not overpaying for the property. This often happens when you “fall in love” with a property.
- Have a building and pest inspection arranged. It should be a condition of the purchase contract that you are satisfied with these reports (or words to that effect).
- If you are borrowing – the contract needs to be subject to finance. A few things here;
- make sure you are given enough time in which to get approval
- don’t agree to the use of vague clauses such as “as per lender’s current lending criteria. What this means is that if your lender decides to approve the loan and offers it to you on ridiculous terms (20% interest, 3 year term etc. – then you are bound to proceed with it. So make sure that you specify the maximum interest rate that you are willing to pay and the required term of the loan – say 25–30 years. By doing this, if the approval is outside of these terms then you can elect not to proceed if you want to.
- there is a form of contract that some agents use that states that upon you providing a letter of approval of finance then the finance clause immediately comes out of the contract and is no longer a condition. We suggest that you should not sign a contract with this clause in it and ask that the clause be amended to state that you are buying subject to finance and also subject to the loan being made available at settlement. Ring us for more detail on this.
- Enquire of the agent/vendor whether there are any problems that they are aware of with the electrical wiring, plumbing etc;
- are all appliances included?
- are they all in reasonable working order and condition?
- bear in mind that what you see (or don’t) is what you get at settlement. If the air conditioner was not working when you inspected it you can’t expect that it is when you settle – unless you discuss this and this is agreed.
- also, if something was working and stops working between contract and settlement, the vendor is only liable if he/she caused the damage. If it came about because of normal wear and tear then the vendor is not obliged to fix it.
- Be aware that you do not have the right to a further inspection before settlement – unless you make this a condition when you buy.
The point of this article is to highlight some of the possible pitfalls in buying. It is not possible to cover them all here as many depend on your particular transaction.
We suggest that you contact us and appoint us to act for you before you sign anything.