| Purchase Contract Reviews |
| 7 Examples – Why You Need your Next Contract Reviewed! |
| About to sign a contract to buy Property? READ THIS FIRST The purchase of a property is a major investment decision. In many cases it will be your largest purchase for a decade! Contracts are prepared by the Vendor’s representative with the Vendor’s best interests in mind and not yours as Purchaser. Lewis O’Brien & Associates strongly recommends a purchase contract review BEFORE you sign. We can point out problems, suggest special conditions that add value and answer your questions. Click here to book your review for the low fixed fee of $125.00. A little knowledge can help you approach your purchase with more confidence and minimise your stress. Set out below are 7 examples that have arisen over the last few weeks where we have been able to avoid a problem for a client or where a review might have avoided the problem. 1. Missing Titles Our first example comes from a contract for the purchase of 4 units. There were two titles included in the Vendor’s Statement. It was possible that this was right as there is no reason why there couldn’t be two units on each of the two titles. However, a closer examination revealed that the titles related to Units 1 and 2. There was no title for Units 3 and 4. This issue highlights that vendor’s solicitors don’t always get it right. This is an extreme case but it isn’t uncommon for car park titles to be omitted and other issues to arise. 2. Incorrect Boundaries The second example is a case where the side boundary had a significant indent on the plan of subdivision. However the Planning Report and Google Maps suggested the fence line was straight. This presented an apparent case of adverse possession – as the vendors had owned the property for 20 years. The obvious solution was to insert a special condition requiring the vendors to provide a statutory declaration prior to settlement that the fence had been in place for more than 20 years. This will allow the purchaser to make an adverse possession claim and thereby include the extra 6 square metres on title at some point in the future. 3. Land Tax Land Tax is becoming an ever larger expense for property owners. Land Tax can bite purchasers in a number of ways. Some clients believe that, if they are buying a home, they will be exempt from land tax. This may be true in later years but won’t prevent you being liable to reimburse part of the vendor’s land tax (if they are liable to it). Further, there are different ways to calculate land tax. The Single Holding method is typical but we are seeing more and more special conditions requiring land tax to be reimbursed on a proportional basis. This difference can come to thousands of dollars. 4. Buying with Plans and Permits If you are buying a site for development with plans and permits there are a number of special conditions you should consider: – Can you get an electronic, editable copy of the plans? – What other reports, plans and drawings does the vendor have? – Has the vendor paid the professional fees due to the parties that prepared the plans; and – Is the vendor assigning their rights in the plans and reports to you? The right special conditions can save you thousands later on. 5. Pest Inspection Conditions We recommended to the purchaser our, more favourable, version of the pest inspection condition. The agent / vendor refused. The client’s pest inspector found termites all around the property. However, the inspector’s access to the inside of the property was restricted (the vendor was a hoarder) and the access to the exterior was hampered by overgrown gardens. The inspector believed that the house was infested with termites – but couldn’t gain sufficient access to be certain enough to include it in the report. The Vendor refused to terminate the contract because, in line with the standard special condition, the report did not state that a structure on the property was subject to infestation. One wonders whether this is why the vendor refused the more favourable pest inspection condition in the first place? 6. GST Let’s face it – few people really understand GST on property and when it does and doesn’t apply. We recently had a case where the contract provided the price was ‘plus GST’ for an existing residential property. It was not clear why this was the case and I pointed this out to the client. As a result we corrected the GST treatment and the client didn’t have to pay an additional 10% GST at settlement on top of the agreed purchase price. 7. Vacant Possession A client recently signed a contract that provided the contract was ‘subject to lease’ without understanding the implications of this. When I pointed out that this meant that the property would come with a tenant at settlement the client was horrified. Not only was the tenant known to be difficult but the client’s visa position made it essential that they could move in relatively quickly after settlement. Fortunately, this issue arose in the course of our review and we were able to get this changed before the vendor signed the contract. Purchase Contract Reviews Again, the above examples are real problems that our clients have faced in the past few weeks! Buying real estate is a serious undertaking that needs to be done well to ensure that your purchase is a success. I understand that it is easy not to get a purchase review done. The agent is hassling you to sign now and it’s another expense you would prefer not to pay as you aren’t sure your bid will succeed. To make it easier we have reduced the cost to a fixed $125.00. This includes a 15 minute phone review of the contract. I will point out the issues you need to be aware of, draft special conditions for you and answer any other questions you may have. Best of all – you can book a time on line that suits you. CLICK HERE to book your review. Our more successful clients always get their contracts reviewed before they sign them. In one case, the client has purchased more than one hundred properties – and still gets every contract reviewed first. Let Lewis O’Brien & Associates help make your next purchase less stressful and allow you to approach the negotiation with more confidence. Book a Purchase Contract Review by clicking HERE. |
