I’d like to make my job easier. If you are about to buy a property, you can help.
How? By not signing a Contract until you’ve had it reviewed.
If a bad clause can be removed, or a good clause can be included; then you will have less hassles to deal with during the buying process!
Buyers of Queensland property have enough issues to manage – you don’t want problems which could have been avoided in the first place!
Give me a call or send me a text, after hours or the weekend, and tell me your plans. You’d rather avoid the issue arising in the first place, than having to rectify it later!
Ask the Sales Agent to email me the draft (unsigned) Contract.
I’ve included a few suggestions below about some issues that are frequently occurring. If these issues can be avoided, it might make your purchase that little less complicated.
However, whilst this information might be useful, if the Selling Agent thinks a Buyer is too difficult or demanding, the likelihood that the Seller will accept their offer might diminish!
The Sales Agent works for who?
Clients buying real estate occasionally tell me how unimpressed they are with the Selling Agent.
Whilst I personally know and interact with many good agents, their job is to achieve the highest possible selling price. Yes, that is obvious, but some buyers forget and think that the Sales Agent is doing the best job they can to persuade the Seller to accept their offer.
If you want someone to act in your best interests, engage a Buyers Agent.
Finance Clause Fiddling!
Most Contracts contain a condition that the purchase is subject to the Buyer obtaining a satisfactory approval of finance.
Some Selling Agents are concerned that Buyers use this as a ‘get-out clause’ where they change their mind and use the clause to terminate the Contract. That’s a genuine concern because it can occur.
Some agents want to minimise this occurring and change the Contract. How?
By inserting a special condition in a Contract stating that:
(a) the Buyer cannot terminate the Contract, &/or
(b) the deposit will not be refunded to the Buyer;
until the Buyer provides a letter from the ‘Lender’ rejecting their finance application.
These ridiculous conditions have more than a few problems, such as:
1 A Buyer cannot demand or compel a financial institution to issue a letter that it is not prepared to issue.
2 The Lender may not have completed its loan assessment by the due date, and a Buyer is not compelled to request an extension of time.
3 The Lender may not have declined or rejected the finance application, but may have:
(a) approved a loan for a lower amount of money insufficient to complete the purchase,
(b) approved a loan on terms and conditions which are not reasonably acceptable to the Buyers, such as:
(i) the elimination of personal loans, credit cards, car loans;
(ii) the provision of a personal guarantee by a family member;
(iii) loan repayments which are too high for the Buyers having regard to other commitments;
(iv) the refinancing of other existing loans;
(v) the interest rate is too high;
(vi) the loan term is too short resulting in loan repayments being too high.
Although there are many reasons why requiring a “rejection letter” from a Lender is not very sensible, we continue to see these clauses!
Seriously, how can a Buyer to agree to something over which they have NO CONTROL ?
Suggestion: Don’t let yourself be bullied by the Sales Agent!
Rule a line through the special condition, and initial!
Body Corporate Secrets
The information disclosed to someone buying an apartment in Queensland is really very interesting. Relevant informaton is required to be provided in the Contract, and in the Dislcosure Statement; rather than having all the information together in the one document!
1 Contract Non-Disclosure
The Seller is required to disclose:
1 Defects in the Common Property or in the Body Corporate Assets – whether obvious or hidden
2 All liabilities of the Body Corporate – whether Actual or Contingent or Expected
3 Any important aspects concerning the affairs of Body Corporate
4 Any exceptions to any Warranties contained in the Contract
5 Any proposed Body Corporate Resolutions
If all this information was disclosed, the Buyer could make an informed decision about:
1 whether to buy the property, and
2 how much money they should offer as the purchase price.
What really happens?
The reality is that this obligation is ignored by the Seller 99% of the time. Sellers rely upon the information they receive from the Selling Agent. >>> Most Selling Agents aren’t aware (in any meaningful way) about these disclosure obligations. >>> Selling Agents don’t give advice to owners about their disclosure obligations, as that is a matter for the owner to discuss with their lawyer. >>> The owner rarely makes that phone call to their lawyer and the conversation doesn’t take place!
2 Disclosure Statement Non-Disclosure
Every Buyer should receive a document called a Disclosure Statement, signed by the Seller or the Sellers Agent – before they sign the Contract.
The information in the Disclosure Statement is important and useful – but rarely comprehensive.
Although a Buyer may feel comfortable receiving a Disclosure Statement, they can easily overlook that much of the vital information which might disclose significant issues was not included in the Contract.
Once you become the owner, the body corporate liabilities become your liabilities – in line with your Lot Entitlement.
3 What should a Buyer do?
It is bizarre that the relevant authorities in Queensland permit the above disclosure process to continue!
Buyers have to look after themselves. The Buyer has to spend money conducting an inspection of the body corporate records.
The money that they spend investigating the body corporate will be lost if the report identifies significant issues and they terminate the Contract. The money that may be lost if they don’t investigate the body corporate and complete the purchase may be far far more.
How we can help
Before signing the Contract, we can provide a Special Condition giving you time (eg – 14 days) to obtain the body corporate information and decide whether you are satisfied. The Special Condition could be for ‘Due Diligence’ or ‘Body Corporate Records Inspection Report’.
Even if you don’t include a Special Condition, we can still obtain a Body Corporate Records Inspection Report. If the report identifies a material non-disclosure, you may be able to terminate the Contract within 14 days of receiving the signed Contract from the Seller.
We engage inspectors to go to the Body Corporate offices and inspect the records, and take copies of relevant documents. Once we send you the report and documents, you need time to consider whether any significant issues have been identified, and if so, whether you will continue with the purchase of the property.
You make an informed decision. Peace of mind……
Disclaimer: The above is to be considered as general education. This is not advice and it is not to be acted upon without advice from a qualified professional who understands your personal circumstances.
Copyright © 2019 Wockner Lawyers. All Rights Reserved. Contact Wockner Lawyers – [email protected]. This article may not be used without the prior written consent from the author. See below for more details…
DO YOU WANT TO USE THIS ARTICLE IN YOUR E-ZINE OR WEBSITE? You can, as long as you include this text copy in its entirety:
For assistance with your next Property and Conveyancing transaction, or your Wills and Estate Planning arrangements, contact Wockner Lawyers.