Our property lawyers have helped
hundreds of people buy their first home.
We know how exciting it can be, but
we also know how daunting it can be.
Given that purchasing your first
home may in fact be the biggest purchase of your life, it’s important to get it
right.
To help you on your way we’ve
compiled a list of common mistakes that we see in Real Estate Contracts.
Hopefully by being aware of these
mistakes you’ll be able to avoid them and
work towards a smooth purchase and a
wonderful investment for your future.
Top 5 mistakes:
1.
Incorrect spelling of names and including middle names
Vendors and purchasers of property
must prove their identity when selling and buying property.
Having a Certificate of Title issued
in the wrong name can cause a lot of headaches when trying to sell a property
down the track.
Too often we see Contracts of Sale
that have incorrect spelling or names or shortening or exclusion of middle
names.
To avoid such problems, buyers
should consider how they wish to purchase a property before they sign the
contract, and if signing in their own name they should ensure to include their
full legal name in all contracts for the sale or purchase of real estate.
2.
Failing to disclose encumbrances in the contract such as easements
Contracts of Sale should note all
easements that affect the property.
Easements give third parties the
right to use your property in a particular way (i.e., a shared driveway).
If an easement materially affects
the purchaser’s right to use the property then the purchaser is generally
entitled to terminate the contract unless the easement has been disclosed under
the Contract of Sale.
3.
Failing to disclose leases in the contract
Generally property is sold with
vacant possession unless the Contract of Sale discloses a tenancy and any
options under the lease.
Often however, vendors fail to
disclose leases because they assume that they will be able to end the lease
prior to settlement.
This is of course not always
possible.
As a purchaser of property it is
prudent to make enquiries about whether or not there are any leases in place,
and if so, whether the tenant will be vacating prior to settlement.
4.
Expired conditions
Purchasers often insert conditions
into contracts such as ‘subject to finance’ or ‘subject to a building
inspection’.
However, inserting these conditions
doesn’t automatically give a purchaser the right to cancel the contract if the
conditions are not met.
The purchaser must make every effort
to fulfill the conditions and if the conditions cannot be fulfilled, the
purchaser must ensure that he or she notifies the vendor that the condition has
not been met prior to the expiration period.
Otherwise the purchaser risks the
contract becoming unconditional.
5.
Ineffective Building Inspection Conditions
Often purchasers think that
inserting a building inspection clause will mean that if the building report
shows that the property is not in ‘good condition’ (i.e. leaks, rust etc.) then
they will have a right to cancel the contract.
In fact, most building inspection
clauses only entitle a purchaser to terminate if the property is not
‘structurally sound’.
In worst-case scenarios this may
mean that something as big as a major termite infestation may not render the
property ‘unsound’, thereby requiring the purchaser to continue with the
contract and purchase a property with a very significant termite problem.
The point here is to ensure you hire
a lawyer or conveyance early on to negotiate the special conditions under the
contract on your behalf.
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