The property market has become so competitive that buyers are willing to not only pay anything for a property but give up some of their contractual rights to be the most appealing offer to the seller. The problem with giving up your rights is that if a problem arises, you may be stuck with taking care of it yourself. Here are 3 things to consider before signing a contract to buy a property:
1. Building Problems and Termites
One of the key contract conditions for a buyer is the ability to inspect the structure of the building and inspect for any pest problems. Too often buyers are willing to waive their ability to inspect the property for any structural or pest issues. When these issues do arise, the buyer is responsible for paying to fix these damages as the seller has no obligation to fix such defects.
We recommend that when purchasing a property, you ensure there is a building and pest inspection condition included in the contract. You should engage a building and pest inspector to inspect the property to ensure that there are no structural or pest defects in the property. If the inspections do show any defects, you have the option of asking the seller to:
- rectify the damages prior to settlement;
- compensate you for the defects; or
- terminating the contract if necessary.
2. Do you have the ability to pay for the property?
A buyer should only enter into a contract if they believe they have enough money to buy the property or have the ability to obtain a loan from the bank for the purchase. If a buyer says they have enough money to pay for the property but cannot provide the money at the settlement date, the buyer risks the seller terminating the contract, keeping the deposit already paid by the buyer and suing the buyer for damages.
The money for purchasing a house does not stop at the contract purchase price. When purchasing a property, you also must pay transfer duty (unless you are eligible for a first home owner’s concession or other exemption), solicitors costs, titles office lodgement fees, property searches, insurance, loan fees and inspector’s costs.
We recommend that to ensure you have enough money to pay for the property, (particularly when you need a loan from the bank) you ask for a finance condition to be included in the contract. If you cannot get a loan from the bank, you will then have the ability to terminate the contract and have the deposit you have paid returned to you. Without a finance condition, if your loan is not approved then you risk being stuck with the purchase and being sued by the seller for damages for failing to perform on the contract.
3. Check the Surrounding Areas of your Property
Make sure before entering into the contract you are satisfied with the surrounding area. You should look at:
- Neighbouring Properties – make sure the fences in between properties are not leaning, as they may need future repairs or compensation. Also check that neighbouring trees do not overhang into the property you are intending to purchase, as the branches and roots from the overhanging could result in damage and diminish your property’s value;
- Construction – agents are not obliged to let you know if a property is close to a construction site, and the construction will not only result in noise, but you may also suffer from dust and debris coming from the construction site. Buyers can check local council websites for future developments in the area.
- Flooding – Queensland is prone to wet weather and cyclones, which is why potential buyers should check whether the property may be prone to flood damage. If possible, buyers should inspect the local area during times of bad weather to look at any future damages, or buyers can order flood reports for the area.
- Noise – laws have been changing so that newly-developed properties have less distance between the property and retaining walls (the regulation is no less than 1.5 metres between the wall and building), which could result in hearing your neighbours during the night.
As a precautionary method, you should carefully inspect the outside of the property and check any adjoining fences with neighbouring properties to ensure they are not leaning. You should also inspect any trees on neighbour’s property that are close to your property. Lastly, you should check how much distance there is between your property and your neighbour’s property so you are aware of potential noise issues.
If you find adjoining fences are leaning or there are trees close to your property, you may be able to make an agreement with the seller to have any concerns fixed before settlement.
If you have any questions or require assistance with a conveyancing matter in Queensland (in particular building and pest issues or property purchase costs) then please contact the property team at NB Lawyers for more information.
Kayleigh Swift, Associate
Kayleigh Swift is an associate in our Commercial and Property team who assists with Employment Law matters. With a high level of experience in commercial and retail leasing, voluntary and involuntary purchase and sale acquisitions, property development and employee relations, Kayleigh provides practical advice to ensure smooth business transactions.
Chloe Skubis, Lawyer
Chloe Skubis is a Lawyer in our Property team who assists with various conveyancing transactions. Chloe is very experienced in residential conveyancing and is a problem solver. She always provides efficient service to all her clients.