Contract of Sale-Do you really need to check it first?

The contract of sale is something we often get asked about and the number one question is this.

Do I really need to get the contract checked before auction? Our answer, yes, yes and yes you do.

Nowadays vendors and their solicitors are putting a lot more onus on the buyer. This means that you need to make sure you’re not buying anything with conditions in it that could financially cripple you.

Even if you bought a few years ago or have bought several times, you should still get the contract checked. And ideally by an independent solicitor/conveyancer because you never know what’s in there. Plus every single Contract of Sale is different.

I have been in real estate for over 25 years and I know what to look for, however I still get my own contracts professionally checked. And I certainly ensure my clients get their Contract of Sale professionally checked also.

So what should you look for in a Contract of Sale and Section 32?: 

• Any order from Vic Roads potentially procuring the property.
• Council rates & if they are paid up to date.
• Easements on the property.
• Covenants or restrictions. Ie/ is it heritage listed or can the property be redeveloped.
• Chattels that are to remain with the property.
• What services are connected to the property.
• Conditions if settlement is delayed and potential fines.

The above are just a handful of what to look out for, but there is so much more to be wary of. So where to from here?

Who can help you with your next step: 

Well we can for starters. As a result of our extensive connections, we can point you in the right direction to ensure you are properly looked after.

A professional and independent solicitor/conveyancer will know what to look for and will advise you if it is still safe to proceed with the property.

Your solicitor/conveyancer may suggest you contact the agent and ask for something to be deleted from the contract or even added.

As mentioned earlier every contract is different and individual. Therefore it’s imperative you know what you are buying.

Don’t assume to know what to look for and don’t assume that just because you’ve had a brief look over it, that everything is still okay.

We have come across properties before that never mentioned that floor coverings were part of the property.

If this is not in the Contract of Sale under the chattels, then legally the vendor can remove the floor coverings if they choose. This would mean that for you as they buyer you may be up for a small fortune to fix this oversight.

If you have found a property you love and want to buy it, you need to do the following:

• Ask the agent to email you a copy of the contract. You want it in digital format so it’s easy to forward on the solicitor/conveyancer.
• Read through the contract yourself to get familiar with what to look for.
• Ask a friend or family member for a good recommendation to a solicitor/conveyancer.
• If you don’t have one, we can refer you one.
• Let them know when you intend to offer or bid on the property.
• Ask how long it will take and if it will cost you extra to have the contract read.
• If there are items of concern, speak to the solicitor/conveyancer.
• Take their advice, not the agents or a family member’s on what to do next.
• Have the solicitor/conveyancer email you so you have confirmation of their comments in writing.
• If relevant forward those comments on to the agent. As he/she may need to relay this to their vendor or vendor’s solicitor.

Never assume to know everything and never assume that the contract will be fine.

We have seen so many different things in the Contract of Sale of late. This would have caused serious problems for our clients if we hadn’t had the contract checked on their behalf prior to purchase.

Please do not wait until you have purchased the property. You need to know upfront what you’re dealing with and if any part of the contract can be amended before you purchase the property.

If there are restrictions in the contract such as being heritage listed or a single dwelling covenant (this means you can only have 1 property on the land) then you may decide to adjust your price.

Essentially if you did want to renovate or redevelop the land you may not be allowed to due to council restrictions. If this is the case you may decide that the property no longer suits you.

Do not get caught out and assume that you can do whatever you like to the property because it could be a very costly mistake.

Real Life Example:

We had one client who really liked a property and it had a single dwelling covenant on it. They assumed, that council would most likely remove the covenant due to other properties being developed nearby.

This wasn’t the case.

Before they purchased I made many many phone calls to find out how easy it would be to remove the covenant. I also inquired as to what the approximate cost might be.

It turned out the cost all up could have been around $20,000, however this wasn’t the real problem.

Regardless of the cost, if just one person in that nearby location objected to the covenant being removed, it wouldn’t happen.

This meant that the the client most likely would not be able to redevelop this property. Primarily, this was their sole purpose for buying the property.

Fortunately the client decided to not take the risk and not proceed with the property. Instead we found them something that could be redeveloped. Minus all the headaches and the expense.

Also my client was told by the agent and a third party that the covenant most likely would be removed by council. Again this wasn’t the case.

Luckily the client trusted me to investigate the property more extensively. Our extensive due diligence saved my client thousands and thousands of lost dollars.

Remember what you think might be an easy fix could be anything but. So please please have the Contract of Sale reviewed before you even start with negotiations.

And if you are not sure where to start, then reach out and let us help you.