Buying a property is one of the most serious financial decisions you will ever make. It’s easy to get swept up in emotions when you think you’ve found “the one”, especially when you’re a first home buyer or you’ve been searching for ages. But it’s very important to consider the legal and financial implications before you sign a contract, to avoid disaster.
I’ve read thousands of real estate contracts during my career and assisted hundreds of people with conveyancing. Here are my top three legal tips for buying property, BEFORE you sign a contract:
- Carefully inspect the property - A standard clause in the contract makes the vendor (or seller) only responsible for delivering the property to you at settlement in the condition it was in on the day of sale, fair wear and tear excepted. If the oven or air conditioner were not working on the day you signed the contract, bad luck - “buyer beware”. Turning on all appliances will give you an accurate picture of the state of the property, and you may be able to negotiate on price if something like a dishwasher or garage door isn’t working. If the vendor agrees to fix something, a condition in the contract must be carefully worded by a solicitor, to ensure the vendor fixes the item before settlement.
- Check your finances - A general pre-approval is not enough to rely on – they are always subject to a property valuation. Before you sign a contract, show it to your lender/broker, so they can advise you if your pre-approval still covers you. At auction, you’re buying unconditionally, so you need to show the contract to your lender well before the auction. If you’re making an offer on a property privately sold, allow at least seven days (preferably fourteen) for a finance approval clause. All the lenders, big and small, are overstretched at the moment, so the more time you can get in a ‘subject to finance’ clause, the better. And remember that when you buy ‘off the plan’, you won’t get finance approval until the property is completed, so you’re taking a risk when you sign the contract.
- Do your research - Understand the zoning and overlays affecting the property. You could ring the Council to confirm how densely the land can be developed. If relevant, read the Owners Corporation information to see if there are any major issues with the building or residents. Visit the property at different times of the day to get an idea about noise, congestion and sunlight. If relevant, confirm when the lease ends and how many days notice the tenants will need to vacate. And ask a solicitor to review the contract and vendor statement, to check for anything you may have missed – I do this for free!
Note: the above is general information and should not be considered as legal advice.