Purchasing a home or an investment property on the Gold Coast (or anywhere for that matter) can be both an exhilarating and stressful experience for the parties involved.
Our Property Lawyers have put together this list of helpful tips to consider before you sign on the dotted line which will hopefully save you from the stresses involved with buying a property:
Before you sign a contract, make sure the purchasing entity is correctly described.
Talk to your banker or accountant before you sign a contract to make sure the purchasing entity is correctly described. In particular, if you’re obtaining finance, the name you place on your finance application must match the contract. Purchasers often omit their middle name and there have been occasions where a preferred name has been inserted over a legal name. In these instances it may be possible to amend the contract by agreement, but in certain circumstances termination of the contract may be the only option (e.g. if a buyer is being added or removed). Whilst termination sounds straightforward, you’re reliant upon the seller accepting the termination and you risk forfeiting your deposit, incurring additional legal fees for the preparation of a new contract, and exposing yourself to double stamp duty if you do. Similarly, this applies if you sign a contract and are subsequently advised by your banker or accountant that you should be purchasing in the name of a trust or self managed superannuation fund.
Always make your contract subject to finance.
If you need to finance your purchase in any way, whether it’s through a new loan, refinance or restructure, always make your contract subject to finance. A contract conditional upon finance approval may not be palatable to a seller who’s eager to enter into an unconditional contract, but it ensures you have the ability to terminate the contract should your finance be declined.
Don’t presume the property you’re purchasing is structurally sound and/or pest free.
A few hundred dollars spent now could save you thousands after you purchase the property and discover a termite nest or rotting roof beams. We always recommend a contract be made conditional upon a building and pest inspection as it provides you with the opportunity to either terminate the contract, seek a reduction in the purchase price, or choose to proceed with the purchase irrespective of any faults in the property.
Ensure everything you expect to be included in the purchase has been included in the contract.
Once the contract is signed it contains the whole of the agreement between the parties, with any previous negotiations concerning issues like the inclusion of furniture and other items no longer enforceable. We recommend any such agreements should be inserted as a special condition to the contract that’s either written or reviewed by a solicitor before the contract is signed. This ensures the condition contains a sufficient description of the agreement reached (as wording such as ‘to be provided’ or ‘as inspected’ for included furniture and other items are insufficient) and termination or compensation rights should it be breached by the seller.
Ensure your contract is subject to the simultaneous settlement of your sale (if selling to purchase).
If you need to sell your existing property in order to purchase a new one, always make your contract subject to the simultaneous settlement of your sale. Failure to do so could result in your being required to proceed with the purchase of the property even if your sale is delayed or terminated.
Allow sufficient time for settlement to occur.
We recommend a minimum of fourteen (14) days from the contract becoming unconditional for settlement to take place, particularly if you’re obtaining finance or need to make arrangements to access funds which may be held overseas or in an investment. Do not presume the seller will automatically grant you an extension of time or decline to charge you penalty interest for any delays.
Organise your insurance!
For most contracts, the property will be at your risk from the contract date. It is vital, therefore, that you have appropriate insurance in place in the event the property is damaged or destroyed.
Purchasing a property with a tenant?
If you intend to claim a home occupation stamp duty concession, ensure the tenancy expires within the time period required for claiming the concession. Also ensure appropriate special conditions are inserted into the contract if you require vacant possession by the settlement date.
Try to limit the amount of the deposit to be paid.
Never pay more than 10% of the purchase price and avoid paying a split deposit on the assumption your bank will grant you access to your loan funds prior to settlement. We recommend the smallest amount acceptable to the seller be paid by way of deposit. This will reduce the amount of money you risk losing should you terminate the contract, or otherwise forfeit your deposit as a result of a breach.
Don’t be pressured into signing a contract on the spot. Before signing on the dotted line contact our experienced conveyancing team at ABKJ Lawyers. Our Conveyancing Lawyers will review your contract free of charge and provide you with quick expert advice on any issues they may identify.