Tricks And Traps When Buying A Property
Whether you’re looking at purchasing your first property, or purchasing your 10th property, Melissa Patterson discusses some tricks and traps that all purchasers should be aware of.
We’re sure that you have all heard of the saying “BUYER BEWARE”. In legal terms, we refer to this concept as caveator emptor. This topic is the focus of our first edition of tricks and traps for purchasers!
‘Buyer Beware’ could not be truer when buying a property. You purchase a property subject to the terms and the conditions in the contract of sale – that is it.
State of the property as at the date of sale
The Fixtures and Fittings listed in the contract are what you get. If the chandelier is not listed – you legally do not have the right to request this if you do not get it. It is that simple – there is no negotiation after the fact!
It is often misunderstood that you take the property in the condition that is was as at the day of sale. The date of sale is the day the contract was fully executed (signed by both parties) and exchanged. So, if the property, at the date of sale had a window that was broken for example – you buy it like that and to fix the window is your responsibility after settlement.
Obviously, things are not always as obvious as a broken window. Some things we often have seen include:
A toilet that does not flush;
A garden that is overgrown;
A hole in the floorboards that was covered by a rug;
The list could go on for pages about the things that purchasers have come across at final inspection. The moral of the story is that the condition of the property when you sign the contract must be taken very seriously.
The problem we see is that people are looking at the property with “rose coloured glasses” and they forget to take photos. Flush toilets! Lift up rugs! It’s important to look around the property carefully and really consider the status of the property and it might be surprising to hear that this simply does not happen nearly often enough.
Purchaser’s liability from the date of sale
Another trick and trap is that some contracts say the purchaser is liable for the property from the day of sale.
Any good lawyer will pick up on this condition, tell you to try and have it removed from the Contract and if you can’t have this condition removed (stubborn Vendor or more likely stubborn Vendor’s lawyer) you will be told that you need to get a cover note – by that I mean insurance on the property.
Undertake due diligence on the property
Because you are taking the property as it is, it is vital that you do your due diligence.
By this, we mean a pest inspection and a building report. Very simply, you should obtain both reports prior to making an offer, otherwise, you should make your contract of sale subject to a satisfactory pest inspection and building report within 14 days of the date of sale.
Now, these reports are difficult when you buy at an auction. When you buy at an auction you are buying the property unconditionally – so the only thing you can do is to get these reports prior to the auction. Yes, these reports do cost money, however, if the property is riddled with termites that few hundred dollars you spent on the report saved you buying a crappy property!
A pest inspection looks for evidence of timber pest activity in the property such as evidence of:
Rats and Mice;
These are all very expensive problems to buy and of biggest concern is that most pest damage is not covered by your insurance! So, it is vital that you ALWAYS get a pest inspection before being locked into a purchase.
A building report is so very important as it will identify any issues with the property that may not be noticeable such as:
Owner builder works or building works (from owners corporation)
the structure of the property;
sloping or bouncy floors may mean stumps need replacing;
blisters or bubbles on paintwork can indicate termite activity;
cracked walls may indicate issues such as the house sinking, requiring the replacement of stumps.
llegal renovations are your problem post settlement – as per edition 1 you take the property as-is.
So, if you do decide to make an offer subject to a satisfactory building inspection, don’t let the agent or vendor’s solicitor use their preferred wording (if you can help it).
The typical clause only allows a purchaser to get out of a contract if the report identifies a major structural defect. Your lawyer will need to carefully word the clause (special condition) to be inserted into the Contract.