The contract for the sale and purchase of property contains standard conditions and the real estate agent, or the Seller or Buyer’s lawyer usually require some additional special conditions be added to the contract.
Buyers should be cautious of special conditions which are added to the contract. In some instances, sellers may delete certain provisions of the standard terms of the contract without explaining the full significance of those deletions to the buyer. Legal advice should be sought before the buyer signs any contract.
Some of the more common special conditions in a contract to be considered are…
Finance clause
If the relevant clause in the REIQ contract is completed, the contract may be conditional on the buyer obtaining approval of a loan for the finance amount from a financier by the finance date on terms satisfactory to the buyer. The relevant part of the contract needs to be completed to provide the Buyer with the necessary protection.
The expression ‘on terms satisfactory’ allows a buyer acting honestly to subjectively decide whether any finance offered suits the buyer’s needs. A buyer who does not act honestly may be sued for breach of contract.
It is important to note a buyer must take all reasonable steps to obtain finance approval. A buyer cannot avoid the contractual obligations simply by not applying for finance. Failure to apply for finance approval will constitute a breach of contract which will entitle the seller to retain the deposit and will afford the seller an opportunity to recover damages if a loss can be proved.
When there is a failure to obtain the form of finance noted in the contract and the failure is not due to a fault of the buyer, the buyer may terminate the contract and receive the deposit monies back.
Building and pest inspection reports clause
If the relevant clause in the REIQ contract is completed, the contract may be conditional upon the buyer obtaining a written building and pest report from a suitably qualified and accredited person by the inspection date noted in the contract on terms satisfactory to the Buyer.
The Buyer must take all reasonable steps to obtain the reports.
The Contract allows a Buyer to terminate the contract if, again, acting reasonably, the report is unsatisfactory to the Buyer. If requested by the Seller, the Buyer is required to provide the Seller with a copy of the report.
Insurance
The REIQ contract provides that the property is at the risk of the buyer from 5 pm on the first business day after the contract date. As soon as possible after the contract is signed, it is very important that buyers protect their interest in the property by arranging appropriate insurance over the property.
Special conditions
There are many different special conditions which can be added to the REIQ Contract which are generally specifically drafted by a property lawyer to cater for the specific scenarios at play between the Seller and Buyer.
It is always best to obtain legal advice when special conditions are required for a specific transaction, whether from the Seller’s perspective or the Buyer’s perspective.
Comments