Buying a new home (especially your first) is one of the most exciting times of your life and buying a property will probably be the most significant purchase you ever make.
The Contract of Sale doesn’t just stipulate the purchase price and the settlement details. It also includes substantial detail and conditions relevant to the sale. Some of these special conditions can be deal breakers, so it’s crucial that you understand what they are, and enlist an experienced solicitor to represent your interests along the way. Keep reading to learn about all the most common special conditions and how they might affect you when it comes time to sign on the dotted line.
What are the special conditions of a contract of sale?
Special conditions within the contract set out the terms upon which you are buying the property. The sale depends upon these clauses, meaning that if the conditions are not met, the sale may not proceed. These additional special conditions are designed to provide each party with more certainty about the terms of the transaction and provide peace of mind.
Many buyers (and sellers, for that matter) think that they can simply use a standard set of clauses when buying a house, and sometimes that can happen. Real Estate Agents may tell you that these special conditions should not be changed and pressure you to sign quickly however we strongly recommend that before you sign the contract for sale that you engage a solicitor to review and advise you on the contract for sale to minimise the risk of issues arising at a later stage
As a first-home buyer, it is important to enlist a solicitor to review the contract thoroughly and ensure your interests are protected, especially when it comes to the special conditions. While standard wording might work for some people, it may not suit everyone’s unique circumstances. In other cases, the wording might be vague and, therefore, open to interpretation.
1. Subject to finance clause
This clause protects a purchaser in the event that their finance falls through. In other words, perhaps circumstances have changed in between a home loan pre-approval and the time when the purchase was to go ahead. In this scenario, a purchaser might not get final home loan approval. If this special condition is included in the contract, however, the buyer can terminate the contract without penalty.
If the purchaser does not have their finance approved by the end of the cooling-off period, however, they can sometimes request an extension. Your lawyer may be able to negotiate this on your behalf with the agent.
2. Subject to satisfactory building and pest inspections
This is another common clause that provides time for the purchaser to organise pest and building inspections. This clause means that building and pest inspections need to be satisfactory in order to finalise the sale. These inspections are important – if the property is riddled with termites, or has water damage that is not immediately obvious, you will want to be able to back out of the sale or perhaps renegotiate.
Ideally, you should organise these inspections as soon as your offer is accepted. For auctions, you should arrange your inspections before the auction, just in case there is an issue that would prevent you from wanting to proceed with purchasing the property.
3. Penalty clauses
The special conditions will also specify any penalties that might apply if the purchaser does not settle on time. Even though you have no reason to believe the sale will not go through, it is important to ensure that you do not have to pay excess interest or fees in the event that the sale is delayed or does not proceed.
An experienced property lawyer will assist negotiate these fees,
4. Subject to the early release of the deposit to the seller
Another common clause is that the funds of the deposit can be released early to the seller. The seller might need the deposit to use for the purchase of another property. An experienced conveyancing lawyer can help you determine whether this clause should be included and will let you know the risks of doing so. It is important that you are not pressured into signing this clause without obtaining legal advice first.
Always consult with an expert property lawyer
It is important to note that, while you can check a contract yourself, it is crucial that you hire an experienced solicitor. Your agent can help you but keep in mind that their priority is to sell the property as quickly as possible, whereas your solicitor is working to protect you.
Unless the contract is reviewed by an experienced solicitor, there may be clauses missing, or even specific wording within the contract that does not work in your favour. The smallest omission or wrong addition might cost you thousands of dollars (or more) down the line. For most buyers, the cost of a solicitor is only a tiny fraction of the property sale price, and it is money well spent, as it provides peace of mind.
Get in touch with our expert team to learn more. Our expert conveyancing solicitors can help you navigate buying your first home with ease, making the entire process far less stressful. To start the process, contact the team at Maguire & McInerney Lawyers or phone us directly on 02 4228 5911 to learn more.