4 Special Conditions to Check For When Buying Your First Home

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.

Important Disclaimer: The material contained in this publication is of general nature only and is based on the law as of the date of publication. It is not, nor is intended to be legal advice. If you wish to take any action based on the content of this publication we recommend that you seek professional advice.

2023-10-06T10:45:55+11:00August 18, 2022|

FAQs

In many jurisdictions, it’s not a legal requirement to hire a conveyance lawyer when buying a house, but it’s highly recommended due to the complex legal and financial aspects of property transactions. Conveyancing refers to the legal process of transferring property ownership from one party to another.

Here’s why you might want to consider hiring a conveyance lawyer when buying a house:

1. Legal Expertise: Conveyancing involves a range of legal tasks, such as reviewing contracts, conducting property searches, ensuring proper title transfer, and addressing legal issues that may
arise during the process. A lawyer with expertise in property law can navigate these aspects effectively and ensure that all legal requirements are met.

2. Contract Review: The purchase of a house involves a contract between the buyer and seller. A conveyance lawyer can review the contract to ensure that your interests are protected, negotiate terms if necessary, and clarify any legal language that you might not understand.

3. Title Search and Due Diligence: A conveyance lawyer will perform a title search to ensure that the property’s title is clear and there are no outstanding liens or encumbrances that could affect your ownership. They can also conduct due diligence to identify any potential legal issues with the property.

4. Document Preparation and Filing: Property transactions involve a significant amount of paperwork, including legal documents and forms that need to be accurately prepared and filed. A conveyance lawyer can handle these tasks to ensure that everything is done correctly.

5. Problem Resolution: If any legal issues arise during the transaction, such as disputes over property boundaries, easements, or other legal matters, a conveyance lawyer can help resolve these problems and protect your interests.

6. Financial Protection: A house purchase is a major financial investment. A conveyance lawyer can help ensure that the financial aspects of the transaction, such as the handling ofd eposits and mortgage documents are properly managed.

7. Peace of Mind: Hiring a conveyance lawyer provides you with peace of mind knowing that a legal professional is overseeing the transaction and protecting your interests.

While it’s possible to complete a property purchase without a conveyance lawyer, doing so increases the risk of making mistakes that could have significant financial and legal consequences.

Conveyancing is the legal process of transferring the ownership of property (real estate) from one person or entity to another. It involves a series of steps, documentation, and legal formalities that ensure the smooth and lawful transfer of property rights.

The conveyancing process involves several key stages:

1. Pre-Contract Stage: This involves gathering information about the property, verifying the legal ownership of the property, checking for any outstanding debts or encumbrances, and preparing draft contracts.

2. Pre-Completion Stage: During this phase, the final contract has been exchanged and the parties are preparing for settlement including undertaking any remaining legal checks and searches,
liaising with banks and preparing statement figures for completion.

3. Completion Stage: This is when the actual transfer of ownership takes place. The purchase price is paid, and the property’s legal ownership is formally transferred from the seller to the buyer. The transfer is now completed through an electronic conveyancing platform called PEXA to officially record the change of ownership. This process finalises the legal transfer and ensures the new owner’s rights are properly registered.

Conveyancing typically involves a solicitor who handles the legal aspects of the process on behalf of the buyer or seller. The solicitor ensures that all legal requirements are met, conducts necessary searches, prepares and reviews contracts, and manages the transfer of funds.

Conveyancing is important to ensure a secure and lawful transfer of property ownership while protecting the rights and interests of both parties involved in the transaction. It’s worth noting that the specific details of conveyancing can vary depending on the jurisdiction and local laws governing property transactions.

PEXA stands for Property Exchange Australia. It is an electronic property settlement platform that facilitates the exchange of property ownership in Australia. PEXA provides an online platform where parties involved in property transactions, such as buyers, sellers, conveyancers, lawyers, and financial institutions, can complete the process of transferring property ownership, paying stamp duty, and settling funds electronically. Before the introduction of PEXA, property transactions in Australia often involved a manual and paper-based process. PEXA aims to streamline and digitise the property settlement process.

PEXA offers several benefits, including:

1. Efficiency: Property transactions can be completed faster since the process is digitised and can be conducted in real-time.

2. Accuracy: Electronic transactions reduce the risk of errors that can occur when dealing with paper documents.

3. Transparency: All parties involved in the transaction can access the platform to track the progress of the settlement process.

4. Security: PEXA employs security measures to protect sensitive information and prevent fraud.

5. Convenience: Parties can access PEXA’s platform from anywhere with an internet connection, reducing the need for in-person meetings.

Overall, PEXA has transformed the way property settlements are conducted in Australia, modernising the process and bringing it into the digital age.

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