Common contract conditions
With the property market reaching new highs and the number of buyers far outstripping the number of available properties, it can be tempting to sign whatever is put in front of you when you find your dream home. While quick sales aren't always a bad idea, there are a few things you need to be sure of before you sign.
Do you need to borrow money? Ensure there is a finance clause in the contract. The agent / vendor / their representative might tell you that the vendor won't accept an offer that's subject to finance. If that's the case, let this one go. You don't need the hassle of getting to settlement without funds, losing your deposit and getting sued.
What about a building inspection? If you're not comfortable inspecting the building yourself, you will want to hire a professional building inspector to go over the place with a fine tooth comb and let you know everything that's wrong with it. You want to know that if there's a major defect (like rotting stumps or the floor slopes three degrees to the west) before you settle and get stuck fixing the problem yourself, at your expense. If you're concerned, ensure there is a building inspection clause in the contract. It will allow you to withdraw from the contract if the building inspector finds a major defect.
Finally, some areas are more prone to termite damage than others. You can check your local council area here and see where your property stands. Anyone can have a pest inspection undertaken, but it's strongly recommended in termite prone areas. If the property you are buying is in a termite prone area, ensure there is a pest inspection clause in the contract.
Have you signed a contract without these clauses and you think you might need them? There is a three day cooling-off period in Victoria, but it will cost you to get out of the contract this way - $100.00 or 0.2% of the contract price, whichever is more. In regional Victoria that's likely to set you back about $1,000, or closer to $2,000 in Melbourne. The benefit of finance, building and pest inspection clauses is that they allow you to withdraw from the contract for those reasons without any cost to you, and your deposit will be refunded to you in full.
Whether you have already signed a contract or you're still contemplating your purchase, it is always a good idea to get legal advice. Even if it is too late for your lawyer to get you out of the contract (for example, if the cooling-off period has expired), it is helpful to learn where you stand and what the next steps are going forward.