If you are buying a property you want to make sure that there are no hidden traps contained deep within the contract of sale. We have explored some common clauses to look out for.
Some contracts of sale may include ‘special conditions’ usually designed to benefit the vendor at the expense of the purchaser. Warlows Legal can provide you with competitively priced conveyancing services and help you avoid getting sucked in by unfair contract clauses. Common ‘special condition’ clauses include:
- Penalty Interest Rates: Vendors may try to insert a clause in a contract that requires penalty interest rates – interest rates above the standard rates – to be paid by the purchaser. Unless the purchaser is in default in making payments, there is no reason why they should have to pay penalty rates.
- Deposit Loss Clause: This special condition allows the vendor to invest the deposit received from the purchaser. The nasty part of such a clause is that the vendor receives the benefit of the interest while the purchaser retains all the risk of the investment. If for whatever reason, the purchaser is entitled to receive their deposit back, but the vendor has lost the deposited money due to a poor investment, the vendor would not be liable and the losses would fall squarely on the purchaser’s shoulders.
- Reasonably Foreseeable Losses Definition Clause: Some vendors will insert a special condition which seeks to define what is meant by ‘reasonably foreseeable losses’ – in the event that the purchaser breaches the contract. This can cause all types of problems later and purchasers should not lock themselves into such a binding and inflexible definition.
- Legal Costs Clause: There may be a special condition hidden in the contract that requires the purchaser to pay the vendor’s legal costs in the event of delay to settlement. No purchaser should agree to pay the vendor’s legal costs unless there is a breach of contract (it is enough for the purchaser to pay their own legal costs!).
In addition to ‘special condition’ clauses, there are other things to look out for when purchasing a property, including:
- True and Correct Title: Before buying your property, it is important to ensure that the title on the property is accurate and does not contain any errors. Mistakes as to the former owner’s name, the measurements of the property, or lost titles could present you with unwanted headaches later on. Check the title and all the details carefully. A fresh pair of eyes is also helpful to pick up these errors. Once the title has been confirmed as accurate, you must ensure that it is transferred into your name correctly.
- Unapproved Structures or Extensions: The previous owner may have sneakily added in some extensions or structures onto the property without obtaining the necessary approval from council. This lack of approval may cause issues in the future, including difficulties in re-selling the property and other legal issues should the structure fail. It is therefore of utmost importance to ensure any extensions or other structures have been approved by council. If not, the contract of sale should deal with this issue to ensure the purchaser is not left high and dry.
Whether you are buying or selling a property, the Warlows Legal team can assist you with all your conveyancing needs at an affordable rate. Contact us today for a free quote and ensure that you do not get caught out by one of the many traps that exist when buying or selling property.