Buying a new home is very exciting, but what do you look out for when faced with the contract and vendor statement? A thorough review by a lawyer is always advisable before you sign the contract as there are issues that a layperson may find difficult to identify. Once you have signed a contract, your opportunities to end the contract can be very limited.
When reviewing the sale documentation yourself, here are some things to look out for:
In the contract
- What goods are included or excluded?
Generally all fixtures and fittings are included in a sale but some vendors may specify that certain items are excluded eg. chandeliers, curtains etc. - Is the contract subject to lease?
If you are planning to live in the property, you need to take note of this. The contract will specify the end date of the lease. - Are there any special conditions?
Read any special conditions carefully. These are conditions that may change the general conditions (standard conditions) in a contract or impose additional conditions, usually in the vendor’s favour.
In the vendor statement
Vendors are required to provide certain information to a purchaser before a contract is signed, and if a vendor fails to do so, you are able to cancel the contract anytime prior to settlement.
- Does the vendor have authority to sell?
The vendor may not be the owner of the property and could be selling under power of attorney or grant of probate. - Are there any charges against the land?
- Are there any easements, covenants or planning restrictions?
These restrict your use of the property. You cannot build on easements and convenants may restrict what you can build on the land eg. single occupancy only. - Is the property in a bushfire zone?
- Have there been any notices issued against the property?
Examples of these include building notices or contamination notices. - Are there any owner builder works?
- Are there relevant permits?
- Is there an owners’ corporation? Are there multiple owners’ corporations?
If there is an owners’ corporation, read the minutes included in the owners corporation certificate as these should show issues of concern eg. legal action, cladding issues etc. Are there multiple owners corporations? - Are all services connected?
- How much are the outgoings?
This includes costs such as rates, taxes and other charges.
Warning!
A vendor statement that appears to show no adverse information does not mean there is no adverse information. It may be incomplete!
One vendor statement reviewed stated that there were no owner builder works, but included a builder’s inspection report on some parts of the house which appeared to have been renovated. The report was minimalistic and the builder qualified his comments with many exceptions, meaning the report was effectively meaningless.
Very specific requirements apply to vendor statements for properties that have owner builder works. These include building inspections reports and insurance.
On the surface, it did not look like there was anything amiss. However, this was a ticking timebomb. This property likely had owner builder works that had been completed without proper permits or proper building inspections or insurance. Had the purchaser proceeded with the purchase, she would inherited all the problems.
Please note that this article is of a general nature and not intended to cover a comprehensive list of issues to look out for in a contract or vendor statement.
We would be happy to assist you with reviewing your contract and vendor statement.
