What are the 3 most common special conditions that purchasers include in a contract of sale? We ask Michael Fox, property expert from Robertson Hyetts Solicitors.
Subject to finance?
If you need a loan to purchase property you may want your contract “subject to finance”. This will enable you to end the contract and get your deposit back if your loan is not approved
The standard form contract used in Victoria, parties can agree “subject to finance” whereby the purchaser nominates the financier, loan amount and approval date and must “immediately apply for the loan” and “do everything reasonably required to obtain approval of the loan”. These terms need to be strictly complied with.
Purchasers should always ensure they are actively involved in meeting their finance approval obligations, discuss any involvement of a finance broker with their solicitor and never assume that a “subject to finance” clause can be used to terminate a contract for other reasons.
Building and pest?
These conditions allow purchasers to undertake building and/or pest inspections on the property by a specified date. If a report is unsatisfactory the purchaser will have a right to terminate the contract and receive their deposit back. However, you should read the condition carefully as it may require there to be a “major structural defect” or “major termite infestation”.
Consider the entire condition so you know your obligations with respect to notice to terminate and how long you have to obtain the report(s). Make sure the building inspector you engage is suitably qualified and licensed. Pest inspections should be carried out if the property is in a termite area or there are signs of active infestation from termites or rodents.
If you receive an unsatisfactory report prior to signing a contract you might still use the information as a negotiating tool.
But also keep in mind that 2 parties need to agree the contract terms. While it is prudent and advisable to ensure your interests are protected with the above conditions, they do form part of your offer that is put to the vendor.
A solicitor is best placed to provide you with advice and guidance with regards to special conditions. For more information contact Michael Fox in Castlemaine on 03 5472 1588 or email firstname.lastname@example.org or Anna Doughan in Bendigo on 03 5434 6666 or email email@example.com