What are the two most common special conditions that purchasers include in a contract of sale?
Anna Doughan, property lawyer with Robertson Hyetts, provides all the details.
Subject to finance
If you need a loan to purchase property, you may want your contract to include a ‘subject to finance’ statement. A purchaser will be able to end a contract pursuant to a subject to finance clause, after whereby the contract specifies a financial approval date, and the purchaser has immediately applied for the loan and done 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 inspections
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 current termite infestation’, as opposed to only minor conditions.
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.
If you receive an unsatisfactory report prior to signing a contract, you might still use the information as a point of negotiation.
A lawyer is best placed to provide you with advice and guidance with regards to special conditions in contract of sale documentation. For advice and guidance, reach out to Robertson Hyetts Bendigo property lawyer, Anna Doughan, or John Wellington in Castlemaine.