The transfer of risk
One thing that comes as a surprise to many purchasers is that, in most cases, the property is at the risk of the purchaser from 5.00pm on the next business day after signing the contract, even though the purchaser is not yet in possession of the property. While the seller has an obligation until settlement to take reasonable care of the property, it is very important for purchasers to obtain an insurance cover note over the property as soon as they have signed the contract. It will generally also be a condition of your mortgage to ensure that the property remains insured at all times.
Be aware of unapproved structures
It is commonplace for homeowners to renovate by adding certain structures including garages, patios and pools etc. to their properties. However, often these structures are constructed without first obtaining formal written approval from a local government authority which is required by law. In situations such as these, an unwitting purchaser may buy property only to find out after settlement that their new home is going to cost them more than they anticipated, as they are required to obtain the necessary approvals from the local council for the already constructed structure or improvement.
Clause 7.6 of the Houses & Residential Land Contract stipulates that any valid notice issued by a competent authority or court (e.g. local council) requiring work to be done must be fully complied with:
- if issued before the contract date, by the seller before the settlement date; or
- if issued on or after the contract date, by the buyer.
In order to protect buyers from assuming the liability for previously built unapproved structures, it is recommended that a special condition is inserted into the contract which will allow the buyer the opportunity to terminate the contract if such a structure is identified, and searches are undertaken as part of the conveyancing process to ascertain whether such structures exist.
Not making the Contract subject to the sale of your existing home
Buying in the wrong name
The time to consider whose name to buy the property in is before you sign the Contract. Changing it later always attracts extra costs (and possibly double Stamp Duty).
Time is essential
Time is expressly of the essence under the REIQ contracts in Queensland which means you must perform your obligations strictly by the due date and time. This means that if time limits are not strictly complied with you can lose legal rights or have legal rights of the other party exercised against you.
Failure by either the seller or purchaser to tender performance of the contract by the due date, unless properly excused, will be a breach of an essential term of the contract and will entitle the other party to sue for specific performance or terminate the contract without further notice.
I can extend the Settlement Date later
Wrong. This is subject to the agreement of the Seller which the Seller can refuse regardless of what the agent may have said to you.
Engage our firm early before you sign a Contract to avoid these mistakes and to carefully lead you step by step through the conveyancing process.
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