Home buyers can learn the hard way that there are many pitfalls involved when making such a huge purchase. Here are some words of warning based on my experiences, and a few tips for those of you who will be house hunting in the near future!
1. Not getting a lawyer to review the contract before signing
Every Monday I wait for the panicked calls to come in from new home buyers: “So yesterday we went to auction and bought a house. Can you please make sure we didn’t sign our life away??” Whoops! I understand that sometimes people make emotional impulse buys. I also understand that when you’ve been house hunting for months, all the little costs add up, so you don’t bother involving a lawyer until you must. You might even think you’ve become an expert on section 32s.
But why risk it?? I’ll review your first standard contract and section 32 for free! Let me identify anything unusual or onerous before you sign. You may think you’re saving costs, but knowing all the issues can help you determine your price or negotiate the contract, so signing without proper advice can actually be an expensive mistake!
2. Not specifying all goods that are included in the sale
When you buy a house, you also buy all the fixtures and fittings that come with it. These are generally items of a permanent nature – most commonly, carpets, curtains and light fittings. However, there is a whole area of law about what constitutes a “fixture”, and many items fall into a grey category. Some of my more unfortunate clients have moved in, only to discover that things they thought were included were missing – free standing ovens that can be carted away, pool equipment, outdoor shade sales, even heavy feature fountains from the front yard.
Trying to recover such items can be more costly than replacing them. So make sure that the contract lists everything included in the sale. Dishwashers, solar panels, sheds, rugs, BBQs, wall mounted TVs – be as detailed as you can!
3. Not investigating the condition of the house at the day of sale
When settlement is completed, the property should be in the same condition it was upon signing contracts, subject to fair wear and tear. Buyer beware! It is up to you to investigate the property as thoroughly as you can before signing. Turn on every light switch and appliance, and get a builder’s report to determine the structural integrity of the house. Call the council to discuss your renovation plans, and call the Owners Corporation manager (if there is one) to check any upcoming works.
You are also entitled to investigate the property in the week before settlement to check that the property is still in the same condition as before. And if it isn’t, tell your lawyer!
At one such inspection, the vendor got chatty about how the security alarm wasn’t working. My client, the buyer, was most upset after settlement to discover that the whole system needed to be replaced. Unfortunately, they didn’t me before settlement and it’s not easy to claim compensation from the vendor afterwards. Plus, they couldn’t be sure that the system was working on the day they signed the contract.
If anything is damaged or destroyed before settlement it is usually the vendor’s responsibility to rectify. But did you know that some insurers will provide a cover note to buyers before settlement, so that you don’t have to rely on the vendor to have appropriate insurance? Most contracts also allow buyers to withhold up to $5000 from the settlement funds if there is an issue with the condition of the property.
Aliza Taubman is the Principal Solicitor at Prime Property Lawyers
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