Don’t get caught out: check that contract!
As buyers’ agents part of our role involves obtaining ‘contracts of sale’ on behalf of our clients, to pass on to their legal representatives for review. Here in NSW there have been several versions updated since we began working for buyers back in 2005, and it’s unusual to see contracts older than 2017, especially with the current 2018 watermarked version being the most commonly used by reputable practitioners.
In the excitement of purchasing property, buyers can often get so overwhelmed with all the information that smaller details can slip through unnoticed, until sometimes it’s too late to rectify. One of these is the the vitally important sales contract and, if rushing a purchase or exchanging contracts before your solicitor/conveyancer has had a chance to review this vitally important document, it can be very much a case of ‘Buyer Beware the small print’. So here’s our quick-check list of the most essential details you should be double-checking in a contract of sale BEFORE you sign on the dotted line:
1. Inclusions and exclusions: many a vendor has taken the opportunity to not include items that otherwise you may have assumed came with the property. Common items that are sometimes excluded (to the surprise of the purchaser) are curtains, dishwashers, pool equipment and certain light fittings. Also be sure to read for any exclusions and if not happy that these aren’t included, re-negotiate.
2. Completion date: Check that the date suits you and you are fully aware of the implications here. Most contracts stipulate a number of days after the date of this contract, most commonly 42 days. Alternatively, should dates be vital to you and you want to ensure settlement is on a particular date, with agreeance from the vendor, you are permitted to request an alternative specific date instead.
3. Vacant possession or subject to existing tenancies?: Most properties are sold with vacant possession to you, as purchaser, however be aware that, if there is currently a tenant in place the ‘Subject to existing tenancies’ box may well be checked here. It is important to realise that if you want the property to be empty, and you’ve signed the contract with this box marked instead, you may well inherit a tenant upon settlement.
4. Land tax- is it adjustable?: On the NSW sales contract, if the YES box is marked, be aware that you may be up for unwanted land tax costs as you will have to reimburse vendor for land tax based on proportion of the year you each own the property. For more information on land tax and ramifications here visit www.osr.nsw.gov.au
5. Special conditions: These can vary so you need to ensure that you read through them to locate anything onerous or heavily in favour of the vendor. If unsure, question your legal representative (even if verbally) before you sign.
6. Easements or encumbrances: These should be disclosed in the contract with most appearing on the certificate of title that proves ownership of the property being sold. They will vary from service easements through to registered caveats and and have to be disclosed by the vendor. It is important that you understand if there are any restrictions on title that prevent you from potentially building or improving the property, or even accessing it.
Naturally, we always advise clients obtain a contract review BEFORE proceeding to unconditional status (or preferably before signing anything) to minimise the risk of making expensive mistakes when it comes to purchasing. This is most certainly the best course of action.