Why it’s a Good Idea to have a Contract reviewed prior to signing on the dotted line
It’s always exciting purchasing property, especially if you have found your dream home.
However it is equally as important to be logical in such times and ensure that you undertake your due diligence as for most people purchasing a home is the biggest investment of their life and we don’t want to get it wrong, there is nothing fun about ending up with a lemon that ends up costing you much more than the sale price.
It is really important that prior to signing on the dotted line that you have the Contract reviewed by a solicitor. A solicitor will go through the Contract with a fine tooth comb and knows what to look out for and then will provide an analysis of their review so that you can make an informed decision about whether the property is the best property for you.
When reviewing Contracts, we look to see if there are any covenants or easements pertaining to the property or any overlays over the property. These are things that may restrict what you may want to do with the property.
By way of example, a heritage overlay may limit what you can do with the property if you were planning to undertake extensions. If you were intending at extend the property a covenant may stipulate what materials must be used in respect to the renovations.
It’s better to know any such limitations pertaining to the property prior to purchasing rather than after you have purchased when you may determine that the property is not the perfect property for you after all.
If the property is an apartment or unit with an Owner’s Corporation we review the Owners Corporation minutes to ensure that there is nothing lurking in their that may cause you grief down the track. A notation that major works are required to the building or common areas which necessitates a special levy being raised allows you to factor in such costs when buying the property, and prospectively in negotiating to purchase the property.
We also check to see if the property is held as an investment which may result in you being liable to pay a proportion of the land tax payable in the calendar year in which you acquire the property.
There are a number of proposed road expansions planned to take place in Melbourne suburbs so it is imperative to review the Vic Road Certificate contained in the Section 32 Vendor Statement to ensure that there are no proposals that will affect the property that you intend to purchase or the surrounding properties.
It is a good idea to obtain pest and building reports of the property that you purchase and these provisions should be adequately stipulated in the Contract of Sale. A little reminder that you can only get out of a Contract of Sale using these clauses if it is found there is major structural damage or major infestation. It is therefore ideal to have these inspections done prior to purchasing the property if possible.
Finally, it is crucial that if you don’t have your finance 100% guaranteed and signed off (or sitting in your bank account) then you must stipulate that the Contract of Sale is subject to finance and clearly complete the applicable section of the Contract of Sale pertaining to this.
Disclaimer: The advice provided in this article is of a general nature only and you should always seek legal advice relevant to your own circumstances.