Why Have a Contract Reviewed Before Buying Property in Victoria?
Buying a property is a significant commitment and the Contract of Sale determines much more than the purchase price and settlement date.
It sets out the legal terms of the transaction, the conditions that must be satisfied and the rights and responsibilities of both the purchaser and the vendor. Once both parties have signed the Contract is generally binding subject to any conditions included in it.
Having the Contract reviewed before you sign gives you the opportunity to understand exactly what you are agreeing to and address any concerns while changes can still be negotiated.
Why should the Contract be reviewed before signing?
A Contract of Sale is usually prepared on behalf of the vendor. Although it may contain standard general conditions it can also include special conditions that alter those provisions or place additional obligations on the purchaser.
A review can identify terms that are unusual, particularly onerous or inconsistent with your expectations. It can also reveal issues that may affect whether you wish to proceed, renegotiate your offer or include additional conditions.
Once the Contract has been signed by both parties your ability to request amendments is limited because the vendor is not required to agree to changes.
What documents are reviewed?
A contract review generally includes both the Contract of Sale and the Section 32 vendor statement.
The Contract sets out matters such as:
• the purchase price and deposit
• the settlement date
• any finance, building or pest inspection conditions
• what fixtures and goods are included in the sale
• the consequences of delayed settlement or default
• any special conditions applying to the transaction
The Section 32 statement contains important information about the property, which may include:
• title particulars and the plan of subdivision
• easements, covenants and other title restrictions
• planning and zoning information
• council and water outgoings
• owners corporation information
• building permits or owner-builder documentation
• notices or proposals affecting the property
• whether the land is in a designated bushfire-prone area
The review considers these documents together as information disclosed in the Section 32 statement may affect the operation of the Contract or the purchaser’s decision to proceed.
Why do special conditions matter?
Special conditions can significantly alter the standard terms of a property transaction.
They may deal with matters such as penalties for delayed settlement, the condition of the property, adjustments of outgoings, solar panels, building works, early access, default fees or the vendor’s liability for defects.
Some special conditions limit rights that a purchaser may otherwise expect to have. Others impose strict deadlines or additional costs if an obligation is not met.
A contract review allows these provisions to be explained in plain English and where appropriate amendments can be requested before the offer is submitted.
Finance and building inspection conditions
If you require finance the Contract should contain an appropriate finance condition with the correct lender, loan amount and approval date.
Loan pre-approval does not necessarily mean that finance for the particular property is unconditional. The lender may still need to complete a valuation, assess the property and provide formal approval.
If you require a building or pest inspection the Contract must also contain an appropriate condition. These clauses may be narrower than purchasers expect and may only allow the Contract to be ended in particular circumstances.
The relevant conditions should therefore be discussed and included before signing. If the property is being purchased at auction finance and inspection enquiries should generally be completed beforehand because the Contract will usually be unconditional.
What if I am buying at auction?
When you purchase at auction you accept the Contract displayed before the auction. You generally cannot negotiate its terms after you become the successful bidder and there is no cooling-off period.
The Contract and Section 32 statement should therefore be reviewed well before auction day. This provides time to investigate any concerns, arrange inspections and request amendments from the vendor’s representative if necessary.
Is the cooling-off period enough protection?
Some purchasers buying by private sale may have a cooling-off period. However, cooling-off rights are subject to strict time limits, exclusions and financial consequences.
A cooling-off period should not be treated as a substitute for obtaining advice before signing. It is much better to understand the Contract and include the conditions you need before becoming legally committed.
If you have already signed and are concerned about the Contract seek advice immediately as any available rights may need to be exercised within a short timeframe.
What a contract review cannot determine
A review considers the legal documents provided for the sale. It does not confirm the physical condition of the property, the accuracy of boundaries on the ground, the structural integrity of buildings or whether there are hidden defects.
Depending on the property you may also need advice or reports from a building inspector, pest inspector, surveyor, town planner, owners corporation specialist or another appropriately qualified professional.
How I can assist
I can review the Contract of Sale and Section 32 statement before you sign, explain the important provisions in plain English and identify matters that may require further investigation.
Where appropriate I can also recommend conditions or amendments to help ensure that the Contract reflects your circumstances and the terms on which you are prepared to proceed.
If you are considering purchasing property in Victoria please send me the Contract as early as possible so there is sufficient time to review it before you make an offer or attend an auction.
This information is general in nature and does not constitute legal advice. Every property and Contract of Sale is different, and advice should be obtained for your individual circumstances before signing.