Knowledge is power, and even though you may sometimes feel that the property process is out of your control, understanding what you are signing in a legally binding contract is vitally important, as it could cost you heavily later on. All too often, the excitement and emotion of finding your dream home can cloud your better judgment, so it is crucial that you understand the property contract, whether you are a buyer or a seller, especially when special conditions can modify the standard REIQ agreement.
Standard contracts are just templates; special conditions customise them, and understanding what they mean can help avoid costly mistakes. Certain clauses should clearly define what needs to happen and when, who needs to do it and what happens if it doesn’t get done, and you don’t want to be signing anything you don’t agree with, or that is impossible for you to fulfil.
Special conditions benefit both buyers and sellers: buyers are protected from unexpected costs, property defects and financial issues, while sellers can ensure buyers meet deadlines and accept certain property conditions. Both parties should carefully read and understand each clause before signing.
Important Points for Buyers
Special conditions are your best tool for protecting yourself against hidden issues like pest infestation, structural faults, building defects, and problems like neighbour disputes or management conflicts. If inspections reveal major issues, then a termination clause will allow you to cancel the contract.
Negotiate timelines carefully, and make sure finance, inspections and settlement dates are realistic, and allow provisions for extensions if needed. Be aware of “sunset clauses” which can set a deadline for completion, where the seller can accept a better offer if you are too slow to make your contract unconditional.
Important Points for Sellers
Make sure conditions are reasonable, and clearly state who is responsible for repairs, etc., and what the consequences are if these conditions are not met. Understand your obligations, like agreeing to repairs or approvals, or providing certificates, but make sure they don’t put you at a disadvantage or cause delays.
Your solicitor or conveyancer will ensure that any special conditions align with the mandatory disclosures you need to provide, and by being flexible and fair with special conditions, you have a better chance of a smoother, swifter sale.
As the seller, you cannot cancel the contract within the cooling-off period; it is designed specifically for buyers’ protection. Unless the buyer breaches the contract terms, you are legally bound to proceed with the sale, so make sure you are happy with all the conditions before you sign the contract.
Common Clauses and Special Conditions
- Due Diligence and Searches: Make the contract subject to satisfactory searches, building and pest inspections.
- The Sale of Another Property: If the buyer needs to sell their home in order to purchase the new property, make their obligation to buy conditional.
- Repairs: Outline specific repairs or renovations that the seller needs to complete before settlement.
- Specify Inclusions or Exclusions: Include information on specific chattels like pool equipment, solar panels and specific furniture and fittings.
- Finance or Mortgage: Make sure the contract is conditional on the buyer successfully obtaining a loan approval.
Make Sure it’s Crystal Clear
Read the contracts carefully, and negotiate if necessary, because a lack of clarity can cause issues for both parties. Make sure you understand all the conditions that are laid out. Special conditions often come with finance, inspections and repairs deadlines, and missing deadlines can result in the contract being cancelled or deposit loss.
