Our Panic Room provides details of things youneed to know and real life examples of what can go wrong when dealing with property transactions. Some things are major but there is also the unexpected small things that can just put a spoiler on the process.
When do mortgage documents need to be signed?
We recommend that mortgage documents are signed and retuned to your lender 3 weeks before settlement. This allows for a smooth transition to settlement. Lenders attend to preparing for settlement based on when documents hit their queue and therefore the earlier documents are submitted the better. This allows time for any errors to be corrected. In peak trading periods the lenders can leave reviews of the mortgage documents to as late as 3 days before settlement and this can cause issues and delays if the mortgage documents do not pass their scrutiny.
Why don't the loan documents show the stamp duty concession?
Lenders will not reflect stamp duty concessions until they receive the signed concession forms. These forms are generally prepared by your conveyancer. The forms are sent to the lender by the conveyancer once signed by the purchaser. The bank then, re-calculates the stamo duty with the concession. Unfortunately the banks do not do this until just before settlement & therefore bank documents that you will see originally will always quote full stamo duty.
Your conveyancer should always check that the bank has taken the concession into account before settlement.
Should I get new locks on the house I just purchased?
If you want complete security you should probably consider changing locks in your newly purchased property. There is no guarantee that you are given all sets of keys a dn sellers could inadvertantly leave a spare set of keys with someone else.
If you choose not to go to the expense of installing new locks, you should check with the selling agent to ensurre that there is at least one key for each lock in the house (doors & windows). If any keys are missing you wil of course need to call a loicksmith in to get replacement keys.
I have just completed my pre-settlement inspection & the place hasn't been cleaned?
The pre-settlement inspection is to check that the property is largely in the same condition as it was when you signed the contract, except for normal wear and tear. Practically though, unless there is signifcant damage or large amounts of rubbish left on the property you have very little leverage in being able to force the seller to clean the property, and unfortunatley some sellers are not that respectful of the rights of the purchaser.
Where significant issues exist it may be possible, by negotiation, to hold back from settlement up to $5,000.00. Any money held is retained in a Trust account until the situation is resooved.
Talk to us about a strategy designed to avoid this situation.
Settlement has been completed but the sellers are still in the property
Hopefully this doesn't happen to you.
If it does then the selller is trespassing on your property and you have the right to place their belongings on the nature strip and have the3m leave the property. This of course, is easier said than done.
You should contact us immediately so that we can have the sellers conveyancer provide them with instructions to vacate the property as soon as possible.
You could also contact the Police to advise of the trespass issue.
Whilst this occurance is extremely rare it has been known to happen. Usually the cause is a mis-understanding where the seller has thought that the buyer has agreed to allow the seller to remain in the property for a few hopures or a few days.
To avoid this type of mis-understanding any agreement on access to the property or arrangements on when the seller will vacate the property must be directed through the conveyancers of the respective parties.
There was a garden shed there when I signed the contract
Do you know exactly what you have bought with the property?
Most contracts note the Goods or Chattels to be sold with the property as "All fittings & fixtures, electric light fittings & window furnishings as inspected"
This is normally accepted as including the oven, cooktop, kitchen exhaust fan & any installed cooling and heating. It would not normally include things like a microwave, washing machine or dryer but what of the dishwasher that that may not be permanently fixed, or if the property has a swimming pool does the Goods include the pool cleaning equipment.
Any items that you, as a buyer would expect to be reminaing with the property should be listed in the contract.
Buyers that don't specifically list items are at risk of some items being taken by the seller before settlement. This could include things such as garden sheds, air-conditioners installed in windows and large potted plants.
Even worse, where there is a wall mounted television the television probably isn't part of the sale. Even knowing this buyers can sometimes be surprised to see that the wall brackets have also been removed, leaving an unsightly hole in the wall.
We have a specially prepared checklist to help our clients undertand exactly what they are buyng when signing a contract.
There's no money in the nominated account for settlement?
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The agent said the building would be finished in June
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The loan approval clause expires tomorrow
If your loan approval is not obtained befoe the loan approval date noted in the contract an extension request must be sent to the sellers conveyancer/solicitor before the expiry date.
This request should be sent by your Conveyancer/Solicitor. As matter of courtesy you should advise the selling agent of a need to seek an extension but it is not advisable to negotiate teh extension through the selling agent.
In the great majority of instances a vendor will agree to a requested extension.
If a vendor does not agree to a requested extension the buyer must then decide to
a) commit to the contract without having the certainty of receiving a loan OR
b) end the contract and wal away from the property.
If the contract is cancelled on this basis any deposit money paid is refunded to the purchaser.
The building report shows some real problems
If you have made an offer on a property and signed a contract subject to either or both a building inspection and a pest inspection a buyer's level of protection varies depending on the clause used in the contract.
The most common clause used in a contract allows the purchaser to end the contract if the reports identify a MAJOR STRUCTURAL DEFECT or MAJOR INFESTATION.
The reference to MAJOR STRUCTURAL DEFECT or MAJOR INFESTATION should be replaced to the effect that the reports are simply to the purchasers' satisfaction.
This provides a buyer with far greater protection in respect to inspections.
Talk to us for further details to maximise your protection.
I bought the house at auction but now I think I paid too much
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I can get out of the contract because it is subject to a loan
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What are my rights as a buyer if settlement doesn't happen on time?
The sellers' are out but they haven't cleaned the house & there's rubbish in the yard
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What day of the week is the best for settlement?
Nationally approximately 7% of settlements do not occur at the scheduled time. This ranges from small delays of an hour up to cancellation & re-scheduling of settlements to another day. Statistically most settlements fall on a Friday and of course, if issues do arise and settlement is deferred to another day, the next day becomes the following Monday. This of course, can create significant difficulties if you are have left your previous accommodation & are reliant on moving in on the scheduled settlement day.
Whilst it is possible, on most occassions, to negoitiate access under a licence agreement, there are additional costs involved, and every now and then the seller will not agree to the granting of a licence.
We recommend that where possible you arrange for settlement (in the contract) to fall on a Thursday and you then plan to move in on the Friday. This provides some breathing room, just in case there are issues at settlement.
If your signed contract does have a Friday settlement it is possible to change the day provided that all parties agree to the change.
Pros & Cons of Off the Plan property
You are buying a brand new property that has never been lived in before.
You are buying a property at today’s value, despite it not being completed for several years when its value could be more than what you are paying for right now.
You only pay a deposit (usually 10%) to secure your home, but don’t have to start paying the mortgage until the development is complete therefore buying you time to get your finances in order and lower your LVR.
There is a possibility that the development is delayed, bring forth uncertainties when it comes to when you’ll be able to move in.
The finished product may not be what you expected.
It may be difficult to get the builder back to the property after settlement to fix defects.
Property prices may fall by the time your development is complete, meaning you might risk paying more than what it’s worth.
What is a "sunset clause"
A sunset (registration period) clause is gerneally in contracts for unregistered plans, both for vacant land and properties where construction has either not yet commenced, or completed. The clause sepcifies a period by which registration must occur. The period is generally noted as 'x' months from the date of signing the contract. The number of months is determined by the developer/vendor and can often be up to 48 months, and sometimes as long as 60 months.
This means that the property may not be available to hand over for the full length of the stated period.
If the sunset period comes to an end either party can then cancel the contract. This is not a mutal consent cancellation & therefore an unscrupulous developer may cancel the contract and put the development back on the market at a higher price.
Whilst the selling agent will generally give a view, to the best of their knowledge, on the expected date of completion for registration this is often an optimistic date. Completion of any development of land or buildings can be affected by a range of issues including lack of sales, poor weather, vandalism, and changing specifications from Council and other regulatory authorities.
We have had clients enter such contracts expecting completion by a date indicated by the selling agent only to find that in reality completion was delayed by as long as 18 months. In one instance, where the contract was for vacant land, the client had signed a building contract with a start date based in the initial advice provided by the agent who sold the land. Registration of the land was delayed by 14 months and, to the clients' surprise and dismay they found that the building contract provided a penalty of $1,000 per month for delayed building.
Purchasers need to be aware of both the status of the development and the sunset period to make a judgment as to whether this clause has significance in relation to their particular circumstances.
If the property is vacant land there is a higher degree of certainty on a reasonable period for completion and registration where some of the infrastructure is already in existance.
Where the property includes a building (an apartment block for example), the risk of delay is lessened once contruction has commenced. This is an indicator that a majority of the complex had been re-sold and the developer has the financial funding available to complete the project. Once construction has commend the developer will be keen to complete the project as soon as possible.
There is nothing wrong in signing contracts with sunset clauses - just be aware that there is a risk of settlement being delayed.