Contract Clauses

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From: Trina Blum


Hi,

Could the experienced investors of this forum perhaps add to this post the clauses/subject to... they recommend be added to an IP offer of purchase so that us newbies don't get caught out.

1. Such as if I had finance pre-arranged up to a certain amount and put in an offer to purchase should a clause of "subject to obtaining finance" still be added?

2. I know its a good idea to get a building inspection done on the property but how should it be worded?

Any other clauses you can suggest would be of help.

Specific to my situation can someone tell me if I put an offer in on a property that needs some work done in the shower (water has leaked through to the hall and bedroom wall - which is due to the grouting I was told by the RE agent and would only cost approx $500 to fix) what sort of subject to clause should I put in so that if it the building inspection shows it would cost a lot to fix I can get out of the deal? If I did buy and fix this would be classed as a repair would it not and be claimable in next year's tax?

Trina
 
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Reply: 1
From: Terry Avery


Hi Trina,

I would be cautious about accepting the RE agent's estimate of cost to fix
the shower. Is he a builder as well that he can quote accurately. I was once
told by an agent that $10,000 would fix up a house, I estimated at least
$20,000 and it cost more.

Secondly, in my experience with renovations grout is not there to keep the
water in the shower. There has to be a waterproof barrier such as cement
sheet under the tiles which is sealed to make a tub. Then you apply the
tiles over that and grout to seal the tiles. If you have that much water
damage then there may be a bigger problem which the building inspection
should pick up.

If you buy and fix an existing fault then it is not claimable as a repair,
it is a capital improvement and can only be offset against a capital gain
when you sell.

Cheers
 
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Reply: 2
From: Jacque Parker


Trina,

We once bought a house that needed the fences repaired. We had it as a stipulation of purchase that we would not proceed with the purchase until the fences were repaired by the vendor. He did it quick smart! Ask your solicitor about the wording or get the RE agent to tell the vendor that you want to get three quotes on the shower job before agreeing to purchase. At least this way you can then negotiate the price accordingly. Cheers, Jacque :)
 
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Reply: 2.1
From: Gidget .


I agree with Steven's last point Trina. I think you'd be far better to ask the Vendor to give you 3 quotes rather than getting the Vendor to agree to fix the problem before you purchase. You never know what kind of "quick and dirty" repair they'll do.

Gidget.
 
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Reply: 2.1.1
From: Crystal .


Hi Trina,
My IP had a cracked shower screen when I bought the property. After the purchase (too late for me) I was told that I could have asked the vendors to claim on their home insurance to get this fixed before purchase. Perhaps your vendors can claim on their own home insurance to fix their leaking shower before you purchase. (ie no cost to you or them)
Hope this helps,
Crystal
 
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Reply: 2.1.1.1
From: Dale Gatherum-Goss


Hi!

I add a clause that says that the vendor will supply a QS report a week before settlement.

This means that I get every available tax deduction without even paying for the QS report.

If the vendor does not come up with one, then, I have the option of withdrawing from the contract, or, instructing my solicitor to deduct the cost from settlement.

I hope that this helps

Dale
 
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Reply: 2.1.1.1.1
From: Trina Blum


Hi to you all,

Thanks for your advice, I'll keep it in mind. The RE agent told me that someone else had put an offer in (which has since fallen through) and had a builder inspect the damage. The builder estimated $500. But as said, I wouldn't take the RE agents' word for it I would get it checked out myself.

Regards
Trina
 
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