Contract of Sale questions

Hi Guys ,

Please your advice regarding the contract of sale .
We've inspected a property today ; the agent specified that they've received an offer and if we are interested to secure this property we have to make an offer in writing immediately :D. Inspection have taken place between 1 - 1:30 PM and he was interested to sign the contract at 2PM .

I am not keen to sign anything in a hurry , so we arrived at 2PM to his office and requested to show the contract of sale .

The contract is just a standard contract of Sale of Real Estate from REIV , however there is a clause specifying :

1) Goods ( list or attach schedule) : All fixtures and fittings as inspected including all fixed floor coverings, all electrical fittings , spa and dishwasher .

Obviously during inspection you don't have time to check all electrical fittings etc
Let' say ducted heating system is not operational . Is there is any way to protect yourself ?

2) We would like to make an offer without subject to finance .
Usually I specify " subject to pest and building inspection to our satisfaction".
The agent has advised that they have " a standard" addendum which covers building and pest inspection .

I've enclosed the doc for your perusal .
My concern is regarding definition of " a major structural defect " . Who will decide if it's a major or minor structural defect ?

In addition , the statement " if the pest inspection report identifies an active pest infestation that compromises the structural integrity of the primary building " appears to be quite problematic . What if there is no active pest infestation , however they've had pests previously ?

Please your advice per the above.
I haven't signed anything prior to clarify these issues .

Kind Regards
gprp
 

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I agree with ianvestor. These are appallingly purchaser-unfriendly clauses. Get your solicitor to provide you with the appropriate wording of the clauses to protect your interests. The proposed clauses are nigh-on useless in protecting your interests.

Congratulations on avoiding the pressure to sign this contract. :)

(Many would just capitulate, then come on here after they've found a major problem which could have been avoided by having clauses worded properly, and wanting our advice on how to fix it when it's too late. :eek:)
 
Thank you for your comments .

As you understand , we don't have any chance if another buyer is willing to sign this crap .

Do you agree with my risk assessment :) ?

As I've mentioned above , I usually specify " subject to pest and building inspection to our satisfaction " .


The agent said this statement will be considered as " a very weak offer " .
Weak , but wise
 
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and adding to the contract, a personal inspection, before settlement, this way you can walk through and check that the fixtures work, and that any secrets, like water leaks previosly hidden by furniture, are revealed,
 
The agent has advised that they have " a standard" addendum which covers building and pest inspection.


1. Don't take advice from a REA.

S/he is working for your contractual adversary and is not authorised by their boss to advise you on any matter, whatsoever, either in written form or verbally.



2. Run when you hear the word "standard"....you know you are getting shafted. Ask yourself - who exactly is "covered" ??


3. I love these REA's who provide all the forms and you just sign where told to. They are literally writing your offer for you. Makes me laugh how they normally get away with it, without even a second thought from the intending Purchaser. It's so close to a dummy or Vendor bid at auction it's not funny.
 
As I've mentioned above , I usually specify " subject to pest and building inspection to our satisfaction " .


The clauses that the agent provided are prepared by the REIV, for whatever that's worth, not the agent themselves.

You're on the right track with wanting to use 'to our satisfaction' but I do think you need to be a little more specific in your wording to make sure that you are covered. Perhaps have your solicitor draft something that will ensure the clause meets your objectives, because just quietly, I'm not sure your current conditions will stand up to anything if challenged.
 
Hi Guys,

Thank you for your comments .
The contract in it's current form is basically a non-conditional offer and I don't have any intention to sign it .

I've spoken with the agent today; I really liked his explanation about
"Active pest infestation" and “a major structural defect" .
It appears to me that the property have had some issues with
termite infestation in the past , so he wants to cover the vendor .

Anyway , he was pretty confident and specified that they will not deviate from their statements ; I think REA have a victim who's decided to sign the contract in a desperate act to secure the property .

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to be a little more specific in your wording to make sure that you are covered. Perhaps have your solicitor draft something that will ensure the clause meets your objectives, because just quietly, I'm not sure your current conditions will stand up to anything if challenged.

JamesGG, I agree with you that “ building and pest inspection to our satisfaction “ is disadvantageous for the vendor . On the other hand , I haven’t received any complaint or disagreement from the vendors if the property was in good condition .

Code:
craigb  
 
and adding to the contract, a personal inspection, before settlement, this way you can walk through and check that the fixtures work, and that any secrets, like water leaks previosly hidden by furniture, are revealed

Absolutely , this is another point I was concerned about . If you sign the contract as it is , the vendor is not liable for any defects or malfunctions .



What would you suggest to make the statement more vendor-friendly?

Kind Regards
gprp
 
JamesGG, I agree with you that “ building and pest inspection to our satisfaction “ is disadvantageous for the vendor . On the other hand , I haven’t received any complaint or disagreement from the vendors if the property was in good condition .


Nothing wrong with it being disadvantageous to the vendor. That's the whole idea, right; to give yourself the advantage?

My concern was that your clause isn't specific enough for your own benefit. For example, it only needs to be shown that the inspector did his job properly and you have no reasonable grounds to be dissatisfied with the inspection itself - regardless of the outcome - and the condition has been met. At that point, the inspection was indeed to your satisfaction; you just didn't like what the report said.

This is why buyers (other than Dazz, perhaps ;)) should always have a solicitor draft their conditions, rather than trying to write them personally. Otherwise, should the proverbial hit the fan, you may not be quite so well covered as you had thought.
 
Hi James ,

I think I've misunderstood you .

You are raising a valuable point – the operation was a success … but the patient is dead :rolleyes:.

Perhaps I should change it to “ building and pest inspection results to our satisfaction ."

I've spoken with my solicitor regarding this statement and he said it should be fine .

What is your opinion ?

BR
gprp
 
Perhaps I should change it to “ building and pest inspection results to our satisfaction ."

I've spoken with my solicitor regarding this statement and he said it should be fine .

What is your opinion ?
I think James and others have made it clear that you should have the clause worded by a solicitor.

If your solicitor says it's fine, then why do you not trust that advice?

I suspect you haven't sought a solicitor's advice; these kind of clauses usually have wording similar to "to the satisfaction of the buyer at the buyer's absolute discretion", so that there's no dispute about whether it's reasonable or not for you to be satisfied.
 
To be concise , you are correct .
My solicitor helped me to escape from a dodgy house & land package . I've asked him about the statement " to our satisfaction " and he's said it's OK , but very general .

I'll give him a call to make sure that everything is clear.

Thanks
gprp
 
Guys ,

Thank you for your advice.

My solicitor suggested to use the following statement :

Building and pest inspection reports to buyers complete satisfaction at the buyer's absolute discretion .

In addition , he's suggested to specify that " All plumbing , fixed floor covering, electrical wiring, fittings and appliances are not damaged and in good working conditions as inspected during building inspection on XXX and private inspection prior to settlement on XXX . "

I do understand that the above-mentioned statement is efficient in a case of contingency , however somehow I feel that it might scary the vendor .

What would you suggest ? May be to soften the statement a bit ?

It appears to me that there are two possible scenarios :

1) I will not add this clause if the vendor accepts my own-made offer , than I will add the above-mentioned clause to the final contract of sale .

2) On the other hand , RA's very often push to sign REIV contract of sale as an offer ; as you know, this is a legally binding contract if accepted and signed by the vendor . In this case I wil use it upon submittal of the REIV offer .

Please your advice if my understanding of the process is correct

Kind Regards
gprp
 
My solicitor suggested to use the following statement :
Building and pest inspection reports to buyers complete satisfaction at the buyer's absolute discretion .
In addition , he's suggested to specify that " All plumbing , fixed floor covering, electrical wiring, fittings and appliances are not damaged and in good working conditions as inspected during building inspection on XXX and private inspection prior to settlement on XXX . "

I do understand that the above-mentioned statement is efficient in a case of contingency , however somehow I feel that it might scary the vendor . What would you suggest ?

There is nothing scary for the vendor in the statements that your solicitor has come up with. Leave them alone.

May be to soften the statement a bit ?
No, I'd advise against it.
You are paying your solicitor for advice and now you want to mess with clauses he has come up with? :confused:
The whole meaning of a contract clause can be changed or watered down with your "softening". ;)
 
Hi Propertunity ,

Thank you for your comments .
I guess my point was to discuss the wording through the eyes of a vendor .
I am neither bored , nor intend to challenge my solicitor.
It's more about getting opinion about vendor's perception

Kind Regards
gprp
 
I do understand that the above-mentioned statement is efficient in a case of contingency , however somehow I feel that it might scary the vendor .


I don't know what you mean by scary - but if I was the Vendor, I wouldn't sign a document to sell my house with those BS conditions attached.


My only question would be : "Do you want to buy it or not ??"


If yes, put down the cash....if I pick it up, it's yours. If not, you'll know it wasn't enough.


If no - stop wasting my time.
 
Hi TPFKAD ,

This topic have nothing to do with enough or not enough money on offer.

Let me put it this way - what if the split aircon system or ducted heating stopped working during a 60 days settlement period ? or any other problem ?

Do you know any other way to protect the buyer ?

BR
gprp
 
It has everything to do with it in my world. In fact it is the only thing.


You are buying in priority order ;

1. the land
2. the construction on the land
3. all the bits and bobs within the construction


You seem to be getting all worked up over minor aspects of the third group.


If it were me, I'd be concentrating on getting a super dooper deal on # 1 and secondly # 2......and if you do that, the "noise" of # 3 articles don't even come into play.


The number of people I've met who give away 50K on # 1 and then bargain really hard and "protect" themselves with 3 or 4 clauses regarding small items that fit into # 3 class is staggering.


Concentrate on the steak my friend and the peas won't matter.


In your original post, you haven't mentioned anything about the quality or quantity of the steak. You are simply squabbling over the peas......makes no sense to me whatsoever.
 
gprp, you cannot protect yourself from every eventuality. Yes, the split system air-con or ducted heating could be broken, or break between contract and settlement. It can also break down the day after settlement. Owning property is risky. You need to protect yourself against the really big unusual risks that could break you - eg get insurance as soon as you have an insurable interest, possibly lodge a caveat, and (if you intend to occupy) ensure that the building is at least going to be habitable for a reasonable length of time (ie not about to fall down or slide down a hill).

But if you want to buy a property and be 100% sure that it will be exactly as you thought it was, and be sure that nothing is going to go wrong and cost you money, such a guarantee simply doesn't exist.

If you want the property, put in some reasonable protections for your position, then take the plunge.

Yes, the conditions you've outlined will be scary to a vendor, and their solicitor will probably advise them not to agree (unless they're desperate and/or it's a slow market). We're not suggesting you *should* put in these conditions, we're answering your question about wording of such clauses if they are to be included.

Because these conditions make your offer less attractive, you're paying for them in the price at which you secure the property. You could almost certainly get the property at a lower price with an unconditional offer. If you could get the property for $5K less with an unconditional offer - which you certainly should be able to - then that $5K will pay for quite a lot of unanticipated repairs.
 
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