If you find a building inspection hump can you offer less?

[eyogina]

Hi
Sorry for the blonde question. If you have signed a S32 for '$x' amount, subject to building/pest and finance approval, with a timeframe of 2weeks to complete checks....IF the building approval comes back to say that you need '$x' amount of re-stumping (for example) as long as it is within the 2 weeks timeframe, you can either withdraw your offer and walk away or withdraw and offer a new amount but less $ and ask to sign a new S32, and then it is up to the vendor to decide?

Thanks

 

[Player]

Depends how the wording is of your "subject to" clause on the Section 32. Certainly anything is negotiatble. I'm not a solicitor, however I would envisage you pull out of the contract by exercising your right to do that and then negotiate a new reduced price or have the vendor rectify said faults whatever they are.

Again depends on how biased the wording was to you. Was it to your unequivocal satisfaction, was it for major structural faults, was it for major building defects or any defect at a certain price range, etc, etc?

In this market anything is possible, although if it is at the very low end, you may be playing against other investors who may snap it up. How much competition has there been for the property?

Does the whole entire dwelling need re-stumping? Also you will need to provide the buidling inspection to report to the vendor along with your advice of not proceeding with the purchase. Ask you solicitor or conveyancer also.

 

[man of action!]

Micheal is correct in that it relates to the wording of the clause.

If the wording is simply "Subject to a building / pest inspection", then what does that mean? Does it mean you will only proceed if you get those inspections? Does it mean you are obligated to get them? And what if they reveal something you don't like, what then?

The type of conditions you are wanting to place on your purchase in your example is one that gives you an option but not necessarily an obligation to alter the offer or, as usually the case, not proceed (escape clause) IF something pops up in the report(s) that you aren't comfortable with - and determining this should be soley at your discretion. Therefore the wording of the conditions MUST be very specific and clear.

Usually a building / pest inspection clause uses a term like "satisfactory building inspection" but again, satisfactory to whom, the vendor or buyer? So it needs to be clear.

What does "satisfactory" mean, well "satisfactory" should be determined by you. This gives you enormous flexibility and "leverage" as there's no obligation for you to reveal to the vendor (or Agent) any aspect of the report(s) or your concerns... it's simply your determination that something was unsatisfactory... even if it is ultra-minor.

Your solicitor should be able to provide you with the correct wording - without it being long winded and confusing - one short sentence is usually enough.

If you invoke the escape clause, then that is what you are doing, so if you wish to make a lower offer, then it is probably best to rewrite it.

Again, speak to your solicitor, that's what they are there for.

PS: Rob Balanda LLB used to sell "Clauses Made Simple" which gives details of how to word and use a number of clauses. Don't know if he still does but it was full of good info.

 

[LynnH]

PS: Rob Balanda LLB used to sell "Clauses Made Simple" which gives details of how to word and use a number of clauses. Don't know if he still does but it was full of good info.

I don't think the book is available in print version any more, but a CD/DVD version is available by mail - see BusinessMall section in the back of API magazine.

Cheers
LynnH

 

[Bargain Hunter]

There is no need to have another clause in the contract saying, "we reserve the right to further negotiate the price based on the findings of the building inspection" because the building inspection clause already gives you the right to cancel the contract.

We signed a contract on a property with the usual clauses and the building report came back with a red flag. We arranged for a quick quotation on what the cost of the repair would be and went back to the vendor with an adjusted purchase price based on the report and the estimated cost of repairs. The vendor accepted the revised price and the sale was finalised.

If the vendor had not accepted our offer we still had two options, walk away or proceed. Easy.

Regards

Andrew