Questions on settlement issues

[Dis]

In Victoria when you make an offer on a property, the process I remember (from my PPOR) is

1) Verbal negotiation

2) Make written offer. Agent asks for some money

3) Offer goes unconditional. Agent asks for full deposit

4) Settlement. Full amount paid.


At step 2, do you have to give money or is this a goodwill thing?

If you decide to terminate your offer before going unconditional, is there any penalty?

Is there a time limit on the "subject to" period? Agents try to limit this to 3 days. What is the maximum time I can take to arrange finance, etc? What if i need to arrange planning permits?

If based on pest/building inspections I wish to insert new conditions / vary the price what is the process and timeframe?

If settlement is delayed because the vendor does not fulfil some conditions / permits haven't been granted, what opions are there? Are there financial penalties for either the buyer / seller?

What happens if a final inspection is not satisfactory - damage, vendor has not done what was promised, etc? Do specific clauses need to be in the original contract regarding this?

Thanks for your wisdom!

 

[JamesGG]

Hiya,

First of all, check out This thread. This will tell you a lot of what you should know before you enter into negotiations.

In answer to your questions, though:

1. No more is required until settlement. As you say, it is merely a 'goodwill' thing and commonly accepted as the norm.

2. If you terminate on the basis of a condition not being met, then no, there is no penalty. If you try to back out of the contract just becuase you change your mind within 3 business days, then you are up for a fee of $100 or .2% of the purchase price, which ever is more. Trying to cancel the deal beyond that is bad form anyway and penalties can be significant.

3. If your contract is subject to building / pest / etc and the said report comes back in a manner that allows you to escape the contract (major structural defects / not to your satisfaction, whichever you chose at the time), then effectively you have the right to withdraw from the deal with no penalties. Then, the negotiations start again, if you wish to proceed. The time limit to exit the old contract is determined by the clause itself (ie: within 7 days of signing), and once that is executed, you have up until the house is bought by someone else.

4. If the final inspection reveals the property to not be in the same condition as when purchased, you can instruct your solicitor to withhold moneys at settlement to cover the cost of this being rectified. Your solicitor will advise the vendor's solicitor of this, who will then advise the vendors to fix the problem or forgoe some of their money at settlement.


I hope all of this helps a little...

Good luck!

James.

 

[Dis]

Thats a great answer. Thanks for taking the time. Helps heaps!