What to look for in 'contract' ....
- Thread starter RandyH
- Start date
Just as, if not more important is what to add to the contract.
Three must haves;
1. Subject to finance approval (min 21 days)
2. Subject to pest/white ant inspection
3. Subject to building inspection
Three must haves;
1. Subject to finance approval (min 21 days)
2. Subject to pest/white ant inspection
3. Subject to building inspection
In NSW you need to pay particular attention to special conditions. You should add a few of your own too. Watch out for clauses about:
- agent introduction
- death
- extra fee for late settlement
- illegal strucutres
- deposit of 10% even if you pay 5% upfront (if you don't settle you may lose 10% rather than the 5% paid)
- etc
On the title search look at the owners names, make sure it is the owners are selling the house! See if there are any caveats or easements, covenants etc.
Then look at the sewerage diagram chechout where the pipes run.
read the s149 certificate and make sure you can use the property for what you want to use it for.
and make sure you use a lawyer to review it well in advance.
- agent introduction
- death
- extra fee for late settlement
- illegal strucutres
- deposit of 10% even if you pay 5% upfront (if you don't settle you may lose 10% rather than the 5% paid)
- etc
On the title search look at the owners names, make sure it is the owners are selling the house! See if there are any caveats or easements, covenants etc.
Then look at the sewerage diagram chechout where the pipes run.
read the s149 certificate and make sure you can use the property for what you want to use it for.
and make sure you use a lawyer to review it well in advance.
What is the worst case scenario if its ticked yes to land tax adjustment and you have no way to change it as a buyer. e.g. mortgagee auction.
Thanks
You pay their land tax!
True, my thought is conduct a search will tell the total of land tax to be paid, if any. correct?
Thanks Terry
I look out for:
1. Fire Prone
2. Flood Prone
3. Location of Easements and Sewer lines (may affect future development and/or value)
4. Zoning
5. Specific clauses entered by the vendor's solicitor
6. Death/Deceased sale
7. Caveats
8. Minerals
9. Road Widening
1. Fire Prone
2. Flood Prone
3. Location of Easements and Sewer lines (may affect future development and/or value)
4. Zoning
5. Specific clauses entered by the vendor's solicitor
6. Death/Deceased sale
7. Caveats
8. Minerals
9. Road Widening
Not really. They may have paid the land tax on Jan 1 and then you sign on 31 June. You would then need to pay them back 6 months worth of the tax as you would be owning the property for 6 months of the year.
You cannot add things after entering a contract, you must do this negotiation beforehand. Get your solicitor to review the contract and then to ask for any amendments you wish.
OTP considerations
If you are going down the OTP path;
1) check how long you have to settle once title issues
2) check the section that covers the things you are not allowed to object to when the property is built (one contract I read had 3 A4 pages of these)
3) whether the developer has access to the deposit
4) compare the contract with the marketing material to be clear about what is included.
5) check how long the developer has to deliver the product (sunset clause), I've heard of people getting burned by having their deposit tied up for extended periods and worse still developers deliberately letting contracts reach their sunset so they lapse allowing the developer to sell at a higher price (if the market has moved)
Trev
If you are going down the OTP path;
1) check how long you have to settle once title issues
2) check the section that covers the things you are not allowed to object to when the property is built (one contract I read had 3 A4 pages of these)
3) whether the developer has access to the deposit
4) compare the contract with the marketing material to be clear about what is included.
5) check how long the developer has to deliver the product (sunset clause), I've heard of people getting burned by having their deposit tied up for extended periods and worse still developers deliberately letting contracts reach their sunset so they lapse allowing the developer to sell at a higher price (if the market has moved)
Trev
I recently had a contract by a developer who didn't even own the block of land saying this:
Despite all things in the contract, the purchaser agrees to release the deposit to the vendor before settlement in order for the vendor to use the funds to:
-buy another property
-pay stamp duty for another property
-pay the mortgage for this current property.
Be careful of that. I had money on house and land I saw was undervalued and then the ones in the estate started selling for 100k more so I thought I'd try hold onto it if they got rid of the clause but they were adamant on keeping that in there because they wanted to use the money. They wanted 16% of the land also rather than 10% which is normal so be careful of that..
They then emailed me a letter of guarantee from the director saying if anything happens to the company he agrees to pay me back...I'm guessing if the company goes bust so does he..or if he doesn't i'm sure it's because he has got a single asset to his name..
So in summary..Don't let anyone touch your deposit..
Despite all things in the contract, the purchaser agrees to release the deposit to the vendor before settlement in order for the vendor to use the funds to:
-buy another property
-pay stamp duty for another property
-pay the mortgage for this current property.
Be careful of that. I had money on house and land I saw was undervalued and then the ones in the estate started selling for 100k more so I thought I'd try hold onto it if they got rid of the clause but they were adamant on keeping that in there because they wanted to use the money. They wanted 16% of the land also rather than 10% which is normal so be careful of that..
They then emailed me a letter of guarantee from the director saying if anything happens to the company he agrees to pay me back...I'm guessing if the company goes bust so does he..or if he doesn't i'm sure it's because he has got a single asset to his name..
So in summary..Don't let anyone touch your deposit..
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