PLEASE NOTE: This article was published on the date listed below and may now contain information that has since been updated or changed. We have retained this article as it may still contain helpful comments. However, we advise you to make an appointment to see us for the most up to date information on this topic.
Pitfalls For Purchasers
Purchasing a house property is one of the largest financial commitments most people would take on in their lifetime. So why do many of those purchasers take unnecessary risks?
Signing an Agreement for Sale and Purchase of Real Estate is the most important step in the purchase process. Yet, frequently, we find that purchasers have not given careful consideration to important aspects before they sign the agreement.
Some of the issues which, we believe, a purchaser needs to consider before signing are:
- Who is the purchaser?
If your signature is on the Agreement, then you are liable even if the Agreement says, "or Nominee". Be careful not to commit yourself to a legal obligation which you are unable to fulfil.
If two or more people are purchasing a property together, the structure of the ownership needs to be confirmed. This includes, but is not limited to, determining whether the ownership should be as a joint ownership or as a tenancy in common. If the purchasers are not married, then the form of ownership and contributions toward such a purchase needs to be recorded in a formal document. This is now a critical aspect of buying a property in light of the provisions of the Property (Relationships) Act.
- What is it that you get?
Have you inspected the property thoroughly? Are all the chattels you are purchasing listed on the agreement? Do not assume that all the chattels are operational – check them. We even recommend that you check all fixtures to make sure that they are operational (these can include all plumbing and electrical fittings).
What you purchase when signing an agreement is the property "as inspected". Do not assume that the vendor will take away the car wreck at the back of the property or repair the broken window on settlement – include its removal or repair as a condition in the Agreement.
Do not agree to pay a large deposit if you do not have the funds readily available. A deposit is intended as a sign of good faith that the purchaser is serious about fulfilling the conditions contained in the Agreement. In most cases the vendor will not be concerned if a large deposit is not paid providing something is offered.
- Building inspection reports
We always recommend that a purchaser obtains a professional building inspection report on the property to identify any potential problems beforehand. Waiting until you are the owner of the property to find out the problems with the property could be very expensive to you. It may well be that you have no legal rights against the vendor, after settlement, to seek recovery for faults with the property. This has become more important in light of the "Leaky Building Affair".
Do not simply rely on the Land Information Memorandum (LIM) as the Council staff do not make a physical inspection of the property when providing you with a LIM.
- Mortgage Brokers
Beware of some mortgage brokers. All brokers offer essentially the same mortgage arranging service but not all brokers are accredited by all of the banks. Don’t be afraid to ask if the broker is accepted by all of the banks and if the broker isn’t ask why not.
The difference between good brokers and bad brokers is their level of professionalism and commitment to the client.
Further, if a broker is recommended to you, then satisfy yourself that the person making the recommendation to you does not get a financial advantage himself (such as a finder’s fee). Full disclosure is an essential part of providing a professional service.
These are only some of the potential pitfalls for purchasers. Our best advice is to contact us, before signing an Agreement, to have us check all matters for you. The small amount of time and cost involved, at the beginning of a transaction, to get things right may well avoid you having to spend significant monies in an attempt to rectify matters after the event.