Stop and Smell the Roses
Getting Agreements for Sale and Purchase right
So often when we come to work in the mornings and open our emails we are confronted with Agreements for Sale and Purchase which have been signed by our vendor or purchaser clients without our being asked to check them first.
Some of these agreements are missing valuable and necessary clauses in order to make them workable and secure for our clients. For example, clients presume that by inserting a “Solicitor’s approval clause” we have the ability to cancel the agreement if the client changes their mind. That is not the case. We are unable to consider the suitability of the agreement after you have signed it and refuse approval because you have made a bad decision. We do not have the ability to insert new terms and conditions into the agreement to rectify omissions for you. We are only able refuse approval of an agreement if there are genuine legal objections or impediments to the bargain the parties have made, such as validity of title. The standard clauses in the Agreement for Sale and Purchase cover title approval in any event.
Another pitfall we are seeing more and more often is an Agreement that contains a LIM condition, however that LIM conditional date has been shortened. We have had an instance recently where one local authority was so inundated with LIM requests that they decided they were not going to carry out any urgent (3 day) LIM report requests. The standard Agreement provides a date for approval of a LIM of 15 working days. A local authority is under an obligation to provide you with a LIM report within 10 working days, however you still need time to check it. Also, the local authority will only commence working on that LIM request once they receive payment. So, time delays are possible.
Did you know also, that a finance pre-approval certificate from the Bank is not an unconditional finance offer? The Bank still has the option of asking for a valuation and still needs to approve the Agreement. If the Agreement is not conditional upon finance and the Bank decide they do not approve the Agreement or if the valuation does not come up to the purchase price then you are still bound by the contract and are still responsible for settling the purchase (even though you do not have the money).
How do you prevent this? Simple. Have us check the draft Agreement before you sign it. Ask the real estate agent to prepare a draft Agreement and send it to us for checking before you sign it. The majority of the wonderful agents in our region do this automatically, however we do know how easy it is to get caught up in the excitement of selling or purchasing a home. We endeavour to check and report to you on such Agreements as soon as possible. As your home is probably the biggest investment you will make in your lifetime we urge you to get our advice beforehand.