Hi all,
Just spent a few hours doing sales representative CPD. One focus was 'writing special conditions' – saw some classic examples taken directly from contracts where vendor/purchaser/agent had added some special conditions to the contract.
REBA advise the following should be covered in all conditions;
1. what needs to be done?
2. Who is going to do it?
3. Who is going to pay for it?
4. When does it need to be done?
5. What is going to happen if something is discovered?
6. Who is going to fix it?One classis (taken directly from a contract) was "This offer is subject to the vendor to obtain from all other owners of the complex approval for one dog to be kept on said property until death within fourteen days of acceptance"
WTF
Final word – be careful your conditions are not ambiguous – maybe get someone who is isn't party to the contract to read and explain the conditions back to you before you put them in the contract.
Derek, I think that’s why we have lawyers – to review contracts before the fact & to get clients out of the mire after they have signed.
Hi Scott,
You are right – unfortunately many people involved in the purchase of real estate think they can 'do it themselves' and the consequences can be significant.
Even a simple white ant or buidling inspection clause can be poorly worded.
The CPD session had some other examples of 'handwritten' conditions that beggared belief.
Step carefully one and all.
They weren't suggesting agents write the special conditions were they? This would probably amount to legal advice.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Not at all – just highlighting how ambiguous conditions can be.
Hi All,
I'm in the process in getting my contract look at through my conveyor not lawyer which have special conditions in it. Nothing has been signed yet and this is my first property. (property is in Victoria)
Here are the conditions which I've put in:
Subject to:
Finance on terms satisfactory to the purchaser
Valuation, to the approval of the buyer and the bank
Satisfactory results of a building and pest/termite inspection, to the approval of the buyer.Please let me know if the wording is incorrect and also what else I should add if one of the conditions is not meet.
1st question is – should i have used a lawyer instead of a conveyor? Can't conveyors help you in regards to wording of special conditions?
2nd question is – If a special condition on the contract eg finance doesn't come through or a building inspection is not to the buyers approval. (As per my conditions above) Does the contract automatically end as long as you give the vendor notice or do you have to put it in the wording in the special conditions that this will happen if finance doesn't come through or inspection is not to the approvel of the buyer?
Im a bit confussed in this area. If someone could give me an example of how a special condition like subject to finance and building/ pest inspection should be worded that would be great.
Thanks in advance
Alexia
Alexia
You are asking for legal advice. Your conveyancer should be able to advise on the contract and wording etc or give legal advice in relation to the conveyancing. However, best to use a lawyer as there are often a lot of other areas that can arise (estate planning, trust, family law, succession, finance, asset protection etc etc).
I think your clauses are too vague.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Please have a look at this recent WA case where the sellers got into trouble over special conditions:
Dodds v Kennedy [No.2] [2011] WASCA 131
http://decisions.justice.wa.gov.au/supreme/supdcsn.nsf/PDFJudgments-WebVw/2011WASCA0131/$FILE/2011WASCA0131.pdfTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
any conditions can be negotiated into a contract as long as its specified as an 'annexure' in the contract of sale and initialled/signed by both parties.
It has worked with me every time ie; longer settlement, longer due diligence clauses extending the cooling off period, subject to finance approval, less than 10% deposit and securing a lease prior to settlement, etc, etc. everythings negotiable with the exception been buying at auctionmost agents will tell you that you can't place special conditions but as an investor you can negotiate anything. don't let agents fool you as they all want to lock in buyers with the standard 5 day cooling off period, 10% deposit. 99% of agents aren't investors and only sell properties as a day job
Thanks guys for your help.
Coalstar, in your conditions above you've noted that you've had securing a lease prior to settlement – how would you word this in your special conditions? Just an example if you could.
Thanks
Alexia
A seller would be more likely to agree to allow access for leasing but would not agree to a clause allowing settlement to be delayed indefinitely as you can’t find a suitable tenant or one at a high rent.
Scott No Mates wrote:A seller would be more likely to agree to allow access for leasing but would not agree to a clause allowing settlement to be delayed indefinitely as you can't find a suitable tenant or one at a high rent.not true, it all depends on how good the agent is
1. subject to obtaining a lease agreement at $………. prior to settlement (settlement to be extended until obtaining lease agreement).
this clause is best used for commercial properties and properties in mining towns where the buyer is looking to secure a lease which also helps obtaining final finance approval.
The reason the lawyer steps in on special conditions or the Real Estate Institute provides a guideline for the clause is because a special conditions clause becomes a binding part of the contract and its fulfilment.
If a poorly written entry allows for the purchaser to have an indefinite period of time for the special condition .. then they can exercise that special provision and the seller is helpless against it. Thats why the clauses must be thorough and specific, because being too vague they can be open to misrepresentation and conjecture.
Thats really where the difference between a conveyancer and a solicitor comes in (Vic only). The conveyancer is fine should all parties be agreeable and there not be any special conditions. Trip outside that .. and the need for a solicitor to pass things smoothly is required.
Coalstar, granting access is often a big enough hurdle & very unlikely if it is owner occupied.
The agent is working for the vendor & in the vendor’s interest, additional work makes it just too hard for the agent. The selling agent is generally not the property manager, so they won’t get the comms.
The vendor doesn’t care how long it takes for you to get a tenant & does not want to delay settlement or the release of funds because of things outside of their control, like finding a tenant. In a thin market you could try it on but when offers come thick & fast you could whistle ‘Dixie’ & the vendor not bat an eyelid.
I agree that you should be clear about your conditions. I think once you have experience with contracts and setting and negotiating conditions, then you probably won't need a lawyer. When you're starting off though, it would be wise to get legal advise. That's my opinion.
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