In a perfect world – you can expect that all aspects of the house you will be purchasing would be in tip-top condition by purely relying on what the vendor or agent tells you. Although this is an option on going about your purchase, it is definitely not the best one!
It is important to make sure that you are getting your money’s worth. Purchasing a home is a huge investment, and if done right, could serve as a lifelong asset. You want to purchase a home that could withstand the test of time, for you and your family.
Here are a few conditions you should strongly consider adding to the Sale and Purchase Agreement. These useful conditions will lend you a helping hand in determining whether the home you are purchasing is the right home for you:
Land Information Memorandum (LIM) – Clause 10.2
This condition will help provide you the necessary information that you need to know about the property that you will be purchasing. It will tell you about the property’s current land features – such as if it has a high risk of slippage, flooding or erosion. Obviously, this is would be an important feature to know when assessing the safety of the property that you’re planning to build a life in.
The LIM will also let you know about any recorded building work done on the property. It will provide you with the building permits and/or Code of Compliance Certificates issued for the work done. This will give you the assurance that the building works were done professionally and correctly. Also, by reviewing the LIM, you can find out whether there has been any unconsented building works done on the property. Unprofessionally done work cannot always be dependable, and may even be defective at times. Knowing which part of the property has a chance of falling apart is always good when you’re looking spend a large amount of money on it.
The information provided by the LIM will also let you know if there are any restrictions on the land that you should be worried about, or if it’s contaminated by any hazardous substance that could be harmful to you. A good example of this may be asbestos, which is a nasty naturally occurring mineral that can cause a whole number of illness when inhaled.
Obtaining a LIM from your local council can only prove to be beneficial for you when purchasing a property. Although it may come at a cost, it provides you with the knowledge to make sure you are making the right decision – a small price to pay for a lifelong investment.
Building Report – Clause 10.3
Similar to LIM, obtaining a building report is a helpful guide in seeing if the property is in a good condition. However, building reports mainly focuses on the structure and contents of the house and any other existing buildings on the property. By having a professional inspection done on the house, you can find out if there are any existing issues that you personally cannot see.
Building reports can identify any hidden damages such as issues that are behind the walls like leaky pipes or water damages. They can also identify any materials on the house that may be subject to long term wear and tear, and are need of replacement.
When significant issues are found in the building report, you can make a complaint to the vendor and order them to have those issues fixed before satisfying the building report condition and giving them your money. Alternatively, if the vendor won’t be able to have those issues fixed, there is a possibility of having the purchase price reduced down to what you think is reasonable. But you should consider that a reduction in price may not be worth it if it is you that has to consistently deal with the issues in the house. It’s always good to get the builder’s opinion on this as well.
Make sure that the Building Report is provided to you by a professional who is qualified and has sufficient experience, so that you can obtain the most accurate report available.
Title Requisition – Clause 6.2
Besides knowing about any physical defects on the property, you should also be aware if there are any “defects” or restriction on the property’s title. Restrictions that you should be worried about could be the ones that restrict the way you use and enjoy your house. The title may even provide you with an obligation to make certain payments as the new owners. You may also have regular responsibilities towards land or even towards your neighbours. You would need to know these aspects of the property, before making the purchase.
When we say “defects” on the title, these may be burdens on the title that can make your purchase of the house problematic. The “defects” can possibly prevent you from being the legal owners of your house, even after the purchase. For that reason, you need to be aware that the title of the property is free from any “defects”, before you finalise your purchase.
Finance Condition – Clause 10.0
You could say that the importance of this condition is fairly self-explanatory – Don’t have enough money? Apply for finance! Even if you have sufficient money for the purchase, applying for finance may also be beneficial for you. Purchasing a new home can be quite incapacitating to your bank account. Having finance can help moderate the effects or taking out a large sum of money.
Even if you think you were already able to have your finance approved, you should include this condition in your agreement anyway. Lots of people think that a bank’s “pre-approval” is sufficient to secure the loan. Unfortunately, since this is not the unconditional approval that you are looking for, the bank can still revoke this approval. This would then lock you into purchasing a property you didn’t get the loan for!
You need to remember that this is not free money. You do have to pay it back at some point – plus interest. Therefore, you should only take out what is necessary for the purchase of your home.
No one likes to be in debt. So, don’t get greedy! You will only make it difficult for yourself in the future. Before finalising your finance application, make sure that you consider how the loan will affect you in the long run – you don’t want your asset to turn into a debilitating liability.
What can WE do?
Regent Law will make sure that you go through the best process in purchasing your new house. We will be right there with you every step of the way to ensure that this process is as simple and painless as possible.
We understand that buying your new house will be a big chapter in your life, and we want to be a part of it.
Lorenzo Villena 5 March 2020