TOP 3 MISTAKES MADE BY BUYERS WHEN ENTERING A CONTRACT
Purchasing a house is a very exciting time but it can also be quite daunting and it’s easy for mistakes to happen that will cost you time, money and stress.
To help you avoid these pitfalls, we’ve set out the top issues to look out for when you’re entering a contract:
#1 Rushing into signing the contract
Ensure you have a solicitor review the contract before you sign
Whilst it may feel like this is an unnecessary delay, it’s crucial to get things right before you sign. It may be costly to make a change after you sign or, worse, you may find yourself stuck in a contract where your rights are not fully protected.
At MAP Lawyers, we offer a pre-signing contract review service and will highlight any red flags in the draft contract. We can also draft special conditions to cover your particular concerns (e.g. you need your purchase to be subject to your sale or you want the contract to be subject to body corporate approval of your pet).
Consider appropriate timeframes
Consider appropriate timeframes or finance, building & pest and any other conditions – we recommend consulting your broker, building & pest inspector and solicitor first. This will limit the likelihood of not being able to meet a condition deadline and the seller potentially terminating the contract.
Ensure your name on the contract is your full legal name
As obvious as it sounds, make sure your name is spelled correctly on the contract, including any and all middle names.
If you’re purchasing via a company, ensure the ACN is included. If you’re purchasing via a trust, ensure both the trustee and trust name are included (e.g. Company ABC Pty Ltd ACN 123 456 789 as trustee for Trust XYZ).
Ensure verbal promises have been included in the contract where necessary
For example, you might discuss with the agent or seller that various items will be left at the property after settlement. These should be included in the contract. If they aren’t, you won’t have any rights if the seller later changes their mind.
Make sure you have considered your transfer duty obligations before you sign
If you are a temporary or foreign resident, you will be subject to Additional Foreign Acquirer Duty (“AFAD”). Further information can be found here:
AFAD will significantly increase your transfer duty payable. We recommend speaking with us before you sign a contract to determine if there are any options to reduce this liability.
It’s also important to be aware that transfer duty is sometimes payable prior to settlement where you have an extended settlement. You will need to ensure you have budgeted for this and have sufficient savings to cover this payment.
Be careful when signing via DocuSign
As efficient as electronic signing is, it is also easier to make mistakes. Make sure you don’t get trigger happy and accidentally sign the contract before you’re ready (it does happen!)
#2 Not engaging the right experts
Ensuring you have engaged the right people will make all the difference.
We recommend engaging a solicitor specialised in property law. Solicitors are able to provide detailed legal advice – crucial when unexpected issues arise.
Further details on the difference between a solicitor and conveyancer can be found here: https://www.maplawyers.com.au/faqs/
We also recommend engaging a broker – they will advise on the loan options available to you, help you obtain unconditional finance approval, assist in signing the loan documents and help ensure the lender is ready for settlement.
When engaging those to assist, it is important not only to consider the cost, but also the service that you will be receiving. Purchasing a property is a complex process and you need to be confident that you have the right people on your team.
#3 Not paying the deposit on time
Often, the initial deposit will be due when you sign the contract.
It is critical to ensure that you pay this deposit on time. If you don’t, you will be in breach of the contract. Importantly, paying the deposit at a later date does not rectify the situation – the seller has a continuing right to terminate and keep your deposit even once you’ve paid. We recommend speaking with your solicitor before paying the deposit if you have any concerns.
