Conveyancing in Queensland is complex and is affected by many different pieces of State and Federal legislation, contract conditions, extensive case law and practice guidelines.
It is important that you obtain legal advice prior to signing a contract, however if you do go ahead and sign prior, ensure that you obtain legal representation right away.
We will discuss some of the most important steps to take when signing a contract below.
Diarise important critical dates
The first things to look for after signing a contract are the important critical dates. These can be the deposit due date, the cooling off period, finance and building and pest conditions, due diligence conditions and settlement.
Buyers and sellers must diarise each date so that it can be ensured that deadlines are met, otherwise the other party may have grounds to terminate the contract. Sometimes a buyer will get the deposit back, but sometimes not.
What happens if I don’t comply with the critical dates under the contract?
In legal terms, time is “the essence” of contracts. This means that performance of a contractual obligation such as obtaining finance or being able to settle on the specified date must be strictly adhered to.
If the obligation cannot be met by the specified date, then an extension of time must be formally requested. The seller is under no obligation to provide any extension of time.
If it becomes necessary for us to request an extension of the settlement date, the seller may or may not charge penalty interest on the balance purchase moneys for each day settlement is not able to be completed.
If a buyer cannot settle, then the seller may, among other things, terminate the Contract, take the deposit, and reserve its rights, including the option to sue the buyer for damages.
Take out insurance
Generally, the property is at the buyer’s risk from 5:00pm on the first business day after the Contract Date.
Despite this, the seller has an obligation until settlement to take reasonable care of the property.
If the property is damaged between the contract date and settlement (for example, due to fire or vandalism), a buyer will be required to settle in accordance with the contract despite the damage (unless a residence is so destroyed or damaged as to be unfit for occupation).
If damage occurs, a buyer may in some circumstances be able to gain the benefit of the seller’s insurance. We do not recommend that buyers rely upon this right as:
- the seller may not take out insurance;
- the seller may choose to cancel its insurance;
- the event that causes the damage may not be covered; or
- other factors may preclude recovery.
As the property is at the buyer’s risk, we recommend that property insurance cover including building, contents and public liability be arranged.
If a buyer is obtaining finance, it will be necessary for the bank to be noted on the policy as mortgagee. The insurance broker or home insurance company should be arranged to attend to this.
Instruct your solicitor to order searches
Whether a buyer’s contract is subject to a due diligence condition or not, it is important to obtain searches at an early stage. Your solicitor does this for you and the searches are usually information in relation to the property itself or the body corporate (if there is one in place).
It is important that the searches are ordered as soon as possible so that any results which may come up unsatisfactory or problematic, can be picked up before the contract becomes unconditional. This way, it is easier to terminate or claim compensation if required.
Who should you speak with to assist with your purchase or sale?
If you are a potential buyer or seller getting cold feet or sweating over entering into a contract, contact us. We will be able to walk you through the process and make sure that you’ve got all the conditions and timeframes you need to protect you by ensuring that you make all enquiries in relation to your purchase.
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