Andrew Pine Solicitor – Property Tips
After the Contract is signed – while the Contract is conditional
Congratulations! You and the Seller have both signed the Contract. You are well on your way to owning your first home. You have contacted your solicitor who has emailed you half a tree of information and it is probably all a bit too much to take in. Well your lawyer is here to help you, so you should always ask them for clarification on any point you do not understand.
Your solicitor should provide you with a to-do list of items for you to action before certain dates. Always rely solely on advice from your lawyer. This is because your solicitor is the only person who is capable of tailoring their advice based on your unique circumstances. Never rely on legal advice from an outside person such as a real estate agent. In fact, you should not even rely on this article for legal advice, even though it will serve as a helpful list of goalposts for you to bring up with your lawyer.
The Property’s risk passes to you when the Contract is signed by both parties. This means if there is damage to the property after the Contract Date, but before Settlement, you are the person responsible for fixing it. There are of course some exceptions, but it is a good idea to call your insurance company and take out adequate insurance for the property as soon as you know the Seller has signed the Contract. Your lawyer will be able to explain what form of insurance cover you will require. It is usual for the insurance policy to commence from the Contract Date onwards.
Hopefully you have managed to insert a finance condition into the Contract. If so, your lawyer should confirm that you are protected in the event your bank decides it will not lend sufficient funds for you to purchase the property for whatever reason.
Banks can take a while to give you ‘finance approval’. Finance approval is where the bank sends you a letter or email confirming in writing that it will lend you the necessary funds for you to complete your purchase. It can be time consuming as the bank must take numerous steps, including (but not limited to): reviewing the Contract, conducting a valuation by a valuer inspecting the property (if necessary), determining that the price you are paying is no greater than market value, confirming that you are able to service the loan and determining that the level of risk associated with giving this loan is acceptable to the bank.
Because this sounds like a very lengthy and convoluted process, your best bet is to have established a relationship with a mortgage broker or banker prior to signing the Contract. Perhaps this information could have appeared in an earlier article! If you are not yet in contact with a broker and/or banker, it is recommended you find one within a few business days of the Contract Date, as it will take the bank / broker a few days to discuss your ‘deal’ with various lending departments. There is also a plethora of paperwork for you to complete and sign, along with numerous items of supporting documentation (for example, bank statements and pay slips) that are often requested by financial institutions during this phase. Therefore the sooner you make contact with a broker or banker, the more likely it is that you will receive finance approval by the finance date.
Building and Pest
Unless you are a qualified builder, here’s hoping you made the Contract conditional upon you receiving a satisfactory building and pest report. As discussed previously, there are numerous problems which can arise with dwellings in Queensland.
Builders are busy people. They won’t drop the job they are currently working on to inspect your property to provide you with a report. It is therefore recommended that you contact a builder immediately after you sign the Contract so as to ensure they can inspect the Property to give it a look over.
The Seller (or usually the Agent) must give your builder access to inspect the Property. Once your builder has inspected the property they will then provide you with a written report outlining the positives and negatives of the Property. You can ask your solicitor to review the report, but this is usually outside their usual costs. Your lawyer can also not provide you with building advice, only legal advice on what your legal rights and obligations are regarding whether you wish to ignore any defects, ask for a price reduction or terminate the Contract on reasonable grounds. While these reports are very long, it is recommended you read them carefully.
A final note – a building report can be different to a pest report, or, the two can be contained in the one report. A building report can often be merely an inspection of the overall structure of the building. A pest report is an inspection of the building’s termite barrier, along with whether any other creepy crawlies have made your house their home! It is best to check with a builder whether their report will or won’t cover a pest inspection. If it does not, either find a builder who will inspect both building and pest issues, or, find a pest inspector who specialises in this field.
It is recommended to obtain both a building report and a pest report, or a report which covers both.
A title search will be conducted by your solicitor soon after the Contract is signed by both parties. This gives you peace of mind that the Seller you are paying your hard-earned money to is in fact the owner and is actually capable of giving you the Property at Settlement (rather than running off with your cash!).
A title search is also an excellent way to pick up on any issues with the title of the property from a legal perspective. Your solicitor will be trained to see any issues with the title and will advise you accordingly.
You have obtained Finance Approval from your bank, your builder has informed you that the property is fine. Your pest inspector has confirmed that there are no hidden friends in your walls. You have therefore waived both Finance and Building & Pest conditions. Your solicitor has confirmed that there are no hidden issues with the title of the property. It is now time for you to prepare for settlement in a few weeks (the time can of course vary on what you and the Seller have agreed to). Our next article will therefore focus on what you need to prepare for from a financial perspective.
Disclaimer: Andrew Pine is a property solicitor practising in Queensland. Andrew is not qualified to give accounting or financial advice. This article is written solely as an opinion of the writer. This article should not be relied upon for legal, accounting or financial advice. You should always seek advice which is tailored to your individual circumstances.
About Andrew Pine
Andrew Pine specialises in property law, residential and commercial conveyancing. As a passionate part-time property investor, he brings years of valuable insight into the property market and property law.
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