TGB's property legal team answers common legal questions asked by first home buyers and people new to the property market.
TGB’s property legal team answers common legal questions asked by first home buyers and people new to the property market.
We have found our perfect home but are not sure if we have enough finance to purchase it. Can we sign a contract?
This situation is not unusual. Most first home buyers will have an idea of what price range their new home will fall within, but there are a lot of hidden extras that need to be taken into account when determining whether you have sufficient finance.
Accordingly, unless you have pre-approval or money in the bank, it is best to ensure that you sign a contract “subject to finance”. That way, if the finance you require to purchase the home cannot be obtained, you can terminate the contract on account of the non-satisfaction of the special condition being the “subject to finance” clause.
My finance has been approved. What now?
It is from this point, provided that finance was the only special condition of the contract, that you are now legally obliged to proceed to settlement. Settlement is the day upon which the property changes hands. You should now engage a lawyer or a conveyancer to act for you in transacting the property to adjust rates, taxes and levies and attend to the formalities. You will also need to arrange for the connection of utilities at the property.
What if my finance was not approved?
This depends upon the exact wording of your special condition clause which may require that you use “all reasonable endeavours” to obtain finance. If this is the case, the vendor may apply considerable pressure to ensure that you have exhausted all avenues in attempting to obtain finance. In these circumstances, it is important to seek some legal advice as soon as possible. The consequences of breaching your obligations pursuant to a contract are severe and the investment in some initial legal advice is certainly worthwhile.
We have signed a contract, but what are my “cooling off” rights?
In most cases, you will receive a Disclosure Statement (Form 1) and be given 48 hours within which to “cool off”. During this period you can terminate your contract without any reason whatsoever. It is wise to use this time to conduct building or pest inspections. You can simply have a change of heart and “cool off”, provided it is within the 48 hour notice period and is in writing to the vendor or the vendor’s agent. It must be delivered personally, sent by registered post or faxed.
The next step, provided you have not elected to cool-off, is to make sure that the property is insured. It is important to know that most contracts will provide that the property is at your risk from the point of signing the contract.
I purchased at auction, can I now cool-off?
No, when you have signed the contract at auction you are bound. There is a basic assumption that you have the required finance and therefore you are not able to buy “subject to finance” at auction. You will also be required to sign a “waiver of cooling-off” which is an acknowledgment that you waive any statutory rights you have to cool-off. If you’re buying at auction, it is important to ensure that you have pre-approval for finance.
Settlement is approaching and my bank says finance will take another one to two weeks after the anticipated settlement date. What will happen?
You should ask your lawyer/conveyancer to negotiate an Addendum to the Contract where both parties agree to delay settlement by two weeks. You may be liable to meet default interest up until the next agreed date but this can be negotiated, so it is important to obtain legal advice.
The consequence of a continued breach by you may include the right of the vendor to:
a) terminate the contract;
b) re-list the property for sale;
c) retain your deposit;
d) sue you for default interest from time of anticipated settlement to termination date;
e) sue you for any difference between subsequent sale price and the price you contracted to purchase.
As you see, the consequence of any breach can be far reaching. If there are any concerns about your ability to meet your obligations at settlement you should obtain legal advice at your earliest opportunity.
For further information or assistance with your property issue or conveyancing contact your nearest TGB office.