Found your dream home? When and why should you get a Contract of Sale reviewed by a lawyer? What are the key issues your lawyer should advise you on when buying a property? This video discusses the timing and importance of contract review when buying residential property in NSW, Australia and the key issues your lawyer should advise you on. (6 mins)
Watch here: https://youtu.be/EgYeEAGsPgM
TRANSCRIPT:
This is one of a series of videos I will be presenting on buying a property from the perspective of the purchaser setting out small-ish chunks of the legal process involved, which is also known as “conveyancing”. Today I’m going to talk about a crucial step in the process of buying a property, and that is getting the contract for the property you are interested in purchasing reviewed by a lawyer. Now, in Australia, the laws around property purchases are state-specific so if you are interested in buying a property located in NSW, this video is for you!
The first point to note is that this video series deals with residential property only, such as a house, unit or block of land and not with any type of commercial property.
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A quick disclaimer that my videos are general and informational in nature only. They are not intended as legal advice, nor should you rely on them as legal advice. Please see the full disclaimer in the description box below.
So, you have found a property you want to buy, the next thing you need to do is…
Find a lawyer!
You may notice that I refer to “lawyers” or “solicitors” (which are the same thing) in my videos as we are the only ones qualified in Australia to actually give legal advice. A common misconception is that conveyancing is very procedural in nature and that therefore you don’t require the services of a lawyer, however, the variety and complexity of legal issues that can and do arise in this area of law cannot be overstated. So, I do recommend you are armed with a lawyer who is best placed to navigate you through this process, whatever may arise.
Okay, so let’s assume that the property you are interested in purchasing is being sold by private treaty, as opposed to auction. Once you and the seller, known as the vendor, have agreed on a purchase price, the real estate agent will usually ask you for your lawyer’s details so they can send your lawyer and the vendor’s lawyer a document known as a Sales Advice. In a nutshell, a Sales Advice sets out particular details about you and the vendor and the agreed purchase price. At this stage the real estate agent will also send a copy of the contract to your lawyer for your lawyer to review and advise you on.
If, on the other hand ,the sale is by auction, then you will need to request a copy of the contract from the real estate agent well before the scheduled date of the auction to give your lawyer enough time to review the contract, advise you on it, and request any changes to the contract from the vendor’s solicitor that you may require. This back and forth process can take some time, so you’ll need to account for this, as each bidder at an auction is actually bidding on the particular contract that they have individually negotiated beforehand with the vendor. At the auction, if the hammer falls and you are the highest bidder above the vendor’s reserve price – then, congratulations, you’ve just agreed to enter into the contract right then and there. So it’s important to have negotiated a contract that you are happy to enter into before you start bidding.
Which brings me to the contract review itself. Your lawyer will review the contract and will usually advise you on the following aspects:
- clauses in the contract that may not be in your interest;
- additional clauses that they suggest should be added to the contract to protect your interest;
- additional information the vendor should provide to you, or your lawyer may recommend additional enquires be made with third parties like councils or Sydney Water, etc.; and
- issues that are disclosed regarding the property itself, like issues with the physical boundaries of the property, rights of way, issues with title, flood risks or land contamination, or that the government plans to build a road through the property – the potential list goes on.
Like with any long-term relationship, some of these issues are things you may not like, but are willing to accept and put up with, and others may be dealbreakers. For some issues, you’ll be able to ask your lawyer to negotiate changes to the contract to better suit your requirements.
If that’s the case, your lawyer can write to the vendor’s lawyer and request certain changes or amendments be made to the contract or certain additional information be provided. The vendor (through their lawyer) may or may not agree to the amendments or to providing additional information, depending on whether or not the vendor is legally required to do so.
It is also highly recommended that you undertake a number of property enquiries either during this contract negotiation stage or after it is finalised (depending on how important the requested amendments and additional information is to you) – but before exchange of contracts. These searches include things like pest and building reports, for example and I have a video dedicated to exploring these pre-exchange property searches in more detail coming up.
My last tip for you today is if you have finished negotiating the contract, and are still interested in the property, you should now notify your lender so they can do a valuation on the property. Your lender needs to be satisfied that the property is worth the purchase price you have agreed to pay for it (or are willing to pay for it at auction), otherwise they might revoke their loan approval.
So, that’s all I have for you today – remember to please “SUBSCRIBE” and hit the “Like” button if you liked this video, and please share it…
If you’d like to make an appointment to engage our services, please follow the link in the description box to contact me and if you have any topics you’d like me to address in future videos, please leave a comment in the comment section as I’d love to hear from you. I hope you found this video helpful and thank you for watching.