Often I get clients who signed a contract of sale without legal advice because it “looked straightforward” or they ask for a discount because their purchase is “easy”. A great conveyancer should leave you with the impression that it’s a simple job, but not because no problems arose. It’s because they pre-empt the problems, or deal with them before you even knew they existed. In this blog I debunk a few popular myths about “easy” conveyances.
Myth 1: the smaller your purchase, the less complicated
Many purchasers will expect that because they are only buying a tiny studio or one bedder, the fee should be commensurate. Unfortunately, it doesn’t work that way. Some issues that should be investigated by your conveyancer are:
- How small exactly? Many banks have policies not to lend for properties that are less than 40sqm, or even larger.
- Is it company or stratum title? Very small apartments can also be very old, and sometimes the older apartments predate modern strata title. This means that they may be are owned wholly or partly by a corporation. You actually buy shares in the company instead of the property itself.
- Does it have a car space? If so, is it on title or part of the common property? Is there any document granting you exclusive use?
If any of these issues apply, it can be harder to get a loan. So make sure you get proper legal advice from your conveyancer before you sign the contract.
Myth 2: but the vendor agreed…
Sometimes the parties will come to an agreement while negotiating the contract, but do not document their agreement, or document it only vaguely. Or the purchaser just assumes that something was agreed, but that assumption is later denied by the vendor.
For example: the vendor may promise to include the rugs. Or the purchaser may assume that the pool equipment is included in the sale. The vendor may agree to grant access prior to settlement to measure the property. The purchaser may assume that they can bring their tradies along for quotes. Or the purchaser won’t quite think through the logistics of a same day settlement and assume that they can just store their stuff in the garage.
Oral agreements cannot be relied on. The vendor might be a sweet old lady and the agent might give you a bottle of champagne, but in order to make the agreement legal, it needs to be in writing. Ask your conveyancer to draft any special conditions for you before you sign.
Myth 3: it’s not our fault!
Unforeseeable delays happen in even the “easiest” of transactions. Not only will there be resulting costs, but also logistical nightmares if you planned to move in that day. You’ll need to find somewhere to stay and store your things, or your conveyancer can negotiate a last minute licence agreement to move in pending settlement.
If the purchaser is not ready for settlement on the due date, you face paying penalty interest every day of delay. The current standard rate is 12% of money owed, but this may be varied by up to 20%. You will also pay any reasonably foreseeable costs incurred by the vendor as a result. If they are reliant on your money to buy another property on the same day, you might have to pay the penalty interest on their purchase. The costs add up quickly.
The delay may be “the bank’s fault”. Perhaps they sent you the loan documents by snail mail and they got lost or didn’t arrive in time. Or perhaps they sent you so much paperwork that you forgot a signature. Maybe they even lost some of the paperwork. No matter what the cause, even if it’s not technically your fault, you will be held liable.
So no matter how easy your transaction looks, always get legal advice on the contract prior to signing, and make sure that you trust your conveyancer to hold your hand if things go sour.
Aliza Taubman is the Principal Solicitor at Prime Property Lawyers
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