Everything you need to know before signing a contract

Buying a property is one of the most expensive purchases you will make and could become even more expensive if you don’t make all the necessary inquiries before you sign the contract.

Below is my list of 5 Things you should do before signing a contract: 

1.  Contact your mortgage broker/lender to make sure you can afford it:

When you visit your lender/mortgage broker, they will advise how much the Bank will lend you based on your circumstances. The loan money and your savings must be enough to pay the purchase price AND the purchase costs, including:

Bank fees and charges

Adjustments of property charges

Stamp duty

Lodging fees

Connection fees for Utilities and Services

Any other costs and charges that apply to your property

If you do not have enough funds, you may not be able to settle on time. If you do not settle on time, the seller can charge penalty interest, costs, damages, losses, etc.

Our Advice: that you check the following BEFORE you sign the contract:

That you have enough funds to pay the purchase price and all purchase costs that you have a pre-approval from your lender/mortgage broker that the Contract is subject to finance approval. (The contract is not subject to finance if you buy at auction)

 2.    Contact your solicitor to check the contract: 

Now that you know that you can afford to buy the property, take the contract to your solicitor for legal advice BEFORE signing it. Your solicitor will check the contract and give you legal advice on; 

Cooling off period

Proposed settlement date

Title and plan

General conditions

Special conditions of the seller

Registered restrictions

Your special conditions and any changes required

Property charges

Owners corporation

Lease

The contract is the whole agreement between the Seller and yourself. If the seller or the seller’s agent promises something that is not written in the contract or if you need the seller to do something before settlement, you must have it written in the Contract. If it is not written in the Contract, the Seller may not have to do it.

Our Advice: that you contact an experienced solicitor for a contract check BEFORE you sign the contract.

3.    Contact your accountant for financial advice on: 

How to structure the purchase If your taxes will be affected. If your current or future Centre link entitlements will be affected, how to minimize your tax obligations If you need to nominate other buyers/ a company/ a superfund/ a trust, etc

Our Advice: that you contact an experienced accountant for financial advice BEFORE you sign the contract as changing the purchaser after signing the contract can increase conveyancing fees.

4. Contact the council to check the following:

a. If there are any plans for re-development near the property

b. If there are any zoning or building restrictions on the property

c. If the property is properly zoned for your intended use

d. If there are any buildings or other structures that were built without a permit

e. If any special rates have been/will be levied

f. If any notices/orders have been served on the property/property owner

g. If the Property can be developed/subdivided/extended etc in the future

Our Advice: that you contact the council to check that you are happy with the above BEFORE you sign the contract.

5. Inspect the property:

The contract says that you buy the property “as is”. This means that the seller must deliver the property to you in the same condition at settlement, subject to fair wear and tear. The seller does not have to fix any pre-existing problems in the property. Thus, you should carry out thorough inspections of the property before you sign the contract, including;

a. Interior and exterior inspections by yourself – carry out a thorough inspection of the whole house, including:

 i. Open and close all the windows and doors

ii. Turn on all the taps, lights, fans, electrical appliances, heater/cooler, jacuzzi, garage doors, security systems, and anything else on the property

iii. Inspect the exterior, floor coverings, wall coverings, light fittings, plumbing, walls, ceilings, etc for any pests, holes, damages, leaks, cracks, etc. Advise the professional building and pest inspector if you have any concerns.  We also suggest that you carry a phone or camera and take photographs/record the whole inspection. This will be your evidence of the condition of the property when you signed the contract. You may need this evidence if there is damage to the property at settlement.

b. Building and pest inspection by a professional – hire a thorough, licensed and insured building and pest inspector to pinpoint any issues that could end up becoming costly repairs after settlement. Inform the Inspector of your concerns before the inspection.

c. Measure the boundaries of the property – to check if the property boundaries are where they should be and the lot size is the same as the plan. You can also take a look at the fences to check if the fences are in good condition or need replacing.

Our Advice: that you carry out thorough inspections BEFORE you sign the contract AND make the contract subject to building and pest inspection. The contract is not subject to building and pest inspection if you buy at auction.

The above list is not complete, and does not of course; guarantee that you buy a perfect property with no problems. I hope it helps you in minimizing future expenses (whether due to repairs or disputes) and allows you to sign the contract as a more informed buyer.

Buying or selling a property is one of the most important and most expensive decisions you will make and can be an overwhelming experience. Hire an experienced solicitor, mortgage broker and accountant, etc to advise and guide you through a smooth conveyancing process.

#signingacontract #financingyourhome #ertrert