27 Mar How to avoid costly mistakes with your Sale and Purchase Agreement
The excitement of finding your dream home can sometimes lead to overlooking crucial details in the paperwork. As Mortgage Adviser’s with years of experience guiding clients through home purchases, we have seen issues arise from hastily signed sale and purchase agreements.
Double and triple check the contract
A Sale and Purchase Agreement is a legally binding document that outlines the terms and conditions of your property purchase. Once signed, it can be difficult and costly to modify. Taking the time to carefully review this document before signing can save you from potential headaches, financial losses, and even legal disputes.
Ensure these key elements are accurately represented:
Correct property details: Verify the address, legal description, and included fixtures/items are exactly as agreed upon.
Accurate purchase price: Confirm the offered amount is correctly stated and the deposit terms are clear.
Closing date: Ensure the timeline works with your mortgage approval process (your Mortgage Adviser can help you with this) and personal schedule.
Names and information: Check that all buyer and seller information is correct and legally accurate.
Contingency timelines: Review deadlines for inspections, financing, and other conditions to ensure they’re realistic.
Some common conditions that you may want to add:
Financing condition
A finance condition allows the buyer to arrange financing for the property, such as a mortgage, within a specified timeframe. This protects you if your mortgage application is declined or the terms are significantly different than expected.
Building inspection condition
This condition allows the buyer to have a professional building inspector assess the property’s condition and identify any potential issues or required repairs.
Sale of another property
This condition allows the buyer to make their offer conditional on the sale of their existing property.
Land Information Memorandum (LIM) report
The buyer’s lawyer obtains the LIM report from the local council, which provides information about the property, including rates, building permits, consents, and potential risks.
Engineers or surveyors report
These reports can be used to assess the structural integrity of the property and the surrounding land.
Tips for conditions
Be specific: Vague conditions can lead to disputes. Clearly state what needs to be satisfied.
Set reasonable timelines: Allow enough time to complete due diligence while keeping the seller engaged.
Consider waiver language: Include how and when conditions can be waived or removed.
Document everything: Keep records of all correspondence related to satisfying conditions.
Work with professionals: Have your Mortgage Adviser and Lawyer review the contract before signing.
Take your time and get advice
Never feel pressured to sign a contract without thoroughly understanding it. A responsible seller will respect your need to review the document carefully. If something isn’t clear, ask questions. If a term seems unfavorable, negotiate. The few hours spent reviewing your contract could save you years of regret.
How we can help
By ensuring your Sale and Purchase Agreement contains the right conditions and is accurate, you set yourself up for a successful home purchase and a smoother mortgage process.
Having open communication with your real estate agent about your needs and concerns really helps when buying property. A good agent will help negotiate favorable terms and conditions. However, remember that agents represent different interests depending on who hired them. Your Mortgage Adviser and Lawyer are focused solely on protecting your interests.
So, give us a call if you would like a Mortgage Adviser by your side when buying your home. We would love to help you.