Purchasing a property is likely to be one of the biggest decisions you will make both in terms of value and size. This can be both exciting and daunting especially for first home buyers. Before purchasing a second hand car most people will get this checked by a mechanic, make sure it is registered and has a current warrant of fitness. Therefore why would you not be as thorough when purchasing a property?
We strongly suggest that at the stage you are negotiating to purchase a property either through an agent or directly with the seller, you should obtain legal advice prior to signing any agreement.
As a purchaser there are a number of fundamental conditions you need to consider putting into any agreement that you sign.
Finance: Some purchasers have obtained pre-approval from their bank up to a certain amount, otherwise the agreement should be made conditional upon your bank approving any funding you require to complete the purchase. The Bank may require a valuation of the property as part of its approval. Even if you have pre-approval you should still check with your bank or mortgage broker that there are no other conditions they require as part of that pre-approval.
Building Report: This enables you to get the property fully checked by a qualified builder before committing yourself to purchasing the property.
LIM: What is a LIM? This is short for Land Information Memorandum which is a report obtained from the local City Council and provides all the details about the property that the Council holds on its file. This report will confirm such things as whether any required consents or permits have been obtained for building work completed at the property, for example, alterations to the house, construction of garages, carports, drainage work. This report will also confirm whether there are other characteristics in respect of the location of the property, such as being in a flood prone area.
Electrical Report This is especially important for buildings built pre 1940 as most insurance companies require that the electrical wiring meets current safety standards in older buildings before they will agree to provide insurance cover.
These are just some of the main conditions to consider. For example, if the property is on a Unit Title or a Cross Lease Title there are other considerations and checks that need to be made by your lawyer.
Although there are costs involved in obtaining building and electrical reports, valuations and Land Information Memorandum reports, compared to the value of the asset you are purchasing this can be money very well spent now to give you peace of mind in the future.
If you are purchasing at auction there is no ability to include any of the above conditions in the agreement as a purchase at auction is an unconditional purchase. Therefore you will need to complete your due diligence prior to the auction date. We can guide you through that process.
If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co. who normally advises you, or alternatively contact:
Simon Milne
03 477 8870 or 09 379 0055
The information contained in this publication is intended as a guide only. It does not constitute legal advice and should not be relied upon as such. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain.