The booming property market of Western Australia has led to increasing pressure on buyers to provide an over-asking offer and to immediately sign a contract to lock in a property.
Buyers beware! Rush into signing a property contract at your own peril…
It is important to remember that once you have signed an Offer and Acceptance to purchase real estate property and the offer is accepted by the seller, a legally binding contract comes into existence, and you are bound by its terms and conditions. All those small jargon clauses to which we often do not pay sufficient attention may result in you being stuck with real estate property that has unexpected and expensive complications.
So, as a buyer of real estate property how do you limit the risk of your dream property purchase turning into a nightmare?
Due Diligence.
Due diligence put simply means taking the time and making the effort to make all the appropriate enquiries in relation to that particular property to identify any potential risks that may be associated with purchasing the property.
Purchasing real estate property is in most cases the biggest financial commitment in a person’s life. It therefore makes good sense that you should undertake due diligence on the property to make an informed decision on whether your purchase is physically, financially, and legally suitable for you.
Key due diligence considerations.
Some of the key enquiries that should be undertaken include:
- A careful physical examination of the property and the condition of all structures (including with the assistance of experienced and qualified inspectors or tradespersons where necessary or appropriate). The relatively small cost to obtain a competent property inspection report before completing the purchase will be invaluable in making the right decision about the property and/or negotiating the best price;
- Whether the property meets all local government and other zoning regulations;
- Verifying the legal status and ownership of the property and ascertain what, if any, unexpected encumbrances (an encumbrance is an interest in a piece of land by someone other than the registered proprietor) may be registered against the title to the property such as easements, covenants or caveats which may interfere with your ability to acquire or use the property;
- Ensuring that you are familiar with all the costs associated with purchasing the property aside from the purchase price. You must factor into the assessment costs such as stamp duty, registration fees, bank fees etc; and
- Including any required or necessary special conditions in an offer to purchase a property, and that these are correctly worded and will provide the ability to be released from the contract to purchase the property in the event that any or all of the special conditions are not met. This includes such special conditions as making the contract subject to finance approval from one or more nominated lenders, obtaining a termite clearance certificate, satisfactory building inspection report and verification that a swimming pool or spa and associated equipment is in good working order etc.
Doing your due diligence is an important and necessary safeguard for anyone wanting to purchase residential or commercial property. Bowen Buchbinder Vilensky has the necessary experience to advise and guide you when purchasing your real estate property. Contact Bowen Buchbinder Vilensky by telephone on (08) 9325 9644 or by email sburgess@bbvlegal.com.au
