Are you protected when accepting an offer?
When selling a property a purchaser can ask for any manner of special conditions to be included as a part of the Offer and Acceptance (the contract). As a seller (vendor) it is important that you understand what these conditions are and what this means to you. Below, I have included some common special conditions that a seller could expect to receive when receiving an offer.
1) Subject to Building Inspection
This is probably one of the most common special conditions that purchasers like to have. As a seller it is important that you do not allow for anything other than major structural defects to be included in this special condition. If the building inspection special condition includes secondary defects or maintenance issues you could be faced with a demand from the purchaser that you rectify a number of items prior to settlement which may cost you a lot of money. If you do not rectify the findings carried out by the building inspector, the purchaser could have the right to ask for a price reduction or even worse they could decide to walk away.
You should also make sure that the clause defines who can carry out the building inspection. As a minimum it should be licensed builder (with a current registration).
2) Pest inspection
Another common special condition is ‘subject to a pest inspection’. Many older houses have been exposed to white ant or termite attacks in the past but this damage has since been fixed and the area treated. This is why you should only accept a pest inspection special condition that refers to live attacks from white ants or termites on the main residential building. This means that if there are live termites or white ants in the garden (which is actually quite common), the seller has no obligation to make good. There is also no obligation to make good if there is evidence of past pest attacks but no evidence of live pests at the time of the inspection.
It should also be a condition of the clause that the inspection has to be carried out by a qualified pest inspector.
3) Electrical, gas and plumbing
A savvy purchaser will make the offer subject to all electrical, plumbing, gas and communication to be in good working order. This effectively means that any leaks in plumbing (doesn’t mean how small) or any blown light bulbs have to be repaired prior to settlement. It also means that if a part of your oven doesn’t work (say the grill) this needs to be repaired as well.
Needless to say this can be a costly affair so if you know something is not in a working order, you should let your real estate agent know when you list the property for sale so the agent can disclose it to potential purchasers and exclude those items from any warranty when writing the offer.
4) Inspection deadlines
There are no set time frames for how long the purchaser has to carry out the inspections (which the purchaser has to organise and pay for), but between 21 – 28 days from acceptance of offer is reasonable.
Another option is having the inspection carried out up to 3 or 5 business days prior to settlement. However, if there is an issue it may be difficult for seller to make good without causing a delay in settlement.
What can the purchaser ask for?
A purchaser can ask for any special conditions to be included in the Offer and Acceptance. However, it is always a good idea to discuss what you are willing to accept and what you are not willing to accept with your real estate agent and even your settlement agent.
It is very important that you tell the agent as soon as possible about anything that could potentially come up as an issue. Your agent will know how to deal with the issue but if the agent is only informed of the problem at final inspection, the agent may not be in the best position to deal with it at such a late stage.
Readers should always seek their own independent advice prior to making any decisions regarding property or finances.
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