What Happens After You Sign an REIQ Contract?

contract

What Happens After You Sign an REIQ Contract?

In this podcast, Legal Practitioner Director Sylvia Lopez shares all the steps that follow after you sign a contract when buying or selling a property.

TRANSCRIPT

 

Speaker 1:

At Big Law, we are big on providing you great legal help. If you have a family law, business law, wills and estates, commercial law, or conveyancing issue, we’re here to help. Now, here is your podcast.

Dan:

If you are buying or selling, it’s inevitable that you may be thinking what happens after you actually sign the contract? Or more to the point, you engage a lawyer to do the conveyancing for you. In this podcast, we find out all the steps that follow with Big Law director, Sylvia Lopez. So Sylvia, once a person has signed a contract, what happens next?

Sylvia:

Sure, Dan. So once you’ve signed your contract, we will get in touch with you and ask you if we can do what we refer to as standard property searches. There’s lots of other things that happen in a conveyance, but I want to focus specifically today on what those property searches are and why they’re critical in the purchase of your home to do them. In Queensland, we are somewhat different to some of the other jurisdictions in Australia, so New South Wales and Victoria specifically.

Sylvia:

A seller will give a buyer all of the copies of the searches and certificates that they need to provide with respect to the property just prior to the entry of the contract or at the time they enter into the contract. Queensland’s different. We get no information when you enter into a contract, so you sign up your contract and then it is up to the buyer to go and make those inquiries. It’s hugely critical that you do that so that you know what you’re buying.

Dan:

So the property searches that you undertake, is there a regular or usual batch of searches that you deploy to ensure full coverage?

Sylvia:

Yes, there is. Some of the searches that we do relate to checking the financial position with respect to the property. There’re things like rates, water and land tax. Now, those three charges attached to the land. So it is critical that we understand what the position is with respect to those charges with those relevant authorities. What I mean by that is, is there are unpaid rates at the time that you settle or unpaid water charges, those charges stay with the land and you could potentially end up paying a significant amount of those charges if we don’t check what the position is before we settle.

Sylvia:

We do those searches. We make sure that we know what’s outstanding. We clean it up at the time of settlement. And by that, I mean that we use some of the purchase monies that would otherwise have gone to the seller to pay out the council or the water authority or the land tax to make sure that there’s no outstanding fees as at the date, but you then become the owner of the property. That one’s really critical. Well, those batches of searches are really critical.

Sylvia:

The next lot of searches that we do relate to title and ownership. We check your title search and we make sure that there’s no encumbrances on the title that we need to deal with. So for example, we check if there’s a mortgage on the property. If there is, we make sure that we pick up a release of mortgage at the time of settlement. We check that things like easements haven’t been registered on the property, and that if there are easements registered on the property they’ve been disclosed to you in the contract. If they haven’t been disclosed, then we go through with you what that means in terms of the use of the property and how that impacts on you and whether or not you have the right to terminate the contract.

Sylvia:

And imagine that if you bought a lovely property and you’re thinking you’re going to be able to put a pool out the back, and you find out that you’ve got a drain [inaudible 00:03:59] that will prevent you from doing that. It may no longer look like the dream home that you thought it may look like. We check building records with the council. So this one’s really important because we make sure that any structures that have been built on the property have no outstanding requirements with the council. We regularly see properties where there’s been no final inspection, therefore no final certificate issued. It’s critical that you understand what that means and what may potentially need to be done to complete those and what the cost around that might be.

Sylvia:

And finally, we do things like your flood search. So obviously given current events at the moment in Queensland and Southeast Queensland, it’s really important for you to understand if you’re sitting in a place or you’re looking at buying a place where there has been floods come through and understanding what that level looks like, and making sure that you’re going to be able to get insurance and so forth in relation to that property.

Dan:

Now, Sylvia, all this does have an impact on the usual or what we call the standard contract that potentially a buyer may be utilising in the sense that maybe that contract won’t offer any protection if some of those searches are adverse. Is that the case?

Sylvia:

Yes, unfortunately it is. I think that sometimes people are allowed into a false sense of security that because you’re signing a standard contract, you’ll be protected. That actually isn’t the case unfortunately. There are limited circumstances under the standard contract that will allow you to terminate the contract if you are not happy with the outcome of your searches, but they are very limited. And a lot of the issues that can come up will not be addressed in that standard contract.

Sylvia:

It’s really important that at the time that you enter into the contract, you negotiate adding a special condition that will protect you in those circumstances so that if there’s something in the search that comes back that you’re not happy with, you can just simply give notice and terminate and get your deposit back.

Sylvia:

We can assist you with that and with drafting that special condition to protect you in making sure that you are happy with what you are buying and that you’re buying what you think you’re buying without any underlying issues that you might have to address, which frankly can be a substantial amount of money can be needed post settlement to rectify these things. It’s really critical that, that is negotiated before you sign the contract so you’re protected.

Dan:

Sylvia, it follows that buyers who potentially are considering bargain basement conveyancing. There’s some inherent risk with that, isn’t there?

Sylvia:

Look, absolutely. My biggest advice to people is, you get what you pay for and you can certainly regret the outcome of some of these things if you don’t deal with it carefully at the outset. The other piece of advice for people is that at the moment, particularly given the way that the current market is, a real urgency to secure properties, but you need to understand that if you don’t negotiate these things up front, that you may be left holding a property that isn’t quite what you thought it was. So whilst it’s very tempting to just sign up, you need to do so understanding what your risks are.

Dan:

And the current price of property certainly dictates the fact that this is likely to be the biggest asset that anyone will ever own, hence the importance of getting it right.

Sylvia:

Absolutely. Absolutely, Dan.

Dan:

Sylvia, thanks for joining me.

Sylvia:

Thanks for that.

Speaker 1:

Thanks for listening. Need further information, visit us at biglaw.com.au.

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