Purchasing A NSW Property?
Purchasing A NSW Property? Seven Key Contract Terms To Consider
If you’re looking for a property in NSW, you’ve probably come across one or two property contracts. Have you noticed how thick they are? When you add a building and pest report (and the strata report if you’re buying an apartment), it’s enough to break your back!
If you feel bogged down by all contract details, you can always seek the advice of a conveyancer or solicitor. They have years of professional experience and know what to look for to ensure everything is above board. But there’s also few things you can do to help yourself when reviewing a property contract. Here’s seven important ones:
Contract inclusions and exclusions
The lovely custom-made curtains draping the big bay windows; the sparkling chandelier hung high above the staircase; the gorgeous café blinds screening the alfresco area from the neighbours. All of these little extras sealed the deal for you to purchase the property. But come moving in day, they are no longer there. How can this be? The sales contract’s fine print stated they were chattels not included but in the excitement of signing, you missed that. This can be avoided if you carefully read through what fixtures and chattels come with the property.
Fixtures are anything on the property that is ‘fixed’ in place whether it’s glued, nailed, bolted, plumbed or screwed. Fixtures are generally included with the sale of the property. Examples include:
- Hot water system
- Fixed carpet
- Clothes line
- Television antenna
- In-ground plants and trees
- Ceiling fan
- Mail box
- Built in air-conditioning or heating system
Chattels are freestanding, moveable items. Chattels are not usually included in a contract of sale and need to be itemised separately on the contract. Some examples of chattels include:
- Pool and spa equipment
- Potted plants
- Washing machine
There is a large grey area in what is considered a chattel or fixture. If in doubt, you should clarify with the agent before you sign the contract. More importantly, make sure it’s all written down in in black and white in the contract.
Items that commonly fall into this grey area include (but are not limited to):
- Gas bottles
- Sprinkler systems
- Light fittings
Title search page
Have a look at the title search which will be a few pages into the contract. Ideally it should only have the owner’s name and the mortgage details (if any). Take note of things like easements, covenants or property subdivisions. These can impact on how use your property in the future. More importantly, they can restrict what you are allowed to do to your property. Watch out for shared driveways too: these could mean joint maintenance costs with a neighbour who may be unwilling to share the load. Are there any ‘rights of way’ over the property? If there are, it could mean you won’t be able to build over the area. If there is a lot of complicated information in this section, make sure you understand it all. This will eliminate the chances of further troubles later on.
Are there any ‘special conditions’?
Are there any conditions in the contract that make you feel uncomfortable? Or are there any that you don’t agree with? An example is a common clause allowing the seller to access your deposit early. You should avoid this clause and make sure your deposit held ‘in trust’. This is the best way for you to recover it if you don’t want to go ahead with the contract. Once someone has accessed – and spent – your deposit, it is very hard to get the money back, even if you are entitled to it.
Check the sewerage diagram
Locate your property in NSW on the diagram on the contract. Make sure it has direct access to the sewerage system.
Section 149 of the contract is the council report. It will tell you about zoning requirements and any other issues relating to the land you want to purchase. It can details things like soil contaminants or whether the land is located in a 1 in a 100 year flood plain. Vital information to have before you make your final decision to purchase.
Specific contract conditions related to apartments
If you are buying an apartment, read the by-laws. By-laws are a set of rules that each resident in the apartment complex must follow. They also cover the rules of use for common areas such as driveways, car parks and swimming pools. Sometimes these rules can be a little unusual so it’s really important you read them, understand them and are happy with them. They will essentially govern how you live on a day-to-day basis.
The all-important ‘cooling-off’ period
Avoid signing a contract that does not contain a ‘cooling off’ period. This clause allows you time to conduct a building and pest report (and strata report if required) to ensure there aren’t any issues with the property. However, if you cancel during the cooling off period, you will lose an amount equal to 0.25% of the purchase price.
For more information about the legal requirements for property transactions, visit the Real Estate Institute NSW website.
We hope you found the information in this article valuable but keep in mind it is no substitute for legal advice. If you need further legal assistance with your property purchase please contact us . We have a good network of reliable lawyers who can assist you.