Part 2 Buying a Property

Part 2: Buying a Property? – what now?

Last Bulletin we shared what happens when you have found a property to buy.  You may recall we strongly recommended that you have your Lawyer/Conveyancer undertake a Contract review so that all conditions are completed and you fully understand what you are signing.   This bulletin, we will cover what happens once the Contract is signed and on its way to your Lawyer/Conveyancer and what you need to do in the interim.

When buying or selling property in Queensland, the transaction is governed by the Property Law Act 1974 (PLA).  This can be complex legislation and one that needs to be closely adhered to in order to protect your interests.  Most contracts will refer to this Act in the “standard conditions” attached to the Contract.  Quite often, buyers (and Sellers) will not read or familiarise themselves with these standard conditions and therefore risk overlooking important terms that could be detrimental.

The main oversight we see quite often is the buyer not taking out insurance over the property from 5pm the next business day of the Contract date.  You may be asking “why” would you need to take out insurance when you haven’t bought the property yet, you are not living there or having any enjoyment of the property plus you are still waiting on inspections and finance approval before moving forward.  In the REIQ Contract current edition, Clause 8.1 states “The property is at the Buyer’s risk from 5pm on the first Business Day after the Contract Date”.   Whilst it doesn’t state “you need to take out insurance” it does state “risk” which is one of the same.    Your next call to make, following the one to your Lawyer/Conveyancer, should be to an insurance company.  Before making that call, ask your Selling Agent whether they have a complimentary cover they can extend to you (some up to 90 days) to protect you in the interim.  If not, bytherules has a relationship with a reputable insurer that can contact you.

Another important term that is used throughout the Contract and also in the Property Law Act is “time is of the essence of the Contract” – so what does this mean?  This term can have an impact on any buyer (or seller in some instances) not acting within any time limit noted in the Contract (ie: not advising the Seller on the Finance date that finance is approved or not, not paying the initial or balance deposit on the due date etc).  If a buyer does not adhere to the time frames in the Contract, the Seller may terminate the contract due to the buyer’s failure to comply strictly with any time provision.  This usually happens in a fierce market where there is competition for the property or if the Seller has had a change of heart in selling.  Unlike the Buyer, a Seller does not have the luxury of any cooling off conditions, finance etc – the Seller is only able to terminate in the event of the buyer’s default in meeting the contract conditions/settlement.

Next Bulletin we will cover what to expect once your Lawyer/Conveyancer has received a copy of the Contract, what information they will need and what your next steps are.