Buyer Beware

We are familiar with both of these commonly used contracts. The two types of standard contracts share many similarities however they also differ in some material respects.

Compared with other states, there are numerous risks for unwary buyers in Queensland. We will ensure that the risks are identified, explained to you, and eliminated where possible. If it is not possible to eliminate the risks then those risks will be carefully managed during the conveyancing process to ensure that your interests are protected at all times.

Time is of the essence in a typical contract for the sale of residential land in Queensland. This means that certain things which must be done by a party to the contract must be done strictly in accordance with the time limits stipulated in the contract. We call these time limits “critical dates” which include the finance date, the buyer’s inspection date and the settlement date. There can be serious consequences for missing a critical date.

A buyer is required to notify a seller on or before the finance date as to the outcome of the buyers finance application. If the buyer fails to do this then the seller may terminate the contract at any time up until the buyer notifies the seller that finance has been approved. Your conveyancing solicitor should ensure that a copy of your finance approval letter is obtained on or before the finance date, and if this is not possible then an extension will be sought on the your behalf.

A buyer is required to notify a seller on or before the buyer’s inspection date if the buyer is not satisfied with its building or pest inspections. If the buyer attempts to terminate the contract after the buyers inspection date because say, live termites were found in the building, then such termination will be ineffective because time is of the essence and the buyer failed to notify the seller of the termination within the prescribed time. Your conveyancing solicitor should call you on the buyers inspection date to ask whether you are satisfied with the results of your building and pest inspections.

A buyer is required to complete the contract on the settlement date. If for some reason the buyer is not ready, willing and able to complete on the date specified in the contract then the seller may terminate the contract and sue the buyer for the loss suffered. In fact, under the REIQ Contract for Sale of Residential Land, the seller may resell the property to a third party within two years from the date of the first contract and then sue the defaulting buyer for the difference between the original sale price and the subsequent sale price plus legal costs and interest. It is critical therefore that the buyer is ready, willing and able to settle on time. Our conveyancing team will work with you and your bank to ensure that there is no delay in settlement.

Many buyers mistakenly believe that it is a simple matter to terminate the contract under the finance condition or the buyer’s inspection condition. These buyers use these conditions as a fall back in case they get cold feet after the cooling off period has expired. This practice is not encouraged by Turbo Legal. It is a term of the contract that the parties must at all times act reasonably in their dealings with one another. If a financier has in fact approved a finance application then the buyer should disclose this to the seller. If the buyer gets cold feet and instructs its conveyancing solicitor to terminate the contract on the basis that the buyers finance application had been declined when in fact it hadn’t then the buyers termination would be ineffective. Likewise a buyer may only terminate under the buyer’s inspection provision if the buyers building inspection report has identified significant defects in the building. Significant defects might include internal water leaks, foundation subsidence, a leaking roof which ought to be replaced, wood rot which undermines the structural integrity of the building. A buyer who attempts to terminate a contract because the kitchen cupboards were rotting in places, or where the hot water system is found to be faulty, would not be acting reasonably and therefore could not terminate on these basis.

Many areas are prone to flood inundation. We can inform you if the property which you intend to purchase is in a flood prone area. If you have concerns about flooding then we can assist you to negotiate the inclusion of a flood search special condition which would make the contract subject to and conditional upon you being satisfied with the results of a flood search which we would arrange as part of the conveyancing service. Without this special condition a buyer cannot terminate the contract before settlement if the buyer discovers that the property is at risk of flood inundation.

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