Buyer Beware – is that still a thing?

by Reta Benjamin | 11 10, 2022 | Latest News

Buyer Beware – is that still a thing?

For most people, purchasing a property is the most significant financial transaction they will enter into and there can be serious consequences when contracts are not entered into properly.  Good legal advice will assist you navigate the buying and selling process and will ensure that you are purchasing the right title with no restrictions on the property that you are unaware of or that may affect your enjoyment and use of it.

The Latin phrase “Caveat Emptor” which means “Let the buyer beware” still very much applies to real estate transactions. Whilst a vendor has certain statutory obligations of disclosure about the property before entering into the contract, they are not obliged to advise the purchaser of every potential negative detail about the property.  The missing information could include defects to or sub-standard building work, or a lack of council approval for structures, amongst other things.

The onus still lies on the purchaser to undertake their own enquires and searches to satisfy themselves about the property. We recommend that all purchasers obtain pest and building reports prior to allowing any purchase contract to “cool off” so that they are aware of the history and structural integrity of the property they intend to purchase.  They should also find out whether the property’s sewer is connected to a system owned by local authority or whether it has a septic or pump out system. If the property has a septic system, find out whether the system is registered and has been regularly serviced.

A review of the title is also necessary to confirm that the vendor has the right to sell the property and so a purchaser becomes aware of any restrictions on the use of the property. We commonly see unexpected encumbrances on title that can include:

1.       Easements reserving the right to use a portion of the land in the future for sewerage, drainage, electricity or telephones.

2.       Restrictive Covenants which affect how the property can be used, such as a restriction requiring that a home can be built only on a certain portion of the land.

Special conditions can be inserted into contracts that can provide protection for purchasers or remedy a problem. For example, the contract could be made subject to repair work to a leaking shower being completed by the vendor, or a contract could be made subject to the vendor providing evidence of council approval or an occupation certificate.

Purchasers should ensure they have their finance in order prior to entering into a contact of sale. If you are obtaining mortgage finance, you should ensure you have obtained unconditional approval. It is important to ensure that adequate funds are available to complete the purchase and to pay the associated stamp duty within the timeframe stipulated.

Knowledge is power and our Property Team has decades of experience in the buying and selling of properties and has particular expertise in rural properties.  It is easier to avoid a problem than to try to fix one.