INFORMATION FOR UNIT/TOWNHOUSE BUYERS
You are buying a unit or townhouse. What information can we give you to assist?
We have set out some hints below, and some matters to watch at the very start, before we may see the contract but, to be honest, it just isn’t possible to distil the experience of having helped thousands of clients buy a unit/townhouse (or investment property) into a few pithy questions and answers.
Like all solicitors we will carry out title searches, property searches etc, but what we do for our clients is more about:
- helping them in advance where possible by reviewing the contract before it is signed¬. We charge a set fee for conveyancing matters and, unless we spend a huge amount of time on advising, we do not charge any extra fee for our principal reviewing a contract prior to signing, including commenting on or drafting special conditions to suit. Without meaning any disrespect to real estate agents, their forte is selling, ours is the documentation. The contract is the foundation document and the opportunity to make sure that the contract reflects the agreement and protects our client assists greatly in reducing the stress on the way to settlement.
- helping our client over the hurdles, large or small that invariably come up during the conveyancing process. These hurdles can be thrown up by sellers who turn out to be less than co-operative or downright dishonest, banks who are slow and/or unco-operative, finance brokers who were selling used cars yesterday, Body Corporates with slack procedures etc, etc, etc.
- make the most of contract conditions for your benefit, such as how to actually understand what the results of the building and pest inspections are.
- and perhaps the most important, having an open line of communication between you and us, where you feel that you can ask us any question at any time during the transaction.
- Make sure that the selling agent is using the latest version of the contract drafted by the REIQ and approved by the Queensland Law Society.
- Keep your eyes open and ask the agent to have the Seller’s Disclosure Statement (this must be held by the agent, signed by or on behalf of the Seller, and given to the Buyer before the Buyer signs a contract). It will have attached to it a copy of the Community Management Statement (“CMS”) held by the Titles Office. If it looks like there is an area outside the building that the Seller has exclusive use of (this applies particularly to townhouses where there may be courtyards etc) the CMS should include a plan of the building showing the exclusive use area, and reference to it in the by-laws that are part of the CMS (commonly a table, or a clause at the end of the bylaws part of the document). Also read the bylaw to see what responsibility the Seller has to clean the area etc. If there is no evidence that the Seller does have the exclusive use right a special condition would be called for to make sure the issue is settled, or you can terminate the contract.
- Make sure to read the disclosure statement to see what other information is given, including the Body Corporate dues.
- The contract for a unit or townhouse has extra pages that disclose information about a number of matters, including “Latent and Patent Defects in Common Property or Body Corporate Assets” as the first item. This should be blank, or state “nil”. We recommend the addition of a special condition to the contract before it is signed. The purpose of the special condition is to allow you, if the usual inspection of Body Corporate records finds matters that were not disclosed and cause you to want to withdraw from the purchase, to be able to do so without having to rely on the restrictive provisions of the legislation. Clients have found this clause to be particularly useful where our enquiries have uncovered major future Body Corporate costs that were not disclosed. If engaged to act for you we will provide you with this special condition for no fee.
- Do not discount a building inspection or pest inspection because you are buying a unit or townhouse. Water entry problems are common. Even though the Body Corporate may be responsible for a repair, it may not be carried out properly and you may have an ongoing problem. ALSO ask the building inspector to have a general look at the building or complex generally and alert you to any major maintenance issues that will be costly for the Body Corporate to repair (refer to the previous point about undisclosed issues).
- Is there a swimming pool that is for the exclusive use of this unit or townhouse only? Note that you can be obligated to carry out substantial pool safety repairs at your own cost after settlement if you do not take advantage of the contract provisions regarding pool fencing and safety.
- Make sure that you have considered whether there is anything that is technically a “chattel”, that is something not fixed to the property, that you expect to be left by the Seller. Remote control devices for garages etc are included automatically (although it is wise to ask the agent to check and note how many remotes there are, say at least 1 each for the garage doors), but freestanding garden sheds and block bar-b-ques that aren’t mortared together could be taken by the Seller. This issue is more prevalent in houses, but it would pay to at least consider the matter. Dishwashers that are plumbed in are technically fixtures but Sellers sometimes don’t think so, so its best to have the dishwasher stated as an “Included Chattel”. The real estate agent has probably been told it doesn’t need to be mentioned. He’s right, but we want the Seller to be aware that it stays.
- Don’t worry too much about the fact that there is a cooling-off period. That was designed to allow foolish people who went to investment seminars interstate and were flown in to buy over-priced property to wriggle out later. There is a financial penalty for using the cooling-off period. Make sure before you sign the contract that you are happy to buy the property for that price on those conditions. If you think that you may want to use the cooling-off provision offer a very minimal deposit (say $100.00) on signing, with the remainder of the deposit payable say 7 days later.
- The contract will place the property at your insurance risk from the next business day after the contract date. There is a reason for this. Arrange insurance (unit contents and related cover) within that time.
- Do not delay instructing your solicitor until you have finance approval and a favourable building/pest inspection. These are critical points in the contract/settlement process. As well, a Buyer has only a limited time to verify the information in the Disclosure Statement about Body Corporate matters. We will generally only ask for reimbursement of any title and other search costs (less than $150.00) if the contract is terminated.
- Are selling your existing home in conjunction with your purchase? If so, and again meaning no disrespect to real estate agents, it is critical that the contract to buy contains a special condition that works. As well, the Seller may want to insert what the real estate industry generally calls a “48 hour clause”, or similar. Even with our best efforts, these are nasty clauses for Buyers but they can leave you in a very bad place if not worded correctly.