TOP LEGAL MISTAKES PROPERTY BUYERS AND SELLERS MAKE
There are usually a lot of tasks to juggle when you’re buying or selling real estate.
With your mind focused on bigger things like getting the best price – it’s hard to focus on the smaller details.
Generally, the last thing you want to dive into is legal technicalities or jargon. That’s where a good solicitor will have you back.
Surprisingly though, a lot of people still make some silly mistakes.
Here are some of the most common mistakes people make in relation to contracts.
TOP MISTAKES MADE BY PROPERTY SELLERS
1) Signing more than one exclusive agreement: Some people will list their property with more than one agency. If the agreements aren’t open and one agent finds a buyer, the other agent may still be legally entitled to a commission. The seller would need to pay 2 x commissions. Yes it’s a legal quirk, but it can stick.
2) Not terminating an agreement: If you don’t properly terminate a prior agreement before moving to another agency, you could also be forking out two commissions. It is important to formally terminate your agreement in writing, even if the original agreement term has expired.
3) Not providing proper incentives: As a seller, you have the power to negotiate the contract of sale. Rather than accepting a flat rate commission, you can negotiate a tiered commission arrangement – where the agent is incentivized to get above the reserve price.
4) Cooling Off Periods: Cooling off periods only apply to the buyer. Once the seller has signed a contract it is binding. Contracts of sale for auctions don’t have a cooling off period, however the seller is obligated to accept any offer above reserve price.
TOP MISTAKES MADE BY PROPERTY BUYERS
1) Not understanding auctions: Many buyers are severely under-prepared at auctions. The fact is once you make a bid, it is legally binding. The contracts signed are unconditional – meaning all due diligence needs to happen before the auction.
2) Not doing due diligence: Although sellers are legally required to disclose relevant information and make certain ‘promises’ about a property this doesn’t replace the need for personal due diligence. The most important things to investigate are the presence of termites, the structural condition and strata issues. If these are not picked up before a property goes unconditional, the buyer will bear any related costs.
3) Not doing a pre-settlement inspection: This is your last chance to make sure the purchase goes in your favor. Is everything in line with the contract? This is the time to check whether all inclusions are present and whether anything has been damaged since you entered the contract. Is the property empty for possession, or do tenants or their belongings remain? As long as the property hasn’t settled, you may be able to ask the seller to rectify these issues prior to settlement.
BUT WAIT…THERE’S MORE!
While these are just the most common oversights, it is not an exhaustive list.
Each property is unique and could have underlying factors that could become legal issues under certain circumstances, such as zonings, easements, restrictions, drainage, covenants etc.
The best policy for complete peace of mind is to deal with an experienced property solicitor.
As well as facilitating an exchange on a property, they are able to provide legal counsel on a comprehensive range of property related legal issues.
If you are looking for legal advice on your property sale or purchase, speak to the team at Zenith Legal.