No contract review? No purchase.

This saying holds us in good stead when supporting buyers to purchase property. There is much that we can spot in a contract, but a qualified legal professional will often identify things that could preclude the purchase being a sound one.

We’ve written about the importance of contract reviews before, but there are some compelling risks that don’t always get covered that can cause some upset if not identified prior to purchasing.

Permits, certificates, owner-builder documentation and warranty insurance are often items that are raised in a contract review. A thorough conveyancer or solicitor will check the online photographs and floor plan of the property in question and often they’ll raise a request for more paperwork from the vendor. Pending the age of the works, the council planning requirements and the extent of the works, there may be missing documentation.

This deficiency strikes more than people could imagine. It is not unusual for us to find ourselves requesting extra documentation for permitted works on a weekly basis.

It’s when the works should have come with a permit but don’t, that we have an issue.

Once a property settles, the purchaser inherits the liability for any non-permitted works. Understanding the risk, the potential cost, the potential stress and the impact on future insurance claims is critical.

We always ensure that we provide photos or observations to the legal representative if we sense that any works have recently been carried out; especially if the online photographs don’t show the works.

Neighbouring properties that have advertised for extensions, renovations or developments are to be included in a contract of sale. A thorough review will shed light on any neighbouring changes that a buyer should know about.

Another upset relates to special conditions being added to the contract by the vendor’s solicitor. Sometimes they come in the form of deleting general conditions. The 35 general conditions that are contained in a standard REIV contract have been written to offer suitable protection to both a vendor and a purchaser.

Removing any of these can result in removing some legal rights, and resolving any pre-settlement issues can become stressful at times.

Take, for example the loss or damage condition. By the time a final inspection rolls around, it may have been several months since the date of sale. Settlement is usually just days away and sometimes there is insufficient time for a vendor to repair fresh damages. On occasion, difficult vendors have no inclination to repair damage. This clause provisions for up to $5000 to be withheld in trust while the vendor remedies the damage. Often we find this condition has been removed by a special condition overriding it.

The challenge then becomes harder as we seek to have a vendor commit to hand over the property in the same condition in what it was on the date of sale.

While plenty of solicitors don’t like their conditions being tampered with, a thorough legal review gives the purchaser a chance to negotiate the removal of such conditions.

Looking out for Orders on properties is a significant benefit of a contract review. Orders can range far and wide, and some that we’ve been privy to relate to combustible cladding on taller buildings. Pending the cost and the resolution already underway, often an order can spell trouble for a purchaser.

This also relates to special levies when expensive issues crop up in a strata development. From underpinning to asbestos removal, we’ve seen plenty of horrible special levies. Sometimes a sign of this can be multiple sellers in the one block at the same time; a sad reality for any owners who don’t have the cashflow or the fiscal appetite to tackle the issue and pay the levy.

Zoning, planning restrictions, encumbrances and caveats are always checked in a thorough contract review. It’s important that our legal reps know about any future plans or requirements of the purchaser for context. For example, if a buyer wishes to develop land and a ‘Single Dwelling Covenant’ exists, the purchase won’t be viable for them.

There is a myriad of potential issues that qualified legal representatives can identify.

This is one of our pre-requisites for any purchase – a thorough legal review.