10 Mistakes When Purchasing a Property Which Can Be Avoided - Part 4 - Cooling-Off Period

 

Part 4 – Cooling off period

Sydney-based legal practice Checkbox Legal will assist you to avoid or minimise complications which arise when purchasing real estate. We helped many of our clients to avoid multiple pitfalls in the process and now ready to share our knowledge with you.

COOLING OFF PERIOD

In our previous publication we discussed payment of a holding deposit to a real estate agent.

What happens next? The statutory cooling off period which usually lasts for five business days.

What happens during that period? Well, it is a question of due diligence and what purchaser is ready to invest in for a piece of mind.

Essentially, this time may be used by the purchaser’s solicitor to order a strata report (if the property is a lot in a strata scheme), a pest and building report (if the property is a free-standing home, a villa or a townhouse) and other reports, which are less frequently made.

Checkbox Legal always recommends its clients to invest in these important inspections, because they may reveal something which may persuade the purchaser to change their mind on the purchase, or budget for further expenses in the future.

Examples include:

• strata report revealing special levies (thousands of dollars each year per unit) struck by owners’ corporation to finance a legal firm to sue a contractor who was negligent in repairing the block of units;
• strata report revealing special levies (tens of thousands of dollars each year per unit) struck by owner’s corporation to defend a claim by owner of one strata lot suing owners corporation for failing to maintain waterproofing of the roof causing damage to one lot;
• building inspection revealing major building damage beyond normal wear and tear, or fire hazard from insulation located close to powerful down-lights in the ceiling of a house.

We believe that even if a house is fairly new, purchasers will benefit from knowing that there may be defects which previous owner chose not to fix and which are not covered by home warranty; and in case of a recently built strata unit, there could be special levies collected to cover for unforseen expenses and borrowings.

One other interesting aspect of ordering a strata report is that it could reveal a history of bad behaviour by a trouble-making tenant (or owner) disrupting peaceful life of a whole block (but only if owners corporations recorded that in minutes of their meetings and inspector could obtain those minutes).

While solicitor is organising these important checks, purchaser should actively work with his or her mortgage broker to try and obtain a formal approval of home loan finance, to be confident that lender will provide funds for purchase.

Conclusion: cooling off period should be used to order property inspection reports and obtain finance approval for purchase.

As always, we remind that we at Checkbox Legal provide not only residential and commercial conveyancing services, but also act for our clients in a variety of other legal matters - check out our website for details.

Contact Checkbox Legal on our phone number 0410 64 54 53 or sent us an email.

Regards

Andre Petrov - Checkbox Legal.