| PURCHASING PROPERTY |
Location is obviously the most important consideration next to price. Proximity to amenities such as transport, shops, medical centre/hospital and schools should be taken into account as these will affect not only your enjoyment of the property, if it is to be your home, but the re-sale value and rental returns. In addition there are other factors which must be taken into account. One of the principal ones being the Court of Appeal decision in Carpenter -v- McGrath 40 NSWLR 39. In this case the New South Wales Court of Appeal, determined that a purchaser was bound to complete a contract he had validly entered into with the vendor, despite the existence of buildings on the land which had been erected without Council approval and which therefore the Council had the right to order the owner to demolish. It was held that the buildings on the land were unaffected until such time, if any, the Council issued the notice and therefore they did not amount to a defect in title which would allow the purchaser to rescind the contract. Although Vendors have a duty to disclose any "notices" received, and are deemed to include in the contract prescribed terms and conditions this may not be enough to protect purchasers in New South Wales. One such prescribed term relates to orders for demolition, repair, or to make structural alterations to a building which have not fully been complied with. This warranty has only limited effect as it relates to non compliance with existing orders. There is no protection in a situation such as in Carpenter -v- McGrath where the notice may issue or does issue after exchange of contracts but before settlement. Apart from this very worrying situation a vendor also does not have a duty to disclose a number of other items which a discerning purchaser may discover. As a purchaser, prior to signing on the dotted line, you must satisfy yourself that the property is in a satisfactory condition. Many searches can be obtained to assist you such as pest and building inspections. Other searches are:- * Strata – If you are purchasing a strata title property this is an inspection you can make of the Owners Corporation books and minutes which will show previous work done on the building and specifically the unit, the financial state of the Owners Corporation and will give a general history. * Smoke testing of sewer pipelines – This search can be ordered to ascertain if pipes are broken or illegally connected to the sewer. If pipes are found to be broken or illegally connected a rectification order may be made against the owner, showing future hidden costs. * Electrical and Plumbing – Especially for older buildings, a qualified tradesman can be engaged to check the condition of the electrical wiring and plumbing which can be very costly to replace if needed. * Local Council – You can and should make inquiries with your Local Council to ascertain any proposed development of the street/suburb. A search can also be conducted to confirm that a house and/or other buildings have been built in accordance with Council requirements. As at 1 July 1998 private Accredited Certifiers can be engaged to give complying developments certificates and completion of building work certificates. As such enquiries as to whether or not a property complies with Local Council building requirements may have to be made to the relevant Accredited Certifier and not the Council for building work done after this date. Once the reports are received it is essential that you read them carefully. If you have any queries contact the company who prepared the report for a further explanation. It is a good idea to re-inspect the property with the report so you can see what is being discussed in the report. Many clients turn to their solicitor and ask advice on the report. As the solicitor has not seen the property he or she cannot proffer advice. The decision to withdraw due to or proceed in spite of a report or search is entirely yours. We can only advise you of the consequences. Buying property is time consuming and clearly the costs involved are a lot more than just the purchase price, however, despite all the risks it is still considered by many as the safest investment. On such an investment it is worthwhile to spend the extra money and take the time to conduct all the necessary searches. With the right attitude and professional legal advice the risks can be minimised so that your purchase can be completed and you can enjoy your investment. Maria Townsend (mariat@gells.com.au) |
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