What Does it Mean When Your Contract of Sale Contains Special Conditions?
When you’re looking at purchasing a property, there are a number of things that can be included in the contract outside of the standard conditions. These are known as ‘special conditions’. During the settlement process, your Conveyancer will explain any items included in the contract, and will provide advice on what special conditions might be applicable to you.
Prior to an Offer being accepted, special conditions can be requested to be included by either the seller or the buyer, and can only be included if both parties agree to them. To give you a better idea of what type of special conditions could be included in your contract, we’ll take you through some of the more common ones.
Special Conditions Buyers Ask For
Subject to Finance
If you put an offer on a property regardless of whether you have pre-approval for a home loan from your chosen lender, you will most likely request the Contract of Sale to contain this clause. All it means is that you will have the time you need to get your finance approved, and that the contract will terminate without any penalty to either party should that finance approval not come through.
Subject to Building and Pest Inspection
A lot of properties might look perfect at an aesthetic level, but you don’t really know what’s going on under the surface until you’ve had a building and pest inspection completed. For instance, the house might have damage in the roof from a possum or there might be structural issues or plumbing faults that aren’t visible. By including this clause in your Contract of Sale, you will be able to walk away from the property with no penalty should your building and pest inspection reveal underlying issues with the property and the seller is not in a positon to rectify the issue.
Subject to Settlement of Another Property
If you’re selling your current house and are in the market to buy a new one, there’s a good chance you will need to include this clause. This means that you can put an offer in on a house you would like to purchase under the condition your current house, that you already have a Contract of Sale for, successfully settles. This special condition is important; as you will need the funds you receive from the sale of your current property to pay for your new home.
Special Conditions Sellers Ask For
A seller might choose to include this condition in the contract, if the buyer has requested a special condition like ‘Subject to Settlement of Another Property’. This means the buyer is free to keep marketing the property until the buyer’s property settles.
However, it also means that during the settlement process, if the seller receives another attractive offer, they can give the buyer a defined period of time (usually a couple of days) to eliminate their clause and finalise the sale. If the buyer is unable to do so, their contract can be terminated at no penalty, and the seller can proceed with the second offer.
Subject to the Termination of a Prior Contract
This condition actually allows the seller to enter into a contract with a second buyer, while their initial contract is still enforceable. This is usually used in conjunction with the 48-hour notice Clause, where the seller has reason to believe the original buyer’s offer might fall through due to finance. If the original one isn’t terminated, the seller can then terminate the second one without any penalty.
These are just an example of the type of clauses that can be included in a Contract of Sale by either a seller or a buyer. To learn more about these special conditions, and about what to expect during the property settlement process, contact the team at Vicki Philipoff Settlements today! Or go to our website: https://www.vickiphilipoff.com.au/contract-clauses/