Since the start of this year there has been a new standard form agreement for sale and purchase in use for buying and selling property. Whether you are a buyer or a seller, here are 5 tips to give you an advantage in your property transactions.
1. Finance Condition
The finance condition in the new standard form agreement states that if buyers wish to cancel an agreement because they did not obtain finance then the seller may ask the buyer to provide a satisfactory explanation of the grounds relied on together with supporting evidence (such as a letter from a bank).
This means buyers cannot use the lack of finance as an excuse to cancel an agreement for other reasons unrelated to finance.
2. A new toxicology report/meth test condition
The new standard form agreement has a new condition for a buyer to carry out a toxicology report to check if the property is affected by the preparation, manufacture or use of drugs including without limitation methamphetamine.
Buyers have always been able to add this as an extra condition in the old form of agreement but including this condition as a standard one that can be chosen by selecting a ‘Yes’ option on the agreement may make the condition more common.
3. Timing for satisfaction of conditions
The time period that buyers have to satisfy the building condition and the new toxicology report/meth test condition is 15 working days. For the building condition this is an increase in time from 10 working days in the previous version of the standard form agreement. A period of 15 working days is probably longer than most agreements usually state so the parties, particularly sellers, may wish to reduce the time period.
The list of chattels included in the sale and purchase of the property is now separated into two lists. One list of chattels that must be in reasonable working order at the time of settlement. The other list of chattels which are non-operational (curtains, blinds and floor coverings) or in the same condition as at the date of the agreement with no requirement that they are in reasonable working order.
The parties should pay particular attention to ensuring the chattels are included in the correct list.
5. Checking work is done before settlement
It is reasonably common for the parties to agree that certain work must be completed by the seller on the property or chattels prior to settlement. In the old standard form agreement buyers only had one opportunity to visit the property prior to settlement (unless otherwise agreed by the seller) to carry out a pre-settlement inspection and to check any other aspects such as whether the seller had completed agreed works. Under the new standard form agreement buyers are given an additional contractual right to visit the property to check agreed works have been carried out.
A final important tip to remember before signing a contract based on the new standard form agreement for sale and purchase is to seek legal advice. Your lawyer can advise you whether the proposed agreement suits your particular situation taking into account all relevant aspects.
By Allister Doo, Partner at Blackwells Lawyers