How to avoid risks when signing real estate contracts

Although the Vendor (the seller) is required to disclose certain matters to the purchaser before the purchaser enters a contract under Section 32 of the Sale of Land Act 1962, the purchaser must continue to rely on their own inquiry into the property prior to contract signing. 

Once you, the purchaser signs an unconditional contract to buy a property, the Vendor is only obliged to deliver the property in the condition in which it was inspected, with all defects (if any) that existed at the time.

It is essential that you thoroughly check the property and as far as possible, physically inspect the property. This is because once the contract is entered into, the Vendor will insist that any defects found subsequently, were available at the date of inspecting the premises. Relying on this argument the Vendor will refuse to fix any defects that is found on the premises prior to settlement.

Regardless of whether the Vendor was aware of or caused defects if you, the purchaser only discovers them after signing the contract, the Vendor is under no obligation to rectify those defects or improve the property.

Conduct thorough inspections of the property by experts such as:

• Building inspectors
• Timber pest inspections
• Plumbing and Electrical inspections
• Strata Inspections - if an owners corporation exists on the property (thorough report of the records of a property) 

Include special conditions:

• The buyer may wish to include special conditions that outline the quality of the property and the Vendor’s liability in relation to any defects. [This would require that Vendor agree to such a condition]

• The vendor may be liable for defects if there was misrepresentation while the Vendor through their agent was advertising the property (this is a very narrow exemption); or

• If there was fraud by the Vendor; or

• If the parties have a specific agreement in relation to the quality defect

  • However, it is important to note that generally when a residential house is being offered for sale, the Vendor is not acting in Trade or commerce. Therefore, as the buyer you must take necessary precautions against any possible defects or misrepresentations.

  • This may include attaching what you require as a provision of the contract, so that as a last resort, you may be able to sue the Vendor for breach of contract.

To avoid last minute disputes about the condition of the property which you have bought we advise you to make a thorough inspection of the house with the assistance of the Agent initially and just before the settlement and keep this record with you.