Are you looking to put an offer in on a property?

A competitive property market can put a lot of pressure on purchasers to enter into agreements without first seeking legal advice. 

Purchasers often do not know how many other offers a vendor has on the table and will want their offer to seem as attractive as possible. 

A ‘tactic’ we are increasingly seeing being used to make offers more attractive is a single “Purchaser’s Solicitor’s Approval” condition being included in agreements, rather than a more fulsome purchaser due diligence condition. Purchasers are often under the false belief that this will give them the ability to cancel the agreement after they’ve spoken with their lawyer, for any reason at all, including if they have a change of mind. 

However, a solicitor’s approval condition generally only permits a purchaser’s solicitor to cancel the agreement due to ‘conveyancing aspects’ of the transaction.  For example, if the purchaser’s solicitor discovered an error within the record of title.   

If a purchaser sought to cancel an agreement pursuant to a Purchaser’s Solicitor’s Approval condition for reasons largely unrelated to the terms of the agreement itself (for example, if an issue with the roof was discovered), the vendor could challenge this. 

At the time of signing the agreement, the purchaser may simply be focused on securing the property before they miss out, then after discussing their intended purpose of the property with their solicitor they may have a change of mind. For example, a purchaser may have had the intention to Air BnB the property, only to find out there are zoning restrictions or land covenants registered on the title which restrict the landowner from undertaking certain activities such as Airbnb.  They may have intended to build a garage on part of the land, only to then find out there are building line restrictions imposed by the Council which prohibit a landowner from building in certain proximity to boundaries. 

The agreement does provide the purchaser with some protection if the agent or vendor makes a misrepresentation, however if a purchaser simply has a change of mind, they may not have any basis to cancel the agreement under a purchaser’s solicitor’s approval condition. They could then be then left in a predicament where they either have to follow through with the purchase or negotiate their way out of the agreement. This process can be very expensive and stressful, could involve legal proceedings and the purchaser could end up having to pay compensation to the vendor. 

With the purchase of significant assets like real estate, it is important that purchasers understand the implications prior to entering into a legally binding contract. The best way to do this is to seek legal advice before signing any agreement. Your solicitor can guide you through the process and ensure conditions are included such as due diligence, finance, Land Information Memorandum (LIM) or building inspection report so you have the grounds to cancel the agreement if the property is no longer suitable to your requirements. 

If you are thinking about purchasing a property and want expert advice, get in touch with our Property Law Team at TODD & WALKER Law on enquiries@toddandwalker.com or +64 (03) 441 2743.