Any insights to share for anyone who stumbles on this thread later?
Okay here goes...these are some of the key points that I wrote down as best I could during the call. However, please accept the usual disclaimer to not rely on this information and to do your own due diligence to verify the accuracy! If any of this informaiton is inaccurate please don't hold it against the settlement agent, as it is likely my interpretation and misunderstanding and I wouldn't like to unintentionally affect their reputation!
Unlike me some/a lot of this information will no doubt be well known to many long term WA locals but it is by no means an exhaustive list!
Inspections to complete:
Termite Inspection:
Expect ~$150-$180.
Real estate agent will recommend an inspector or we can choose our own (preferred). Any pest activity identified has to be rectified by the seller at their cost.
Building Inspection Fee:
Be aware that the contract contains restrictive time periods in which these inspections (building and pest) must be completed and the report served (if required) on the vendor. If time periods are not met the buyer waives their rights under this clause.
Comments on Contract Clauses & Common Warnings/Problems in WA Purchases:
NOTE: The Real Estate Agent creates and/or inserts any additional clauses that the buyer desires to have in the contract. This includes pest & building clauses.
Pre-Offer review of contract:
The majority of WA purchaser’s alarmingly (from my perspective) do NOT have a settlement agent peruse the Offer and Acceptance Contract prior to signing! REA’s will try and state this is the ‘norm’ and whilst it is, it is not recommended. Buyers have an absolute right to request that the contract is forwarded to their settlement agent to peruse for suitability/completeness prior to signing and submitting their offer.
Finance Condition:
A reasonable finance clause is to allow 21 days (not business days) to reach unconditional finance approval. Ordinarily settlement occurs 21 days after the buyer advises they have unconditional finance approval. A buyer is obligated under contract to confirm approval at the time it is received. So for example, if unconditional approval is advised within 7 days, then the time to settlement would only be 28 days in total. A specific settlement date can be stipulated to give certainty as to how soon settlement will take place (rather then the date of obtaining unconditional finance triggering the end date).
Unauthorised additions/structures:
In WA about 8-9 out of every 10 property purchases involves unauthorized changes to the property. For example, pergolas, closed in carports, pools/spas, sheds, etc… All these require building approvals. Part of the enquiry fee includes requesting copies of any orders and requisitions (which includes building approvals) from the shire. If there is only one building approval than this would generally be for the original house.
There are two approaches to resolving unauthorized structure issues:
1. Monetary Claim – normally the seller gives a warranty (as distinct from a condition) that all extra’s/changes/additions are shire approved. If the seller breaches this warranty this can not hold up settlement for breach of contract. This breach results in a claim for compensation only. The seller usually agrees to apply for the relevant approvals and if they ultimately are not able to be issued or aren’t received than the seller must rip down the unauthorized structure.
2. Get out of the Contract – the buyer can insert a clause requiring the seller to demonstrate they have the necessary approvals within 10 days. If they don’t satisfy this condition then the buyer can cancel the contract and get their money back.
Buyer’s can choose to negotiate on either of these options – for example by trying to knock down the price.
Possible solution – ask the REA for the seller’s full disclosure regarding approvals upfront and then possibly use the existence of unauthorized additions to renegotiate the price.
Listing chattels accurately:
The buyer needs to make sure that ALL chattels have been accurately listed to avoid any issues pre/post settlement, when a seller may remove an item/chattel that the buyer had assumed would remain with the property. For example:
Fixed floor coverings
Light fittings
Window treatments (coverings). i.e. blinds, curtains, etc..
Dishwasher
Alarm system
Reticulation
Garden Sheds
Working Order Clause:
The buyer needs to check that the contract includes a warranty that all electrical, gas & plumbing fixtures/fittings are in good working order on settlement.
Mandatory Clause:
There must be a clause requiring that the seller has working hard wired smoke alarms installed and also RCD switches. There are big fines for these items not being present.
Once the Offer & Acceptance contract is received from the REA – and BEFORE SIGNING – it is a good idea to send a scanned copy via email to the settlement agent to review generally.
I hope these insights prove useful to some other forum users buying in WA for the first time. Happy investing!
Angela
