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10 January 2010

Get your assumptions in writing!!

Many buyers (and vendors) make the mistake of assuming a Real Estate Agent's comments during a property inspection are legally binding. In short, they're not! Write down any assumptions not explicitly covered in your contract, then get a legal opinion as to whether they need to be included. If they do need to be included, get them translated into legally enforceable conditions by someone competent to do so. DO NOT ATTEMPT TO DO THIS YOURSELF.

Of course, Real Estate Agents will often try and persuade you to keep the contract 'clean', or legally unenforceable. Remember, Real Estate Agents are paid to represent the person selling the property, so this should come as no surprise -they're only doing their job. You need to look after YOUR best interests as the buyer. Ultimately, the contract is your best defence against any confusion later down the track.

Let's examine a few examples (these are not ficticious) of things you might say during an inspection:
Buyer: "I'd like to get a few trades folk through the property as we approach settlement. This will give me a chance to measure it up for the renovations I have planned."
Agent: "That shouldn't be a problem!"
Note: What impact could this have if the agent or the vendor simply refused? If it's a long-term contract, this could cost many thousands of $$$.

Buyer: "As we'd like to buy this property as an investment property, I'd like our Property Manager to prepare early and get prospective tenants through the property. That shouldn't be a problem, should it?"
Agent: "We'd prefer you use our property management services, but we'll work with anyone you appoint."
Note: Again, what impact could this have? If not getting prospective tenants through as it approaches settlement means you'll miss out on rental repayments, this will cost you money.

Buyer: "Do you think the current owner would mind leaving behind that painting?"
Agent: "I think they even mentioned that, but I'll have to check"
Note: Even if the agent comes back to you and says they're happy to leave it, they could always change their mind.

Buyer: "There's a big pile of bricks and miscellaneous building material down the side of the house. Are the current owners planning to dispose of this before they leave?"
Agent: "Yeah. I'm pretty sure they're planning to get rid of that stuff before they leave."
Note: These conditions (where work is required) need to be quite clear and unambiguous. Make the instructions as detailed as they need to be.

Of course, all of the above issues should end up in your contract. You should also maintain evidence to support the conditions where appropriate. This might include photos or video footage you captured during your preliminary inspection and prior to signing the contract.

You should avoid writing these conditions yourself and raise the issues with your conveyancing provider and get them to draft them on your behalf. They will ensure they're legally enforceable. If things go bad, the conveyancing folk will be depending on them to resolve the dispute.

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