With the financial year winding down to a close and the Melbourne property market remaining relatively static, I thought we might talk about a topic most home buyers do not really understand
After purchasing your dream home or investment property.
The weekend has gone, and you are now a home owner. Whether you were successful at auction or have signed off on a successful offer, you now have a contract of sale that will settle sometime in the future.
Assuming you decided to use a buyer’s advocate, you have probably bought very well, you would have had a legal opinion of the documentation, and you would have also decided whether to have a pest and building inspection done on the property. If you haven’t had legal advice and you are still within a 3 day cooling off period – GET IT DONE NOW! (Doesn’t apply if you have bought at auction or you made your first offer in writing more than 3 business days earlier)
Now the “settlement” period begins. There are some things to organise that may make your life easier. Get a copy of the contract of sale to your financier and your solicitor. Even if the selling agents says they are going to – you should show them the copy you have.
Whilst it is the responsibility of the vendor to maintain the property and the inherent risk until settlement, I would strongly advise that you take out building insurance in your name unless the owners corporation has already done so. The reason is simple, it is relatively inexpensive and if something goes wrong and the current vendor is either not insured or dramatically under insured then you will have options. It may also be easier dealing with your insurer that is contractually obligated to you, rather than another insurer who has a contractual obligation to a third party, who once they have your money, may be far less assertive with their insurer.
If the settlement is a fairly long one most solicitors I have dealt with have recommended a caveat is placed on the property during settlement.
Within seven days of actual settlement, as the purchaser, you have a right to inspect the premises to see if the property is in a similar condition to what it was a time of contract signing. The best way to describe the condition: imagine the owners have been tenants, so fair wear and tear is allowed, but not holes in the walls or fixtures been removed. Make sure you ask about any manuals, extra keys such as those to windows, remote controls for the garage, or air conditioners and any special instructions about watering systems or alarms.
Fixtures are a potential minefield when it comes to settlement. The majority of solicitors I have spoken to break down what stays with the house and what goes with the owner as this:
Whether it is conventional to remove the item on the sale of the property, whether the item can be removed without substantial damage to the property to which it is attached and how long has the item been attached where it is.
Some examples of goods which usually go with the owner: Washing machines, dryers, fridges and freezers, non-fixed wardrobes, rugs that are not fixed to the floor, paintings and anything hanging on hooks. There are some things that will most likely stay with the property such as dishwashers, kitchen benches, build in wardrobes and shelves, non-portable air conditioning units, hot water services, heaters that are fixed in place.
But the biggest and sometimes most contentious issue now is the audio visual equipment. TV sets are now regularly bolted to walls via a bracket. The wires usually disappear into the walls and come out somewhere else and connect to an amplifier that again has wires disappearing into walls to connect up with speakers all over the inside and potentially the outside of the house. If there are fixed speakers, and televisions on walls and you care whether they stay or go then you need to specify in writing in the contract what stays and what goes when you sign the contract. You also need to specify that if anything is going the vendor will have to “make good” any holes in the walls. We have been to several properties to find holes throughout the house where TV brackets have been removed. Some so bad that we have had to organise plasterers and painters out to repair damage before being able to lease the property to tenants.
If there are any issues regarding the condition of the premises you have only until settlement to negotiate these. Once you hand over money at settlement it gets very difficult to get the vendor to fix anything.
On the day of settlement the purchaser has the right to the premises literally as soon as settlement has occurred and monies and paperwork has been exchanged. In practice, however, it usually takes about an hour for the agent of the vendor to be notified in writing and then be in a position to release keys. You can usually pick the keys up from the office of the vendors’ agent.
Once in your home I would strongly suggest within the first couple of days, you organise an electrician to do a safety check of the switchbox, power points and smoke alarms. If there are any heaters, especially if they are a few years old, you should organise a carbon monoxide test (about $120 – $150) to see if the heater is producing any of this odourless, invisible but very deadly gas.
You should remember to re direct your mail from your old address and start organising your house warming party. Unless you are going to lease the property out, then think about calling us to organise your property management.
Ian James
Director
JPP Buyer Advocates