Article - Taking the stress out of buying or selling your house
Taking the stress out of buying or selling your house
by MichellePaddisonBuying or selling a house can be one of the most stressful experiences we will ever face in life. When one of the parties does not want to, or is unable to follow through with what was initially agreed, dreams of home ownership can turn sour.
For most people, sale and purchase agreements are concluded without any serious hitches. But in a tightening property market the potential for contracts to go wrong increases.
For a vendor looking to buy a property after selling another, this can mean breaching their own purchase agreement unless bridging finance has been obtained.
For the purchaser, they may miss out on a bargain or the house of their dreams.
Worse still, if their deposit has been paid to the vendor, they may need to take legal action to recover it if something does go wrong.
While there are legal avenues available to a vendor or purchaser when the other party fails to complete their side of the deal, there are steps both sides can take at the outset to minimise the possibility of either defaulting.
The best thing a vendor can do is obtain a deposit when both parties sign the purchase agreement. The deposit should be no less than 10 per cent of the purchase price.
In the standard Agreement for Sale and Purchase form, if a purchaser fails to settle, one option for the vendor is to cancel the agreement and retain the deposit.
The amount a vendor can retain under the Sale and Purchase Agreement cannot exceed 10 per cent of the purchase price (unless the parties have pre-agreed otherwise). The larger the deposit, the less likely it is the purchaser will pull out, if that deposit is at risk.
On the other side of the deal, the purchaser has the option of obtaining what is known as a "caveat". A caveat is a document that is lodged against the vendor-s title and prevents any dealing with the vendor-s title without the caveator (the person who lodged the caveat) being given notice.
Traditionally, lodging a caveat against the vendor-s title has been seen as an adverse move, because vendors can take it personally and see it as a sign of mistrust.
However, the use of a caveat can be a useful tool to protect a purchaser-s interest in a property.
There are three particular situations which are vital for lodging a caveat:
• When the agreement is long term (eg. the settlement date is more than two or three months away)
• Where significant sums of money are involved (eg. a high deposit or instalments); and
• Where you are alerted that something may be amiss with the house (eg. you discover it is a leaky building)
Even if your purchase does not fall into one of these categories, lodging a caveat is something you should discuss with your solicitor and requires careful consideration in today-s market.
For most people, sale and purchase agreements are concluded without any serious hitches. But in a tightening property market the potential for contracts to go wrong increases.
For a vendor looking to buy a property after selling another, this can mean breaching their own purchase agreement unless bridging finance has been obtained.
For the purchaser, they may miss out on a bargain or the house of their dreams.
Worse still, if their deposit has been paid to the vendor, they may need to take legal action to recover it if something does go wrong.
While there are legal avenues available to a vendor or purchaser when the other party fails to complete their side of the deal, there are steps both sides can take at the outset to minimise the possibility of either defaulting.
The best thing a vendor can do is obtain a deposit when both parties sign the purchase agreement. The deposit should be no less than 10 per cent of the purchase price.
In the standard Agreement for Sale and Purchase form, if a purchaser fails to settle, one option for the vendor is to cancel the agreement and retain the deposit.
The amount a vendor can retain under the Sale and Purchase Agreement cannot exceed 10 per cent of the purchase price (unless the parties have pre-agreed otherwise). The larger the deposit, the less likely it is the purchaser will pull out, if that deposit is at risk.
On the other side of the deal, the purchaser has the option of obtaining what is known as a "caveat". A caveat is a document that is lodged against the vendor-s title and prevents any dealing with the vendor-s title without the caveator (the person who lodged the caveat) being given notice.
Traditionally, lodging a caveat against the vendor-s title has been seen as an adverse move, because vendors can take it personally and see it as a sign of mistrust.
However, the use of a caveat can be a useful tool to protect a purchaser-s interest in a property.
There are three particular situations which are vital for lodging a caveat:
• When the agreement is long term (eg. the settlement date is more than two or three months away)
• Where significant sums of money are involved (eg. a high deposit or instalments); and
• Where you are alerted that something may be amiss with the house (eg. you discover it is a leaky building)
Even if your purchase does not fall into one of these categories, lodging a caveat is something you should discuss with your solicitor and requires careful consideration in today-s market.