There are a number of important questions to ask (and have answered to your satisfaction) before committing yourself to purchasing real estate in Australia, whether it is to be your principal residence, a residential investment property or a commercial property:

• Have I got loan approval?

In order to avoid a situation where you lose your deposit or are sued for damages for breach of contract, it is strongly recommended that you have written loan approval. This ensures that when you bid at an auction or write up an offer to purchase a property, that there is no doubt as to the availability of the funds you require to complete the purchase.

Even when you have notional loan approval, it is still wise to qualify your offer as “subject to finance”. You are relying on the clause so you can always waive that clause later.

• Is the building structurally sound and pest free?

Ascertaining the structural integrity and the presence of pests for any property you are looking at purchasing needs to be considered before you enter into a contract to purchase or bid at the auction so the necessary steps can be taken.

Check the Incorporated Terms

In purchases where there are terms incorporated into the agreement like the Joint Form General Conditions for the Sale of Land (in Western Australia), the General Conditions include conditions relating to:

• encumbrances – a registered interest in the land by a third party which can hinder its use or transfer such as a mortgage, a lease agreement, an adjoining property owner’s right of way, or a claim that has been lodged on the title;
• the payment and holding of the deposit;
• the settlement and consequences for delays in settlement – penalty interest rates are now nine per cent per annum calculated daily;
• terms about when possession must be handed over (called vacant possession);
• representations that the seller makes about the land or strata titled lot;
• who is responsible for payment of costs such as the installation of underground power and connection to the sewerage mains where relevant;
• errors, risk, default and interpretation of terms; and
• requirements for strata titles disclosure from the seller.

Further Conditions

You can add extra clauses to the Offer & Acceptance (O & A) that you want included as special conditions. These conditions must be as precisely worded as possible to avoid disputes later on. All amendments and extra conditions should be signed and dated by the seller and the buyer. It is advisable to seek expert legal advice to ensure that the special conditions are drawn up correctly.

Special conditions can cover a range of matters such as: the need for repairs to be made to the property; for electrical gas and plumbing fixtures and fittings to be in working order, or to allow for a building, plumbing or termite inspection. A buyer may insert a special condition that requires the O&A form be either accepted or rejected by the seller by a certain date.

• Are the terms of the purchase contract fair and reasonable?
Be mindful of any terms or conditions that may have been added to the contract that are unreasonable and may impact you unfairly. Some examples include passing on liability for GST, land tax or certain other costs, as well as any clauses that prevent you from objecting or seeking compensation in certain circumstances.

• Whose name/s should the property be purchased in?
There are many factors to take into account when deciding in whose name the property should be purchased in. Some of these include tax considerations, asset protection, estate and succession planning just to name a few. Be sure to consult the relevant experts in these fields before making a decision.
• Fixtures and fittings – what is included (or excluded)?
In general no furniture will remain with the property, unless they are specified inclusions. However all fixtures must remain with the property unless they are specified as exclusions. Make sure these matters are addressed, agreed upon and put in writing to avoid any disputes.

• Is the settlement date suitable?
Negotiate the settlement date to suit your specific circumstances rather than just accepting a time period you haven’t thought out.
• Will I have to pay a sales commission on the purchase?
In general it is the vendor (seller of the property) that engages the real estate agent to sell the property on their behalf for an agreed commission. There are some other circumstances that may give rise to a liability to pay a commission as well; such as the Purchaser employing their own agent to act for them.
• In the event of a purchase of a strata property – in what state is the body corporate in?
Before purchasing you should always have a look into the affairs of the body corporate for the property. In most states there are obligations to disclose the following: what are the strata levies; what do they include and exclude; is the property due for major maintenance that will require the payment of additional ‘special’ levy amounts?

Another good idea is to check the financials for the body corporate to see how much money is in the bank; is there a sinking fund for large maintenance works; and how much is in it?
• Do I have future plans for the property, like land subdivision or extensions?
If so, it is important to consider issues such as planning laws and regulations and zoning for example.

• Is the structure on the property legal? Are there structures that haven’t received planning approval for example?
If you have any doubts as to the legality of the property for occupation, it is highly recommended you seek advice prior to purchase.
• Have I budgeted for all the costs and expenses associated with the property purchase?
Whilst you may have enough money for the deposit and remaining balance of the purchase price, you need to make sure you have factored in the variety of additional charges, fees and expenses that come with purchasing a property including (but not limited to) stamp duty, loan applications fees, valuation fees, insurance, adjustment of water rates, council rates, land tax, and strata levies. As well as the costs for items such as building reports, pest inspections, and search fees just to name a few!


The most important thing is to obtain professional legal advice and to undertake a robust due diligence process before committing to the purchase.


If you are looking to purchase a property, please don’t hesitate to contact Havilah Legal to assist you through the process.

Bruce Havilah

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