Signing a contract for an investment property
In nearly every case where a client is buying an investment property, the client is working through a real estate agent and when the initial decision to buy is made the clients are signing a contract for an investment property purchase. The legal side of the purchase of the investment property is, in almost all cases, handled by the client’s legal representative. The legal representative is usually a qualified solicitor or someone qualified in conveyancing.
The conveyancing laws differ from state to state so it is extremely important to ensure that the legal representative the client uses to purchase the property investment is qualified in the laws of the state in which you are making the purchase.
Laws from state to state differ in terms of deposit monies to be paid, the ‘cooling off’ periods of a contract, the stamp duty that needs to be paid and the timing of the stamp duty payment. In Queensland in particular, a common additional clause in a contract is a ‘subject to finance’ clause which allows the purchaser to cancel a contract if full funding for the purchase cannot be obtained through a recognised Australian lender.
The most important issue for buyer to know is that once the contracts are signed, you are working within the legal framework and any issues which occur should immediately be reported to your legal representative and the selling agent as a secondary consideration.
The recent report in the media “Selling a house in Melbourne: investors stung over trying to pull out of sale” highlights the importance of this.
The case reports that two investment property buyers seem to have informed their agent by phone and in writing that they did not wish to proceed with the purchase during the “cooling off’ period to the selling agent but did not inform their solicitor or the vendor’s solicitor. The result is that they may be up for as much as $1 million in penalties for not proceeding with the purchase.
The moral of the story is obviously ‘deal with your legal representative in all contractual issues” and don’t be caught out trying to blame the selling agent if you have not abided by the full conditions of the contract you have signed!
Full story click here: http://goo.gl/URIruO
