A standard real estate contract of sale allows the buyer to inspect a property within seven days of settlement.
The general condition states that the vendor must deliver the property to the purchaser at settlement in the same condition as the day of sale, except for fair wear and tear.
It is important all property buyers carry out this important right. Although rare, there is a possibility a vendor may remove fixtures or chattels after the sale. Also, an appliance may no longer be working at settlement.
Ideally, a buyer should inspect the property as close to settlement as possible, reducing the possibility it is altered before the title is transferred.
The general conditions of a standard contract of sale allow the purchaser to withhold up to $5000 of settlement money where there is a dispute. This is held by a stakeholder appointed by the purchaser and vendor.
The nominated amount may be deducted from the amount due to the vendor at settlement but only if the buyer also pays an amount equal to the nominated amount to the stakeholder. It is the stakeholder’s duty to pay out in accordance with resolving the dispute.
There is a recent trend among lawyers and conveyancers acting for the vendor to override this buyer’s right to withhold money in the case of a dispute.
Some lawyers and conveyances are now inserting a special condition in the contract of sale deleting general conditions that give buyers the right to withhold monies at settlement if the property is not in the same state as it was on the day of sale.
Where a property is highly sought-after, the vendor holds the upper hand. If the contract does not allow a buyer to withhold money at settlement, vendors are reluctant to delete this clause from the contract.
After a buyer hands over the full amount to the vendor it becomes more difficult to seek redress. The withholding condition gives buyers more rights but if it does not apply due to a contrary special condition, buyers should reserve their right to take legal action after settlement.
All buyers should therefore carry out the final inspection as close as possible to settlement.