TOP 5 PITFALLS FOR RESIDENTIAL CONVEYANCING
1. REVIEW AND UNDERSTAND THE CONTRACT
The REIQ and the Queensland Law Society approved Contract for Houses and Residential Land ('REIQ Contract') is the industry standard contract used in all residential conveyancing in Queensland.
The standard terms and conditions of the REIQ Contract have been continually reviewed and refined as various contractual disputes have arisen, been litigated and resolved. As a result, the standard terms and conditions are now extremely comprehensive, but also quite complex, and it is important that you and your acting solicitor fully understand their operation and effect.
Most conveyancing contracts also have a number of 'special conditions', which are specific to the particular property being sold or are requested by a party to the contract. These include 'sunset clauses' whereby if a particular event, such as the sale of an existing property, does not occur by a certain date (the sunset date), either party may terminate the contract.
It is vitally important that you and your solicitor understand both the standard clauses and any special conditions in your contract. Any uncertainty should be resolved with the other side as soon as possible.
2. UNDERTAKE ALL RELEVANT SEARCHES AND CAREFULLY REVIEW THE RESULTS
A vendor or seller only has a duty to disclose 'latent' defects in their title or ownership of the property - that is, those which the purchaser (or an expert employed on their behalf) is not reasonably able to discover on inspection of the property.
The buyer is given the opportunity to discover any 'patent' defects through undertaking its own enquiries and third party searches.
The REIQ Contract gives the buyer the opportunity to terminate or seek compensation from the vendor if certain defects are discovered though this search process. However, strict time limits apply which dictate when the buyer must exercise their rights or lose their benefit.
If the relevant searches are not undertaken and properly reviewed in a timely manner, the buyer may lose their right of termination or compensation from the seller. Furthermore, the property may be adversely affected by something which may affect the value of the property or the buyer's use and enjoyment of the property.
3. ACT EFFICIENTLY AND BE AWARE OF DEADLINES
Every stage of a conveyancing matter is governed by strict time frames. This is due to the very nature of the transaction, whereby both parties are usually motivated to complete the transaction in the shortest period of time, while allowing the buyer adequate time to undertake due diligence enquiries, searches, arrange for finance, etc.
Meeting these strict deadlines can be further complicated where cooperation is required from third parties such as building inspectors, search providers and financiers.
Therefore, it is vitally important that both the buyer and their solicitor remain apprised of these deadlines. The buyer's solicitor must monitor the progress of the conveyancing and maintain efficient systems and timetables to ensure that deadlines are met and acted on, or that an extension is requested if required.
Failure to meet such deadlines may result in the loss of contractual rights vested in a party to the contract to either terminate or seek compensation.
4. UNDUE RELIANCE ON CONVEYANCING CLERKS/PARALEGALS
It is with good reason that the Queensland Law Society mandates that all conveyancing matters be carried out under the strict supervision of an experienced solicitor, even if the majority of the procedural work and correspondence is handled by a conveyancing clerk or paralegal. History has shown that the bulk of professional indemnity/negligence insurance claims against law firms have arisen from conveyancing files.
No paralegal or conveyancing clerk, no matter how experienced, has the legal training to analyse and interpret certain contract conditions, particularly special conditions which may have been drafted by a solicitor acting for the other side.
There are also an ever-increasing number of regulatory limitations on a buyer's right to purchase property in Australia that most paralegals would not be aware of, such as the Foreign Investment Review Board rules, which may require preapproval for or even prohibit certain purchases by foreign nationals.
5. PRE-SETTLEMENT INSPECTIONS AND TITLE SEARCHES
In the time between the contract date and settlement, unscrupulous vendors may deliberately or inadvertently deal with the property in a way that is contrary to the buyer's rights under the contract, including encumbering the property, removing certain fixtures and fittings, or simply not maintaining the property in a proper state of cleanliness and repair.
The only way to ensure that there has been no change in the title or the physical condition of the property between the original date of inspection and the settlement date is to arrange for a pre-settlement inspection and title search. This is something that our firm recommends is always done as the final due diligence on the property prior to completing the purchase.
Whether buying or selling, please feel free to contact NB Lawyers today for an initial free consultation and quote on your conveyancing needs.