Buyer’s contract obligations when purchasing a property

There are a number of obligations that are imposed on the buyer of a property, some having immediate effect once the contract is fully signed.  This article only deals with some of the main obligations contained in the standard terms of REIQ or ADL contracts (which are normally used by real estate agents).

The first important concept that a buyer should understand is that Queensland contracts have strict deadlines, which fall at 5pm on the due date.  This is known as time being of the essence.  Once the 5pm deadline passes (even by 30 seconds), you are potentially in default of the contract which could give the seller rights against you.

Another important obligation to be aware of is that the risk of the property passes to the buyer at 5pm on the first business day after the contract date.  Therefore, as a buyer it is strongly recommended that you insure the property immediately after entering into the contract.  Often your financier will also require a copy of this insurance prior to settlement.

If a notice or order from an authority or court is made after the contract date against the property, you as the buyer are required to comply with it.  The seller may do the work if required to be completed prior to settlement, but you will be required to pay the reasonable costs for this work at settlement.

You must ensure that you pay initial deposit and balance deposit on time or you will be in default under the contract and the seller could pursue you for this debt. The seller may also impose interest on the late monies at a rate set by the Queensland Law Society (9.45% as of January 2016).

If the contract is subject to finance and/or a building and pest inspection, you must advise the seller of approval or satisfaction by the due date.  If you miss the strict 5pm deadline on the due date, the seller will have a right to terminate the contract.

If the property is tenanted, you should decide on a property manager.  You do not need to retain the current property manager.  You should arrange for whichever property manager you want to commence managing the property from the day after settlement.

If the property has a pool but there is no pool safety certificate compliance or exemption certificate, the buyer must arrange for an inspection at the buyer’s cost by a due date prescribed in the contract.  Normally a body corporate would attend to any pool certificate requirements if it is shared pool.  We recommend obtaining more in depth advice on this topic.

If you are a foreign buyer under the Foreign Acquisitions and Takeovers Act 1975 (Cth), you must ensure that you have either obtained consent to purchase the property from the treasurer or you are not required to obtain consent, prior to entering into the contract.

You are required to pay the stamp duty payable on the contract.  Your solicitor can advise you of the amount and whether you are eligible for an exemption or concession.

This article does not cover all contracts and not all obligations.  If you are intending to purchase a property, we recommend that you obtain advice on the contract prior to entering into it.  Icon Legal can assist you with this.