Without conditions, both parties are legally bound to complete the transaction.

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If you are planning on purchasing a property, it is important to understand the purchaser conditions in your Agreement for Sale and Purchase. They give you a right to potentially cancel the agreement if certain matters relating to the property do not turn out the way you expected.

5 of the most common conditions we see in agreements for sale and purchase:

1. Finance condition

This condition gives you an option to cancel the agreement if you are unable to obtain sufficient finance on the basis that you have made genuine and reasonable efforts to arrange finance. If your loan application is declined, you must notify the vendor  by the finance condition date. If the vendor requests, you will be required to provide evidence from your bank or mortgage broker that your loan application was declined.

2. Land Information Memorandum (LIM) condition  

A LIM provides information that the council holds in respect of the property. This includes any flood risks, consents issued (or the lack thereof) for alterations to the property, zoning, soil issues and any existing or future plans the relevant council may have for the area which the property you are purchasing is located in. A LIM can reveal hidden issues that may affect the property’s value or change your decision about buying the property. You can apply for a LIM directly through the local council’s website.

If the contents of the LIM are unsatisfactory, you are required to provide the vendor with a written notice within the conditional period, detailing the issues and what you reasonably require to be done to remedy those issues

The vendor  then has the opportunity to comply and address the issues you have raised. The provision of notices in relation to the LIM are subject to strict time frames, therefore it is important to communicate with your lawyer and act promptly to avoid any delays.

3. Building report

A building report allows you to have the condition of the property inspected in a non-invasive manner by a building inspector. A building report will identify any leaks, structural issues or earthquake vulnerabilities. If you cancel the agreement due to an unsatisfactory building report, you are required to immediately provide the vendor upon request with a copy of the report.

4. Toxicology report

A toxicology report for a residential property is a document that reports on the presence and levels of any hazardous substances in a home. This report must be prepared in good faith by a suitably qualified inspector. Similar to the building report, if you wish to cancel this agreement on the basis that this condition is not satisfied, you must provide a copy of the report to the vendor immediately upon request.

5. Due diligence  

A due diligence condition is generally included in the “Further Terms” of the Agreement for Sale and Purchase. This condition enables you to investigate anything you deem relevant about the property. A due diligence condition offers the widest protection and basis for you to cancel the agreement. Your lawyer will provide you with wording for a due diligence condition to include in your Agreement.

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Tailoring an agreement to your needs

There are a number of other conditions that can be inserted into your Agreement for Sale and Purchase and your lawyer will assist you in advising what conditions may need to be inserted for the particular property you are purchasing.

Having the right conditions in your agreement can save you a lot of unnecessary stress, money, and surprises later on. That’s why we always recommend having your lawyer review the Agreement for Sale and Purchase and make any necessary changes before you sign.

If you’re considering buying a home, get in touch with our team of property lawyers early on in the process.

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