When buying or selling a home in Australia, the standard contract of sale forms the foundation of the deal. It covers essential details like the price, settlement date, and parties involved. However, no two properties or transactions are exactly alike. This is where special conditions come in—unique clauses added to the contract to address specific circumstances not covered by the standard terms. Understanding these conditions is crucial, as they can significantly impact your rights, obligations, and financial risk.
Think of special conditions as custom-tailored amendments to a boilerplate agreement. They are powerful because, in the event of a conflict, they override the general conditions of the contract. This power can be a double-edged sword: they can offer vital protection, or they can introduce hidden risks if not properly understood.
Common Special Condition Examples 🏡
You'll often encounter these in Australian property contracts:
- Subject to Finance Clause: This clause makes the sale conditional on the buyer securing a loan by a specific date. If the finance falls through, the buyer can terminate the contract without penalty.
- Subject to Building and Pest Inspection: Allows the buyer to arrange for satisfactory inspections. If the reports reveal significant structural issues or pests, the buyer can often withdraw from the contract or renegotiate.
- Subject to Sale of Another Property: A crucial clause for buyers who need to sell their existing home to fund the new purchase. It makes the transaction contingent on their current property selling within a set timeframe.
Why You Need a Solicitor to Review Special Conditions
It's a common mistake to assume all special conditions are fair or standard. However, they are often drafted by the seller's legal representative to protect the seller's interests, not yours. Signing a contract without a professional review is like walking into a legal minefield blindfolded. A qualified solicitor or conveyancer will:
- Translate Legalese: They can explain complex legal jargon and ensure you fully understand the implications of every clause.
- Identify Risks: A legal professional will spot clauses that transfer undue risk to you, such as those that waive your right to compensation for defects or impose inflated penalty fees for late settlement.
- Negotiate on Your Behalf: Your solicitor can work with the other party's legal team to negotiate changes, add new clauses that protect you, and ensure the contract is a fair reflection of the agreement.
- Ensure Enforceability: A poorly drafted special condition can be ambiguous, leading to disputes. A solicitor ensures the wording is clear, precise, and legally enforceable.
Examples of More Complex Special Conditions
Beyond the common clauses, property contracts can contain more intricate conditions that require expert scrutiny. Here are a few examples that highlight the importance of legal advice:
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Early Release of Deposit:
This clause allows the seller to access the deposit money before settlement. While sometimes a legitimate need, a poorly worded condition might give the seller an "unconditional" right to the funds. This is a significant risk for a buyer, as retrieving the money can become difficult if the sale falls through, forcing a buyer to sue to get their deposit back.
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Land Tax Adjustments:
Some contracts, particularly for investment properties, may include a special condition that adjusts a portion of the seller's land tax liability onto the buyer. A buyer who plans to live in the property may be exempt from land tax, but this clause could force them to pay thousands of dollars in a tax that should be the seller's responsibility.
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No Compensation for Defects ('As Is' Clause):
While standard contracts have some protections against undisclosed defects, a special condition can override this by stating the buyer accepts the property "as is." This shifts all risk of pre-existing faults onto the buyer and prevents them from claiming compensation, even for serious, undisclosed problems.
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Indemnity and Warranty Clauses:
These clauses can create hidden liabilities. For instance, a clause might state the buyer warrants that they only dealt with the listed real estate agent and indemnify the seller against any commission claims from other agents. If it turns out another agent was involved, the buyer is liable for the seller's legal costs and any commission owed to that other agent.
In the high-stakes world of property transactions, a single, overlooked phrase can cost you tens of thousands of dollars. Whether you are a first-time home buyer or a seasoned property investor, the small cost of a legal review is a wise investment that provides peace of mind and safeguards your financial future.
Contact Eden Lawyers on 02 6041 5596 to have one of our experienced team help you with your next property transaction.
