Hypotheticals by Manny Wood. Published in the Coffs Coast Advocate on 29 July 2017.
John and Cynthia have been looking to buy a home for some time, but have missed out on a number of properties where other purchasers have exchanged contracts before John and Cynthia could make the proper enquiries such as obtaining pest and building reports and obtaining legal advice on the contract. This is what is referred to as “gazumping”.
John and Cynthia eventually find the ideal property and they want to make sure they secure the property. The real estate agent advises them that they can secure the property by signing and exchanging contracts with a “cooling-off period” of 5 working days and rather than paying the usual 10% deposit, they only have to pay .25% of the purchase price, which on this occasion is $1,250 as the purchase price is $500,000.00.
The real estate agent explains to John and Cynthia that if they “cool-off” within the 5 working days, then the most they will lose is the $1,250.
John and Cynthia go ahead and exchange contracts in the real estate agent’s office and then immediately see their solicitor, who commissions the pest and building reports and carefully reviews the contract.
The solicitor explains that if for some reason the reports cannot be obtained within the 5 working day period, the vendor may agree to increase the cooling-off period.
Fortunately for John and Cynthia, they receive satisfactory reports within the 5 working days and are satisfied with their solicitor’s advice on the contract.
John and Cynthia then pay the balance of the 10% deposit to the real estate agent before the 5 day cooling-off period expires and are very happy that they didn’t miss out on their dream property.
If you would like Manny to address a particular legal issue, send your request to manny.wood@ticliblaxland.com.au or call him on (02) 6648 7487.
