Special Conditions in Contracts

Does the standard residential houses and land or lots in a community title scheme contract suit your circumstances?

Before signing on the dotted line it is always a good idea to consult a conveyancing solicitor to ensure that the contract addresses any particular concerns you may have about the property.  It is a common misconception that a buyer will have the right to get out of a contract if they discover something adverse about the property. Unfortunately, unless you are still in the cooling off period phase of the contract this usually won’t be the case.  It is also a misconception that a buyer can use the finance clause or the building and pest clause to get out of the contract if they discover something about the property they don’t like.  These sort of clauses are not “ out “ clauses and a buyer has very strict conditions they must fulfil if they intend using these clauses as a way of exiting the contract and getting their deposit back.


So what concerns may a typical buyer have?

A buyer may wish to know for example:
Will the vacant land next door be built on and will the view be blocked out if it is.
Are we able to subdivide the block.
What are the neighbours like
How much will land tax /rates be
Will we be able to build a pool in the back yard or is there a sewerage line preventing us from doing this.
Will we get approval from the council to build three storeys
What would a valuer say the property is worth.
What development is likely to occur in surrounding areas.

These are merely some examples of issues that might be of concern to a buyer, and if so we recommend that you consult a solicitor so that they can draft a special condition to include in the contract, which would give you a right to lawfully exit the contract if your enquiries prove adverse.  Below is an example of a condition which gives a buyer a very broad right to get out of the contract.  Before including it in your contract it is always advisable that you first consult a solicitor who can properly assess your own personal circumstances to determine whether this clause is appropriate. This blog is not intended to be legal advice and can’t be relied on as such.


Example Clause:

1.1 This Contract is subject to and conditional upon the Buyer being completely satisfied in its absolute discretion:
(a) as to every aspect of the Property; and
(b) with any searches conducted by the Buyer in respect of the Property; and
(c) that the Property is suitable for the Buyer’s intended use of the Property; and
(d) with the Buyer’s enquiries in obtaining finance to purchase the Property,

by carrying out its due diligence inquiries (“Due Diligence Investigations”) on or before the date which is twenty-one (21) days after the Contract Date (“Due Diligence Date”).


1.2 The Seller will provide reasonable assistance and information to allow the Buyer to carry out its Due Diligence Investigations at the Buyer’s own cost.  The Buyer, its agents and contractors may obtain access to the Property to carry out the Buyer’s Due Diligence Investigations as it may require.


1.3 The Buyer must give written notice to the Seller that:
(a) the Buyer is not satisfied with its Due Diligence Investigations and the Contract is terminated; or
(b) the due diligence condition in Special Condition 1.1 has been either satisfied or waived by the Buyer.


1.4 The Seller may terminate this Contract by notice to the Buyer if notice is not given under Special Condition 1.3 by 5.00pm on the Due Diligence Date.  This is the Seller’s only remedy for the Buyer’s failure to give notice.


1.5 The Seller’s right under Special Condition 1.4 is subject to the Buyer’s continuing right to terminate this Contract under Special Condition 1.3(a) or waive the benefit of Special Condition 1.1 ( prior to the seller terminating the contract) by giving written notice to the Seller.


1.6 If the Contract is terminated under this Special Condition 1, the Deposit must be refunded to the Buyer in full.


1.7 This clause has been inserted for the sole benefit of the Buyer and only the Buyer may at any time by notice in writing to the Seller waive the benefit of this clause.


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