Buying a home is an exciting experience, albeit one that can be daunting and especially if it’s your first home. Coming to grips with your legal and financial obligations is a lot to contend with!

Add to that the prospect of buying a home with a defect that has been disclosed and it’s even more tricky. But, with the right advice, it is achievable.

We encountered a situation recently where a room in a house wasn’t consented. It was disclosed on the sale and purchase agreement, so the bank was aware of it and had approved the lending. But…. there were conditions for draw down (money being paid out), which meant the buyers had to complete a number of conditions to the bank’s satisfaction before the bank would give them the funds to settle the sale. Then the bank changed the conditions and asked for more than we were expecting. We pushed back on that, and the funds were eventually released. But it’s important to be aware of what you’re getting yourself into.

If you’re buying a house with or without a defect, always get your lawyer involved from the get-go – before you put in an offer! It also pays to have a trusted mortgage broker and insurance broker on your team.

If you’re considering putting an offer on a home with a disclosed defect, it might mean that you can buy the property for lower than asking. Again, have your lawyer involved in the pre-negotiation phase before you put pen to paper. Because if you don’t know how to get out of a deal, you shouldn’t be signing a sale and purchase agreement.

We can ensure you ask for specific clauses in the contract so that if you fail to get insurance or lending, or something crops up during the due diligence phase that is of concern, you have a way of getting out of the deal.

A case in point is a client who came to us about a home they were looking to buy that also had an unconsented part. Knowing that, we made sure we included finance, insurance, and due diligence clauses. That meant that if the buyer couldn’t get insurance and therefore couldn’t get finance, he could pull out of the deal. However, he had a great insurance broker who got him options to insure the house without exceptions (albeit with a higher premium) which satisfied the bank, so they approved the lending.

At Owen Culliney Law, we regularly help first-home buyers assess property disclosures and ensure they’re fully protected before moving ahead.