December 20, 2021

#132: Purchasing laws in each state - Part 1: When is a sale legally binding? Cooling off periods. Contract conditions and when to use them.

40 minutes

https://propertyplanning.com.au/propertyplannerbuyerprofessor/ In this week's episode Dave, Cate and Pete take you through: Market update 1. Highest annual sales since December 2003 Over the last 12 months, national dwelling values have risen 25.2% across regional Australia and 21.3% in capital cities. An incredible story for the regions that we are excited to keep watching closely. In the same period, ~614,000 homes were sold, which is the highest annual sales volume reached since December 2003. However, buyer demand is so great at the moment, that stock on the market is simply being soaked up at a rapid rate. 2. Fixed rates on the rise, and here's why Lender fixed rate offerings have risen sharply since June, when the Property Planner made his prediction that fixed rate hikes were likely to occur. Three year fixed rates have taken the biggest hit, with some lenders increasing the rate by as much as 0.95%. The trio discuss the reasons why fixed rates have experienced a sharp incline in recent months. Those who took advantage of the low fixed rates will be laughing all the way to the bank now! Property purchasing laws 1. Check out our show notes for a detailed breakdown on the differences in purchasing laws between each state In this week's episode, the trio discuss the differences, advantages, disadvantages and quirks of property laws in each state. It is critical to familiarise yourself with the laws and processes that apply to your purchase, particularly if this is your first purchase or you are interested in purchasing interstate. There is a vast amount of information to get acquainted with, (enough to do one episode on each state!) and unfortunately we can't cover it all. Visit the show notes for further information and detail on each state. 2. The starting point - what constitutes a legally binding contract? The commonality between all states and territories in Australia, is that no legally binding contract exists until the contract is signed by both parties. However, some states also hinge on the concept and requirement that contracts must be 'exchanged' as well before they are binding. The different approaches here can cause confusion and also leave the door open for gazumping, (which we will explain shortly). The trio discuss the different requirements in each state and how that impacts the purchasing process. 3. Cooling off periods The trio discuss the varying statutory cooling off periods in each state, (or absence of cooling off periods in the case of some states), when a cooling off period does not apply and can the cooling off period be waived as a negotiation tactic? 4. Negotiating 'subject to' clauses and contract conditions While all states allow for 'subject to' clauses to be entered into contracts, interestingly, this is not common practice in the states of NSW and ACT. The trio discuss the common conditions that are negotiated between the buyer and the vendor and also why NSW and ACT don't take this approach. 5. Gazumping - what is it and why is it legal? Gazumping occurs when an agent or vendor accepts an offer made on a property, but before the contract is signed to formalise the deal, another buyer swoops in with a higher offer or better conditions and the vendor sells to them, leaving the first buyer out in the cold. This occurs because in most states, the buyer and vendor do not sign legally binding contracts at the time of the sale agreement. Before the contract is signed, the agent is legally oblgiated to present to the vendor any further offers received for the property. 6. Why is gazumping mos...

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