Property notes – Claims
Problems with the property at settlement – claims by the purchaser
The Law Society of NSW and Real Estate Institute of NSW Contract for sale and purchase of land (the standard contract) is a reasonably fair contract that covers nearly all the issues that come up in property transactions.
The vendor has to maintain the condition of the property from exchange subject to fair wear and tear. If something is damaged or missing at the pre-settlement inspection, it’s not the end of the world, the standard contract has a solution.
The contract allows the purchaser to make a claim. If the claim is for more than 5% of the price, the vendor can rescind – that means cancel the contract. The purchaser gets their deposit back and the parties can go their separate ways. If the claim is for 5% or less, the parties complete the contract as normal and the agent holds back the amount of the claim.
In most cases the parties reach an agreement about the claim and instruct the agent to pay the money they’re holding. But if they don’t, the standard contract says that the parties have to appoint an arbitrator with a month to resolve the issue.
If they can’t agree on an arbitrator, then they can ask the Law Society to appoint one. If they don’t do that within 3 months, the claim lapses and the agent can pay the money to the vendor.
So, if there are problems with the property at settlement, there’s no need to get too excited. The transaction can complete as scheduled. We find that once the vendor has their money and the purchaser has their property, the stress comes out of the situation and the parties are much better placed to negotiate to resolve the claim.
Contact us here or at the numbers below
Rhys Bower / 0423 063 998 / [email protected]
Nick Wood / 0412 774 682 / [email protected]