With the recent extreme weather Queensland has been experiencing, many people purchasing houses and property have been affected. Events such as flooding can come without warning, however we have outlined a few key points that buyers should consider when purchasing:-
For any buyer obtaining finance to purchase property, it is important to be aware of the risks involved. Becoming familiar with the terms and conditions of finance approval is extremely important because once a finance condition is satisfied a buyer will generally lose their right to terminate for insufficient finance, even if there are problems that later arise.
Recently, one particular issue we have been seeing is financiers re-valuing property during or after an extreme weather event. Many financiers reserve the right to withdraw finance approval or vary the terms of the finance approval or amount of funds to be advanced at any time prior to settlement. This can be extremely distressing for buyers, as if a buyer is not able to settle and is in breach of the Contract, the seller will generally be under no obligation to grant extension of time and may terminate and have rights of compensation against the buyer.
- Insurance coverage and availability
Under the standard terms of many purchase contracts, the property being bought will be at the buyer’s risk shortly after the Contract is entered into. This means that the buyer will be responsible for obtaining appropriate insurance cover for the property, and the buyer will generally still be required to settle even if the property is damaged before settlement by something such as an extreme weather event.
It is therefore vital that buyers looking to purchase property consider the matter of insurance before even entering into a contract. Insurance policies and levels of cover being offered can change in a matter of minutes, and buyers should investigate the availability and cost of insurance to avoid being caught out.
Even where a property is not at the buyer’s risk until settlement of a contract, it is never recommended that a buyer rely on the seller having insurance in place. As noted above, generally a buyer will still be required to settle where a property has incurred damage before settlement, and relying on the seller to have insurance in place or claiming on an insurance policy involves significant risk.
A standard aspect of purchasing property in Queensland is that the onus is on the buyer to investigate the property. While buyers do have rights of termination where the seller fails to disclose certain issues regarding the property, there are many instances where a buyer will not have any rights for compensation or termination after receiving unsatisfactory search results.
One example is where a property is revealed to be subject to flooding. Flood searches provide information as to whether the property has flooded previously and the level of any flooding, and buyers should make these inquiries before signing the contract. Alternatively, buyers might wish to consider including an appropriate special condition in the contract such as a due diligence clause.
The information in this article is general information only. If you are considering purchasing property, please contact the experienced team at Miller Sockhill Lawyers on 07 5444 4750 for advice.