Purchasing a home: your biggest investment
Purchasing a property
Purchasing a property has its own set of pitfalls to avoid; some of the most common are set out below:
1. Before signing the Agreement of Purchase and Sale, consult your attorney regarding the implications of the Agreement and make sure that all the conditions pertaining to the sale are incorporated in the Agreement.
2. Ensure you are aware of additional costs, such as transfer duty costs and conveyancing costs and be sure that you have the finances to cover all the expenses.
3. If you have not yet obtained a mortgage bond to cover the purchase price, ensure that the Agreement is subject to the obtaining of the bond.
4. In the event that you will pay a deposit for the purchase of the property, and once the agreement has been finalized, pay the deposit to the conveyancer (attorney) dealing with the transfer. They will hold the funds for you in an interest bearing account and will only pay the funds over on registration of the property to you.
5. In the event that you wish to take occupation of the property prior to transfer, you will be required to pay occupational rental.
Selling a property
Assuming your property has been successfully marketed and you have a potential purchaser, these are common issues to consider:
1. Ensure that you know which conveyancer you would like to use to complete the transfer of the property. As the seller, generally, you are entitled to elect the conveyancer. Whilst your estate agent may have a preferred conveyancer, you are fully entitled to choose your own.
2. Once you sign the Agreement and all the suspensive conditions (e.g. finance/bond) have been fulfilled, the Agreement is binding. Consult with an attorney before you sign the agreement if you have any concerns whatsoever.
3. Bear in mind that you are responsible for the estate agents commission and you must ascertain whether or not VAT is payable.
What if the agreement is breached?
As the Agreement is binding once the suspensive conditions have been fulfilled, should either party breach the Agreement, the other party will have recourse against the defaulting party and may (in most cases) elect whether to force compliance with the Agreement or cancel the Agreement and sue for damages by way of approaching the courts for relief.
Furthermore, depending on the breach and the party at fault, the estate agent may have a claim for commission from the defaulting party. As such, ensure you comply with the Agreement or you may face legal action from both the other party and the estate agent.
If the purchase of the property involves any special conditions, make sure they are written on the agreement. Purchase and Sale Agreements cannot be changed later unless the changes are written down and signed by both parties.
Ensure, therefore, that any items to be excluded from or included in the sale are written into the Agreement.
Should the purchase of the property be subject to the sale and transfer of another property, set this out fully in the Agreement.
The importance of seeking legal advise during the process should not be underestimated and is certainly encouraged before you enter into the Purchase and Sale Agreement.
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