Buyers of property in Western Australia should be aware that they do not have a mandatory cooling off right.
In WA, an offer to buy property is made using the standard contract for sale of real estate, consisting of the Contract for Sale of Land or Strata Title by Offer and Acceptance (O & A) and the Joint Form of General Conditions for the Sale of Land (GC). On many occasions buyers just blindly sign the standard contract on the assurance by the Seller’s Real Estate Agent that it is a standard contract. The problem is that the Agent acts on behalf of the Seller.
It is therefore prudent that you consult your property lawyer before buying a property to make sure your interests are also protected.
Consider the following scenario:
~ Seller wanted settlement to take place a.s.a.p. on a specific date;
~ Buyer requested 21 days to obtain finance;
~ Seller’s agent suggested fixed settlement date, being 35 days after acceptance of offer;
~ Buyer’s finance was approved on day 20. Buyer duly signed loan documents and sent it back to his Lender to process.
However, due to the internal processes of his Lender, they were not ready to proceed with settlement on day 35. (It normally takes the Lender 21 to 28 days after approval of finance to be ready to proceed with settlement.)
Seller’s settlement agent informed Buyer in terms of clause 4 of GC that if settlement does not take place within 3 business days after contracted settlement date, he will be liable for penalty interest on balance of purchase price at 9% per annum, calculated daily.
For example:
On $800k it amounts to $197.26 per day.
When settlement finally took place, Buyer had to pay penalty interest for 14 days, being $2,761.64!
By consulting a property lawyer, the buyer could have avoided paying penalty interest by adding the applicable special clauses and conditions before signing the contract.
At LAWMAX Legal we provide such advice as part of our service to assist our clients with settlement and we include this in our fixed settlement fee.
It is therefore advisable to always speak to your lawyer before proceeding with signing any Contract.