The standard “special conditions” in a NSW real estate contract of sale unlike the rest of Australia are clearly biased towards the vendor . The purchaser in fact is in a “no man land” situation and that is why I feel real estate buyers in NSW are penalised.
Example:
The purchaser requiring settlement on a specific date and includes it as a condition in their offer.
The vendor agrees to the condition in writing.
The exchange proceeds with a 66W Certificate (waiving the purchaser’s entitlement to a cooling-off period).
One business day before the agreed settlement date, the vendor writes to the purchaser stating they cannot settle as agreed.
Other than serving a “14 day notice to complete” on the vendor, there is not much else the purchaser could do. Pulling out of the contract would cost the purchaser their deposit and possibly more if the vendor elects to pursue their expenses and costs including chargeable interest per each day of the dispute.
What penalties/costs would be incurred by the vendor if they rescind on the contract? Nothing!
Months of searching for the right property are wasted. The purchaser now have to start all over again, not to mention having to re-apply for finance, and Thousands of Dollars of expenses incurred in the process: legal, pest, building and strata inspections and other due-diligence reports.
There might be some rationale behind this one-sided approach to penalties etc… being if settlement is delayed through the fault of a purchaser then the vendor is likely to incur additional interest on their existing home loan. The corollary to this is that a purchaser does not incur the same additional interest because their home loan has not been drawn down until the actual settlement.
This one-sided approach does not take into consideration the vendor might not have a home loan nor the possibility the purchaser is renting while seeking to find a new home.
What do I think is required to bring real estate laws in NSW to the 21st Century?
A long shot but in the meantime, if settlement date is absolutely critical to the purchaser’s needs, they:
- Should insert a “special condition” in the contract requiring the vendor to pay the purchaser similar penalties that would have otherwise been paid by the purchaser if they do not settle as agreed;
- Should insert a “special condition” in the contract whereby they have the option to rescind on the contract without any penalties and be refunded the full deposit should the vendor not settle as agreed and after having being served with a 14 day “notice to complete”.
