Think Nicholsons

May 04

What will the property look like on the settlement day

What will the property look like on the settlement day?

You have found the property you want to buy, but you have some concerns about the level of cleanliness, the gear stored in the shed or the mound of grass clippings and tree pruning’s heaped in the garden. You are ready to make an offer to buy the house but what about these issues. Beware - don’t assume that the seller is obliged to remove the junk, tidy the gardens or clean the house before settlement occurs!

Under the standard terms of the REIQ contract for the sale of residential property, which is most commonly used for real estate transaction in Queensland, the seller is required to provide the buyer with the house and improvements and any included chattels, such as pool equipment or an outdoor setting if they are expressly stated in the contract. Similarly, there is an obligation on the seller to remove all other chattels which are essentially the things that are not fixtures forming part of the land and improvements. The seller must repair any damage that happens when they take their possessions out of the house, but there is no contractual obligation to clean the house or gardens, or specifically address the state and condition which the property is to be in at settlement. There is no obligation on the seller to maintain the property in the condition it is in when the contract is signed which is a particular risk for longer term contracts.

Seek advice before you sign the contract and consider conditions being added which will protect against these matters becoming an issue.

Before you sign a contract think about what you expect to receive on the settlement date! Some points to consider:  

  1. Do you want your offer to be conditional on these issues being sorted out before settlement i.e. removal of garden waste or landscaping material in the yard, or clearing out the shed. If you are worried about it, then make it an express obligation of the seller

  2. Perhaps require that the sellers carry out a ‘bond clean’ before settlement

  3. Are the pool equipment and garden ornaments included or excluded from in the sale

  4. If there is a tenant in the property, then are they in breach of their lease, what condition was the property in when their lease started, and when they leave, what are they likely to hand it back over to you. Ask for a copy of the entry condition report.

The key is to think about these aspects before you make your offer. If the seller will not agree to include terms such as cleaning and removal of rubbish then ensure that you are happy that the price you offer reflects any expense to you in doing those things after settlement occurs. We can help with drafting special conditions in the contract to deal with these things and avoid any nasty surprises when you carry out your final inspection on settlement day!  

If you would like to discuss any of the above issues, or property issues more generally, please telephone Nicholas Prove on (07) 3226 3944.

Nicholas Prove

Senior Associate
Nick advises on property and associated commercial issues. He has broad experience in leasing across the industrial, commercial and retail sectors.