Issue with Property after purchase

Discussion in 'Legal Issues' started by PropJim, 18th Mar, 2020.

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  1. PropJim

    PropJim Member

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    I am in an old building, 1 year after buying, we discovered fire safety is not done as well as well as termites.

    The contract says buyer cannot chase after seller for compensation.


    Going forward, I was thinking of amending the contract to "if anything is discovered within 3 years, of a problem that originated prior to the 3 years, then buyer can chase after compensation."


    My question is,

    Has anyone seen this type of term before? I want to know if it is outrageous or reasonable.
     
  2. thatbum

    thatbum Well-Known Member

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    Why would a seller agree to that amendment?
     
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  3. KateSydney

    KateSydney Well-Known Member

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    Did you get a building inspection done before you bought it?
     
  4. Peter_Tersteeg

    Peter_Tersteeg Well-Known Member

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    It seems reasonable until you realise that if anything at all goes wrong with the property within 3 years, the seller might be liable. There's almost no chance that any vendor would accept such a term.

    It would also be nearly impossible to enforce and many vendors wouldn't be able to compensate for the damage years after the fact (they've probably spend the money the day after your settlement).

    Perhaps next time to proper building and pest inspections so you know what you're buying upfront.
     
  5. PropJim

    PropJim Member

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    I understand they most likely wont.
    Especially in a market where more buyers than sellers.
    Maybe could have a chance if its buyer market? I am not sure.
    I am just wondering people on this forum ever seen terms like this.
     
  6. PropJim

    PropJim Member

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    No I didn't. I have accepted it is my fault.
    I am new to the process and no parents to guide. Not an excuse, just feel bad about the situation.
    So, are building inspections extremely common? Like would you(or others on forum) undoubted get building inspector for old buildings? before the auction? during cooling?
    What if building inspector missed it? are they liable?
    So what happen was, one year after I bought it, the neighbor (a builder) who has owned his unit for 2 years, wanted to renovate and discovered fire upgrade and termite issue.
    The builder has family member whom after some strata meetings I believe is a keen and skillful litigator, and even they have not sort compensation, prompts me to think they have also missed the building inspection step as well as thinking there is no recourse.
     
  7. PropJim

    PropJim Member

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    thank you for your reply. Appreciate it.
    Useful to know an opinion that there is little chance vendor would accept.
    I was naive to think, "if you have nothing to hide, then why not agree to the term? unless you think your building has some serious issues you are hiding? or you didn;t do pest inpection checks for 5 years?"
     
  8. Peter_Tersteeg

    Peter_Tersteeg Well-Known Member

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    Building and pest inspections are quite common. My position is that if the vendor refuses these requests, then ask yourself what don't they want you to know about?

    It's a bit late now, but I'd never buy a property with evidence that termites are in the building (they're almost always in the backyard btw).
     
  9. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Caveat Emptor is the latin (Roman) expression for "Buyer Beware". Most property contracts have this as a foundation and common law adopts that view too and contracts generally have default terms which say as much. General consumer law doesnt apply to real estate and other states laws prevail. This imposes the obligation on a buyer to ascertain any defects or issues prior to making a contract. You should also never use the vendors information as you have no legal recourse against them or their provider. The correct position is you dont accept a single thing a vendor, agent etc says about a property. The contract generally contains clauses which disclaim and exclude all representations made outside the contract terms. There are minor exceptions eg Real estate says its a 4 bed unit but its 3 bed + study with the study not being habitable as a bedroom.

    There are exceptions for new buliding warranties etc but these can also be statutory or limited (very limited).

    Auction terms require the bidder do this prior to bidding. Once the hammer falls its your problem.

    Did you get legal advice before signing or bidding ? A solicitor would have likely recommend a pest & building inspection to ensure you were all knowing prior to making a contract. If its strate they may have also recommended a strata review and report to determine the extent of planned maintenance and the extent of the levy funds. The fire and termite issue may be a strata issue requiring all owners to fund the defects.
     
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  10. spludgey

    spludgey Well-Known Member

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    Am I the only one really confused?
    Are you trying to amend a contract after the sale has been completed? Why would anyone ever accept that?
     
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  11. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    If I received a request like that I wouldnt even reply
     
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  12. Archaon

    Archaon Well-Known Member

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    Title Insurance?
     
  13. spludgey

    spludgey Well-Known Member

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    I would. I'd reply with this. No text just the picture.

    [​IMG]

    Not a title related issue...
     
  14. Trainee

    Trainee Well-Known Member

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    Ignorance and naïveté will be steamrolled in real life. Sorry but you need to learn how this works.

    every purchase should be made with a building and pest inspection and the buyer should have a long conversation with the inspector to go through the report. Attending the inspection is even better.
     
  15. Trainee

    Trainee Well-Known Member

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    This requires the vendor to potentially be responsible for stuff they dont know about. Eg after the storms last year a lot of roofs leaked. Doesnt mean there was anything wrong with it, just storm damage. This clause might open the previous owner to liability if the buyer tried to argue there was damage before. There would be arguments and legal costs about what was damage before and after purchase.

    Who wants the aggravation?

    any decent lawyer or marginally intelligent owner would reject this. Unless its a horrible market for sellers. In which case I suggest lowballing and spend some of the money you save on a proper inspection.
     
  16. Trainee

    Trainee Well-Known Member

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    naive in the sense that you dont understand how wide the liability for this clause would be if the vendor (insanely) agreed to it.
     
  17. The Y-man

    The Y-man Moderator Staff Member

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    I always get a property inspection done (unless I am thinking of demolishing the house in 5~10 years)

    I do this BEFORE putting the offer in. People say this is stupid because if I don't secure the property, I lose the inspection money ($600+) but it's small change in the the scheme of things IMHO.

    Further, the biggest issue I see people come up against doing the inspection AFTER they offer is when fixable faults are found, but the vendor refuses to negotiate. The contract is crashed, and the buyer loses the inspection fee anyway. Similarly, if a major problem is found, the buyer crashes the contract and the inspection fee is lost.

    I use the inspection report to guide my offer (NEVER show your report to the agent/vendor) ~ i.e. estimate the costs to fix everything the report has and deducts off my offer (with a bit of "adjustment" of course)

    You could do it during cooling, but in most cases there won't be enough time.

    Most inspectors have a "all care no responsibility" clause - they may miss things - so you need to find a good one that you can work with.

    There's just no way unless it's a new building with guarantee.

    As an extreme example, inspections would not have found the issues at
    Unit owners hit with repair bill of at least $10 million to repair cracks in Mascot Towers
    or
    Opal Towers residents’ year from hell

    This also goes for flammable cladding etc.

    The Y-man
     
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  18. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    I have a client who has a relative who purchased a termite ridden property. The building and pest failed to detect the issue. It was VERY apparent there was negligence as the external signs of defects were obvious let alone opening the manhole to find roof timbers like dust. The main report company had insurance. But they sub-contracted a guy to report who did not which compicanted things a little. Took several months but now its with assessing to determine if its repairable. Best estimates indicate it would cost more to repair than demo so they are doing a full costs assessing to determine the loss to be paid. Now they are working on a claim valued between $320-$390K. The inspection fee was $695. So far legals of $10K+ but the insurer is not fighting it so that costs may not expand and will also be met by the insurer.

    Apparently report providers dont NEED to be insured (NSW) but best they are. It avoids a civil claim and very costly legals. In this case their insurer accepted the claim quite quickly and were satisfied it was professional negligence. But an insurer could also defend a claim.

    Tip - Make sure your pest & building inspection company has PI cover before you engage them. Dont fall for "we are insured". They may mean workers comp.
     
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  19. PropJim

    PropJim Member

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    no I am not trying to amend what has already happened.
    try to find out going forward, should I ask for amendment.
    and it is common practice to do so
     
  20. PropJim

    PropJim Member

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    yes I understand the liability is very wide.
    based on some of the replies, it would seem generally seller has general advantage. Maybe? Just wondering.

    As a seller they could say, "I am not going to agree to your new terms, and you don't have to buy it."
    so the first buyer goes away, and I will wait for second buyer.
    the second buyer gets a building inspector and finds nothing. so seller sells the property successfully with the clause to protect them.
    or
    building inspector finds something eg, so buyer points it out. seller doesn't want to decrease price, so second buyer goes away.
    until one day, seller get a 3rd buyer that is not vigilant. maybe that sale will go through?

    so now i think, maybe a different term. "seller must inform buyer of any known structure/soil/foundation issues that was raised in the past 2 years" would that be too much as well?

    in this case, the damage was found in wall of a different unit. which is now the responsibility of all the units. maybe the building inspector would have found fire upgrade wasn;t done? or is it not part of their job...