Legal Comment by Mark Illidge

23 November 2006

Correct purchasing entity?
Many  properties are  not  held  by  the  appropriate  person/s  or  entity to  achieve  the  best  taxation  and  liability outcomes.  It may be preferable for the property to be held by a particular spouse or by a company or family trust.  Before signing the contract, we recommend you consult your accountant and lawyer to determine which entity should purchase the  property to ensure that capital gains tax, transfer duty, income tax, land tax and asset protection issues have been properly considered.

Watch those contract dates
Buyers need to understand the importance of adhering to dates attached to contract conditions and the consequences if these dates are not met, as usually time is of the essence of the contract.  Common conditions that are time-critical include:
Pest and Building Inspection:  You, through your lawyer, must notify the seller of the results on or before the date stated in the contract.  If not, you lose your right to 'get out'.  If these inspections aren't completed before this date you may not be able to terminate the contract if there is a problem.  An unsatisfactory report, obtained within the stated timeframe, and provided by a licensed professional, may be grounds to terminate the contract.

Finance Approval:   If the buyer doesn't have finance approval by the stipulated date and provide notice to the seller, then either party may terminate the contract.  In the current lending market it is advisable to allow a minimum of 14 days for finance approval.

Deposit:   If a deposit is not paid on time then the buyer is in default and the seller  may: terminate the contract; forfeit any deposit paid; sue the buyer for the balance deposit and for any damages. 
A  buyer  may  request  extensions to these dates through  their  lawyer, but there is no guarantee the seller will agree.

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