Understand the Contract You Sign

When you enter into any agreement it’s important to have full knowledge of what you’re committing to.  This is especially the case when it comes to the purchase or rental of a property.  When you sign a contract you are binding yourself to a legal agreement when you will have certain rights and obligations.

The first rule is to read the contract thoroughly.  Under the Consumer Protection Act, the contract needs to be in plain language that the average person can understand.  If it’s not, then insist on an explanation of any clause where you’re not sure of the meaning.

Next, make sure you fully understand what the costs are that you are committing to.  These will include a purchase price or rental amount.  Also be sure to understand the additional costs.  What are the transfer duties, bond costs, and attorney fees?  For a rental, what are your lease or administration costs?  What is the deposit you need to pay, and by when must it be paid?

If you’re needing finance be sure to include the amount of finance you need.  There will be an obligation on you to have the finance approved by a certain date – so make sure you have all your supporting documentation ready and that you apply as soon as you can.

There will also be important clauses that relate to when you actually take occupation or possession of a property.  Understand the timing, and what needs to be done before you move in.

In most contracts, there will be a breach clause that states what will happen if you are in breach of the agreement.  Be sure to understand fully what the consequences are if you are in breach and what you stand to lose.

When it comes to the sale or purchase of a property, it’s vital to know if there are any exclusions or inclusions.  It is increasingly common to find out that a property may have alterations made to it without the municipality approving the plans.  If you’re the buyer, ask to see the plans.  You need to be aware if there are no approved plans as the onus will pass to you on transfer to comply with municipal regulations.

When it comes to property rental, most of the disagreements between outgoing tenants and the landlord (or their agent) relate to damage to the property.  An inspection should have been carried out when you moved in.  If there is damage that you have caused you will be liable to have this rectified at your cost.  So anticipate this and have the work done in good time so as not to delay the repayment of your deposit.

Where there is a need for special conditions to be added ensure that they are correctly drafted to cover exactly what the intention is.  A badly worded clause can lead to confusion, disputes, and additional costs for someone to absorb.

Once you fully understand what you are committing to then sign the contract and move swiftly to ensure you comply with your obligations.

Steve Caradoc-Davies
Principal, Harcourts Platinum

 

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