Our clients negotiated to buy a unit. They needed finance to be approved and
even though they were borrowing very little their lender was being peculiarly
careful and were quite slow in checking past tax records. It is unwise to
exchange contracts without unconditional loan approval and at worst and, exchange under a cooling off is an alternative but
recognising they had to pay the agent 0.25% of the purchase price and, if they did not proceed they
would lose that. Our
clients were persuaded by the seller’s agent and, in this case they had a
buyer’s agent, that they should be confident all will be alright. They decided
to proceed with a cooling off contract since we managed to arrange 10 business
days cooling off so as to give them a better chance with more than usual time
to get the approval.
As it turned out the 10 days passed and there was no
approval. We were told that 1 more day would do it and we were able to get a 24
hour extension. Fortunately approval came through near the end of the extra
day. We have prepared the relevant notice to terminate the contract in case of
having little time to take action.
Cooling off has some traps:
- Usually contracts allow 42 days to complete from the date of the contract and so often preparations to do the usual work on a purchase does not begin until the buyer decides to proceed. That often means 5 days later than normal. Sellers usually refuse to allow 5 extra days to complete.
- In recent years lenders take the best part of 42 days to be ready to advance the money.
- As contracts normally provide that the buyer must pay interest, usually 10% per annum, there is the risk that the time lost will end up causing extra expense as a result of this interest.
Planning ahead is important as well as having lawyers who
have the foresight and experience to know the traps. For the little extra it costs to have an
experienced lawyer, is it
not good insurance against extra expense and anxiety that is usually associated
with less trained and experienced practitioners to say nothing of the value of
that lawyers reputation among his colleagues.
Call us on (02) 9264 3877 and let us tell you what we can do to provide you
with worry free experience of one of the most important transactions in you
life.
