When purchasing a property, it is important for Purchasers to understand the parties’ responsibilities and risks concerning the property.
A Property is at the Purchaser’s risk once settlement has taken place. This means from settlement, you are liable for the risk in respect of damage to the property. If the Purchaser takes possession of the property before settlement, e.g. the Purchaser moves into the property before settlement, then the risk passes to the Purchaser upon taking possession.
The Vendor has an obligation to take reasonable care of the property to ensure its condition remains the same between the contract date and settlement, subject to fair wear and tear. If the Purchaser takes possession of the property before settlement, e.g. the Purchaser moves into the property or starts receiving income from the property before settlement, then the Vendor is responsible to taking care of the property until the Purchaser taking possession.
If the property is damaged — whether substantially or not — between the Contract Date and the earlier of Settlement and the Purchaser taking possession, on settlement the purchase price can be reduced by the amount as is just and equitable in the circumstances. If an agreement as to the amount cannot be agreed by settlement, the Purchaser can recover the reduction amount from the Vendor after settlement.
The Purchaser’s entitlement to price reduction does not apply if the damage is caused by the Purchaser by a wilful or negligent act or omission.
If the property is substantially damaged between the Contract Date and the earlier of Settlement and the Purchaser taking possession (e.g. fire or vandalism), the Purchaser can rescind the contract within 28 days after the it first becomes aware of the damage. The 28-day period can be extended if agreed by the Vendor and Purchaser.
If the Purchaser does not wish to rescind, the court may refuse to force the Vendor to settle if it is unjust and inequitable to do so. In this instance, the court will order the deposit and any money paid to be refunded to the Purchaser.
If you are purchasing a standalone house or a dwelling in a community title scheme, it is advisable to obtain your own insurance for the property by no later than the settlement date. If you are borrowing money to purchase the property, building insurance is normally a lender’s requirement. You should speak to your lender in case they have specific loan requirements regarding insurance for the property.
You may also consider obtaining contents insurance.
The owners corporation (association) is responsible for insuring the association property which often includes driveways, street lights, any recreation land and common facilities such as basketball courts, tennis courts, community rooms, etc. The Community Title insurance must also cover Public Liability and Voluntary Workers cover.
If you are purchasing a property within a strata scheme, such as a unit, apartment, townhouse, villa, duplex in a strata scheme, the owners corporation insures the buildings and for public risk. Therefore, you only need to insure your contents if you so choose.
The owners corporation is responsible for obtaining insurance that covers:
The owners corporation may also obtain insurance that covers other aspects of the scheme depending on it specific needs and potential risks.
Disclaimer: Every property transaction is different, and the information provided may not be relevant to your circumstances. By using this site you agree that the information provided is for general purposes only and does not constitute legal, financial, or professional advice.
