Special Conditions: What can go wrong?

Selling or purchasing property? Consider engaging a lawyer or conveyancer to consider special conditions. See below to learn what can go wrong with special conditions.

WHAT ARE SPECIAL CONDITIONS?

When purchasing or selling a property in Victoria, the Law Institute of Victoria and Real Estate Institute of Victoria have developed a standard Contract of Sale of Land (“Contract of Sale”) that addresses the particulars of sale (eg: the price and the settlement date) and general conditions of the sale that apply to all Victorian transactions.

Special conditions are additional clauses or conditions often written in a Contract of Sale to deal with specific circumstances or issues in relation to that particular property which are not addressed in a standard form Contract of Sale.

Special conditions can be required to provide a buyer or seller with additional protection or rights, more clarity, or peace of mind, on an issue or circumstance that is not addressed by the general conditions of a Contract of Sale.

When reading a Contract of Sale, special conditions are read as second priority after the reading of the particulars of sale. General conditions are read after the special conditions and where there is an inconsistency, the special conditions will prevail.

COMMON SPECIAL CONDITIONS

Special conditions can address a range of wants, circumstances, and issues. Some common examples where special conditions are included in a Contract of Sale of Land are: –

1. Conditions that make the Contract of Sale conditional upon the purchaser undertaking due diligence enquiries in relation to things such as the boundaries of the property, soil testing, or whether the property can be subdivided/developed;
   
2. Conditions that make the Contract of Sale conditional upon the purchaser undertaking due diligence enquiries in relation to things such as the boundaries of the property, soil testing, or whether the property can be subdivided/developed;
   
3. Conditions that make the Contract of Sale conditional upon the purchaser undertaking due diligence enquiries in relation to things such as the boundaries of the property, soil testing, or whether the property can be subdivided/developed;
   
4. Conditions that make the Contract of Sale conditional upon the purchaser undertaking due diligence enquiries in relation to things such as the boundaries of the property, soil testing, or whether the property can be subdivided/developed;

WHAT CAN GO WRONG WITH SPECIAL CONDITIONS?

Once a Contract of Sale is signed by both a seller and a purchaser and all conditions have been met, both parties are bound by the Contract of Sale and must complete settlement.

When a special condition is drafted poorly or incorrectly, it can be easily misinterpreted and a dispute between the parties may arise as to whether or not the conditions have been met. For example, if there is a poorly worded special condition for the buyer to conduct further “due diligence”, the following issues would likely arise: –

What is the metric for the purchaser being satisfied after its investigations?  Is it only if a report says that the soil test results is at/below a certain level, or it is at the buyer’s absolute discretion?

If the buyer isn’t satisfied, can the buyer end the Contract or are its rights limited to claiming compensation after settlement?

If the purchaser can end the Contract, who gets the deposit?

What is the due date that the purchaser must advise the seller of their decision to end the Contract or claim compensation?

It is extremely important that you seek legal advice from your lawyer or conveyancer about any special conditions before signing a Contract of Sale as the consequences of not getting it right can be serious.

Our highly experienced lawyers and conveyancers are experts in drafting a variety of special conditions to be included in your Contract of Sale to protect your interests. If you are looking to sell or purchase land, our expert property team can provide you with advice in relation to your Contract of Sale and special conditions.

Please get in touch with our friendly staff at our Warragul or Drouin offices today, or book an appointment online.

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