The Importance of Conditions in a Sale Contract

Anna and Ted had been house hunting for over a year when they found their perfect property. The only downside was the large tree in the front yard but it would be easy to remove it. The estate agent said there were other interested parties and to put forward their best offer. Any conditions to the contract could affect their chances of being successful. They put forward an offer with no conditions. They were confident the bank would lend to them as they had a good credit history.
It was Sunday and their lawyer’s office was closed so they didn’t show the contract to their lawyer. The real estate agent said an offer needed to be made soon or the property would be sold. Anna and Ted signed the sale and purchase agreement with their offer and no conditions. They were overjoyed when it was accepted.
On Monday morning they sent the already signed contract to their lawyer.
The lawyer said they always recommend a finance, building report, LIM and/or a general due diligence condition be added to a sale and purchase agreement before signing. Their lawyer also said they should have obtained a letter of approval from their bank before committing to the purchase.
On further investigations it was discovered there was no Code Compliance Certificate from Council for the extension to the house. The bank said they would not lend on the property without a Code Compliance Certificate.
In addition the tree was protected and they could not remove it from the property.
All of a sudden the property did not seem so perfect after all. They asked their lawyer if they could cancel the contract. Their lawyer said no. If they’d had a due diligence, finance or LIM clause it would have been easy to cancel the contract but their offer had been unconditional.
Luckily for Anna and Ted, the Vendor was in breach of their warranties because they had not did have a Code Compliance Certificate. Their lawyer managed to get an agreement from the Vendors lawyer that the Code Compliance Certificate would be obtained before settlement. The bank were satisfied and agreed to lend on the property. Anna and Ted still needed to proceed with the sale despite the fact they could not remove the tree.
In future, Anna and Ted would definitely have the agreement to buy a house reviewed by their lawyer first and include conditions in any contract they signed.