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Normally a buyer first comes into contact with the property through a real-estate agent. Remember that the agent works for the seller, not for the buyer, and that the seller pays the agent’s fees or commission for negotiating the sale. This means that the agent’s obligations are primarily owed to the seller, not to the buyer. It is what is said in the contract itself, not earlier verbal representations, that matter. This means it is extremely important that the buyer check these things thoroughly or through a settlement agent or solicitor before contracts are exchanged. After exchange may be too late.

Before exchange

Most contracts for the sale of real estate contain no promises by the seller on the condition of any improvements on the land. It is very much a case of buyer discovers, for example, that the roof leaks or the woodwork is infested with borers.

It is therefore wise for a buyer to have the property surveyed and a structural report carried out before the exchange. This will often be necessary anyway if the buyer is borrowing funds to finance the purchase. The lender, or mortgagee, will usually require an up-to-date survey report.

For the same reasons, it is wise to have the improvements on the property checked for pest infestation before exchanging of contracts. A buyer will be held to accept the buildings on the property in the state they are in at the time of exchange unless there is a clause in the contract to the contrary.

After exchange

The buyer’s solicitor or settlement agent can also prepare the transfer of the property and will arrange for stamp duty to be paid on the contract on settlement. This is payable by the buyer. The solicitor or settlement agent will also provide all necessary details to the buyer’s lender to enable the lender to prepare a mortgage over the property. Usually, the lender also requires the same searches and enquiries that the buyer’s solicitor or agent is obtaining. The deposit, usually 10 per cent of the purchase price, is handed over by the buyer’s representative to the seller’s representative  at the time of exchanging contracts. The cheque for the deposit is then given by the seller’s representative to the agent, who holds it as stakeholder on behalf of both the seller and the buyer until the transaction has been settled.

However, the contract will often provide that the deposit is to be invested by the seller’s solicitor, or by the agent or financial institution, for example, until the time of settlement and that the interest earned on the money is to be shared between the seller and the buyer. This is a matter for negotiation and the desirability of doing it should be discussed by both parties with their respective solicitors or settlement agents.

Keep in mind that the agent does not account to the seller or the solicitor for the deposit until after settlement and until after the buyer’s solicitor or agent has authorised this to happen.


Your settlement agent or solicitor may also attend to the settlement and will arrange for your mortgagee to attend to ensure that the funds are available to complete the purchase. Most contracts stipulate a time for completion and it is important that you comply with those time limits. Your solicitor or settlement agent should advise you adequately of the consequences of non-compliance and should ensure that you are not put at risk but cannot, however, do certain things. Only you can attend to sign documents and do all things that your solicitor advises are necessary. For this reason, you must ensure that you are available to sign documents and that you do not cut off the lines of communication with your solicitor or agent, particularly when the time for completion is drawing near. At completion, your solicitor or agent will ensure that each of the parties pays his or her fair proportion of the rates and other outgoings in relation to the property.

N.B. Should the seller give you notice to complete and you fail to do so, the seller may keep your deposit of up to 10% of the sale price and either sue you for breach of contract or re-sell the property and recover any losses incurred from you.

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