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Special conditions

A contract for the sale of residential land sold by private treaty (that is, not at an auction) that has no special conditions is said to be unconditional. A property purchased at auction is generally unconditional, although it may be possible to negotiate terms such as the amount of the deposit or the date for payment of a deposit. It is very important to understand the conditions of the contract.

If a contract includes special conditions, and any of those conditions are not fulfilled the contract will lapse and the vendor must put the property back on the market, or re-negotiate the terms of the contract with the purchaser.

Common examples of special conditions are:

Purchaser obtaining finance for the purchase

This condition should be quite specific, and will give details of the credit provider, the interest rate and when the finance should be finalised. It is prudent to ensure that finance is arranged before signing a contract to make the contract more attractive to a vendor.

Sale of the purchaser’s home

Depending on the state of the housing market, a vendor may not want to take the risk that the purchaser’s property will sell within the time specified. The condition should specify a date for a contract to be signed, and every effort should be made to ensure that settlement of both properties occurs on the same date to avoid additional costs.

Satisfactory building inspection

Usually a building inspection can be arranged at short notice, and most vendors are happy to allow an inspection to take place prior to an auction or the making of an offer, or during the two day cooling off period. It is therefore somewhat unusual for a vendor to accept a contract subject to a satisfactory building inspection.

Repairs or removal of rubbish

Any assurances by the vendor regarding the state of the property should be very clearly set out. Depending on the type of work (if it is significant or simply tidying) it may not be sufficient to justify rescission of the contract, but rather a claim for the cost of performing the works.

A purchaser must make 'every reasonable endeavour' to fulfil any special condition. If the special conditions are not met, the contract lapses and becomes unenforceable, that is the vendor cannot insist that the purchaser buys the property (special performance) or sue for damages for breach of contract.

The agent has no authority to refund the deposit, as the agent is not a party to the contract. Any refund must be authorised by the vendor. A purchaser can be asked to provide evidence that reasonable efforts were made to fulfil a special condition.

If a property is being purchased from a mortgagee in possession, there will often be complex special conditions to protect the mortgagee. If you do not understand any of the special conditions in any circumstances, it is wise to seek legal advice or speak to a conveyancer.

Special conditions  :  Last Revised: Mon Dec 16th 2013
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.