Spring Selling.
Historically, the spring season has been a popular time for people to sell, and perhaps to buy. Real estate agents put a lot of focus and time into spring campaigns. If you’re thinking of selling in spring, there are things that home owners need to address prior to signing a listing agreement with an agent.
Titles
If you own a cross lease property or unit title, check with your lawyer to make sure any additions made are reflected on a new plan, and if necessary obtain a new title. It can be difficult for agents to attract interest in a property with a defective title. Further, banks are often reluctant to lend against properties with defective titles. If your title is freehold, ask your lawyer to check to see if there are interests on the title that need removing or could prevent a successful marketing campaign, or even settlement of the property (once sold).
Warranties
Sale and purchase agreements include vendor warranties. A warranty is a promise by the vendor about certain matters. They remain in place even once the property is sold to a new owner. Usual warranties that are given at the date of the agreement are that the vendor has not received any notice or demand and has no knowledge of any outstanding requirement from the council, or tenant of the property or from any other party (including a neighbour) or given any consent or waiver which directly or indirectly affects the property and which has not been disclosed in writing to the purchaser. Another warranty is that the vendor has no knowledge or notice of any fact which might result in proceedings being instituted by or against the vendor or the purchaser in respect of the property. If you’re thinking of selling, it is necessary to consider these matters and advise both your agent and your lawyer of any such matters.
Chattels
The law puts a distinction between chattels and fixtures. The building, or buildings, on the land are fixtures (i.e. fixed to the land and not possible to remove) but items that can be removed easily are chattels and do not go with the sale of the land. For this reason, chattels are listed separately on the agreement according to what the vendor wishes to sell with the land and buildings. Not only is it important to correctly record the chattels on the agreement, but it is also important to check that the chattels being sold with the property that have an operational function, are working. That is because there is another vendor warranty that confirms this.
On the topic of operational function, this also extends to plant, equipment systems or devices which provide any services or amenities to the property, which will include underfloor heating, alarms and the like. If you’re thinking of selling, it is helpful to check these, and fix them if necessary.
Bank
Let’s face it, most of us don’t particularly like dealing with the bank, but it might become necessary before you make the decision to sell. A bank’s mortgage on the title secures all lending of the owners, not only the original lending to purchase the property, but all other lending of the owners. The mortgage can also secure cross guarantees of related entities that might have loans outstanding. For example, if your business has loans outstanding, and you, the home owner, have given personal guarantees for that lending, the bank treats that guarantee as your loan personally and can require it to be repaid on the sale of the property. If you are not expecting this, it can mean that more money is due to be repaid to the bank than is being paid at settlement, which puts the vendor in default. If this is likely, vendors need to ensure the deposit that is received is utilised to repay bank lending, rather than being spent on a new Tesla!
Summary
Attending to these matters can assist not only you but also your land agent and your lawyer. It can make a somewhat complicated and stressful process much easier.
If you feel you could use some specialist advice, don’t hesitate to contact the Property Team.
