VIC Contract of Sale for Buying at Auction -Special Conditions Queries

[Le85]

Hi, I'm looking to purchase a property at an auction. So far I have obtained a copy of Contract of Sale but I am a bit concerned about some of the special conditions.

1. Purchaser cannot lodge a caveat. I was told that it is best to lodge a caveat as soon as I am the successful buyer
2. $150 penalty every time settlement is rescheduled. Is this condition allowed?
3. Who pays the council rates? Do the Vendors pay any council rate amounts up until settlement?
4. There is a covenant that says that dwelling must be of brick or brick veneer? Is this something I can change in future?
5. Is there anything else I need to be careful of when buying at auction?

 

[James D. Ford - Solicitor]

Hi, is this a normal sale at auction, or a distressed auction sale by the mortgagee in possession, or the local council for non-payment of rates?

1. Normally a purchaser would lodge a caveat in Victoria in order to protect their interest between exchange of Contracts and settlement. Again, this contract has prohibited this ability, and it would be prudent to enquire as to why?

2. The Vendor can generally charge penalty interest if you request an extension to the settlement date.. as they suffer loss due to not having the money on the agreed settlement date... they could also have fixed expenses that they would incur if you request to change the settlement time... or date... as they may have agents they have to book and pay for the scheduled settlement time... as long as the amount is a genuine estimate of their cost (and not an unreasonable penalty), it is likely it would be upheld as reasonable.

3. Normally the vendor pays rates up to the date of settlement, however you need to look closely at the terms of the "auction" contract as it may specify otherwise.

4. Covenants usually carry forward with the property, and must be complied with... I would need to see the covenant.. but it will usually apply to the entire development which the property is included within...

5. This depends on my initial question? There are many risks involved in buying a property at an auction, and even more at a distressed auction, but also many advantages.. the primary one being the opportunity to pay less than market value.

Kind regards

 

[Le85]

Thank you for your help.
It is a normal auction (brochure and contract give no indication that is a mortgagee sale) so I figure they have put the caveat restriction there to avoid settlement being delayed...? Can I amend this condition after auction? what is the process of amending contract conditions for auctions when you don't know if you'll be the successful bidder or not? I was told you sign the contract of sale then and there so you'll have to accept the terms and conditions as they are?

The reason I was concerned were due to the following special conditions as follows:
"The legal Purchaser and/or their legal representative must prepare Statement of Adjustments and deliver to our office at least three (3) working days prior to settlement date as stipulated in the Contract of Sale." (why do i have to prepare statement of adjustments when I'm not the one paying for anything until the property is in my name...?"
and
"The Purchaser undertakes the he/she will not lodge a Caveat against the Title to the land hereby sold pending approval of the Plan of Subdivision by the Registrar of Titles" (it's an established property with no approved planning permits or proposed subdivision...?)

The convenant looks like its an olden days type which has a lot of writing but towards the end it says "...shall not erect a dwelling or dwellings on the said land or any part of it unless the exterior walls of such dwelling or dwellings (except for the usual outbuildings) are substantially of brick or brick veneer."

 

[Le85]

Actually, under section 32 it says "Any further amounts (including any proposed Owners Corporation Levy) for which the Purchaser may become liable as a consequence of the purchase of the property are as follows - none to the vendor's knowledge"