Dangers of dropping the ball during Settlement Process – Example 1 of 2

The process of selling can unquestionably be a stressful and chaotic time… what with sales preparations, open house inspections, price negotiations, etc. etc… it’s understandable that sellers often want to sit back and relax once the all important Offer and Acceptance has been signed.

However, whilst there’s certainly cause for breathing a well-earned sigh of relief, there are still a number of key responsibilities that must be completed during the settlement process – and thus it is pivotal that sellers remain focused, and don’t take their eye off the ball. The consequences of dropping the ball can not only impact and delay the deal, but also leave the seller liable for penalty interest charges, as we will see in this example below:

Example 1 – Buyer’s Inspections Blues

A couple selling their home, who we will call Mr. & Mrs. Smith for the purpose of this example, found themselves amidst a nasty dispute that arose from the Buyer’s lawful insistence on conducting a secondary inspection prior to settlement…

Mr. & Mrs. Smith initially agreed that the buyer could conduct a final inspection about 10 days before the scheduled settlement date, which went ahead without incident, and led the Smith’s to believe that everything was in order. Thus, understandably, when the buyers requested an additional inspection a few days later, Mr. & Mrs. Smith (who were amidst the painful task of moving house) politely refused the request.

They were unfortunately unaware that the buyer was legally entitled to a final inspection within 5 Business Days before settlement: under clause 5.1 of the Joint Form of General Conditions – Right to Inspect, “… the Seller must grant access to the Property to enable the Buyer to inspect the Property, on 1 occasion within 5 Business Days before the Settlement Date…” which in this instance the Buyers cited, as the initial inspection was not within the regulatory 5 days.

Now with a dispute on their hands, the Smith’s faced potentially costly delays and penalties if they didn’t allow the extremely inconvenient secondary inspection to be conducted… which highlights the importance of fully understanding all clauses in the Joint Form of General Conditions.

If Mr. & Mrs. Smith had used an experienced Settlement Agent such as Vicki Philipoff, they would have been fully aware and prepared for any inspection related activities under our recommendations. We use our experience and expertise in what can be a complicated procedure of selling a home, to ensure Sellers are not caught out by nasty surprises like this, explaining thoroughly and providing all key information, such as:

• – Most Buyers also request Timber Pest Inspections, thus it is necessary to allow enough time to solve any arising issues, and arrange subsequent re-inspection prior to settlement…
• – Any repairs required should be completed prior to the final inspection in order to satisfy the Good Working Order clause, and avoid unnecessary and potentially costly delays to the Settlement…
• – If tenants occupy property, appropriate notice to tenants is required in order to gain access as per the Residential Tenancies Act, which should always be coordinated with the managing agents…

For further information on not getting caught out by dropping the ball during the settlement process, don’t hesitate to contact Vicki Philipoff today for professional property settlement advice and services.