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Specific DD Clauses and Conditions when making an offer protect you from losing money after settlement.  Find out how to deal with unforeseeable events or problems.



Buyer’s Due Diligence

Specific DD Clauses and Conditions

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Losing money after settlement


Previously we discussed three “must have” clauses on your property purchase offer (Expiry or Sunset clause, clauses for DD investigation, and Access Clause) for managing the due diligence process. If for instance the Access Clause is missing, you are practically like a stuffed dummy as you might not enter the property to do your due diligence.


Certain circumstances and properties require little bit more vigilance. That might be relevant with town-houses and apartments. For DD on apartments and multi-unit block units follow this link. Stand-alone properties may also have conditions you need to take special care of. For example you found a property overgrown by trees or covered by dumped rubbish, obviously that can cause costs and headaches after settlement.


However, even when everything goes smoothly until settlement, what do you do if the vendor breached his settlement promise?  People have different views about trees or maintenance you wanted to be sorted before settlement. Why not adding such conditions to your purchase offer?

Specific clauses and conditions


Here are some examples where I use special clauses to avoid problems after settlement:


· Penalty clause for agreed work not done

· Rubbish removal (check beneath the house)

· Vacant possession for rental properties

· Tree pruning (be informed about the tree protection law)

· Vendor finance (interesting for willing buyers short on deposit)



Watch out when buying from developers


Check warranties and connected services. Installing a missing cable after settlement can cost you a fortune. Buying off the plan is another reason to be careful.


For new properties is recommended a clause for providing a full list of chattels and furniture.



The agent’s role drawing up DD clauses



True, for the inexperienced buyer having clauses prepared can be an obstacle, but not so when taking legal advice and discussing the risks with a lawyer.


Who is comfortable with the agent’s paperwork can add a clause for the benefit of the buyer that the offer is conditional upon the  lawyer’s approval.


Seller’s agents try to make an offer more acceptable for the vendor/seller, their role is to sell and they have to comply with the seller’s instruction.



A word to Due Diligence for Apartments



In addition to the given link, check with the Body Corporate manager (previously called Body Corporate secretary);

· Two years minutes from the Body Corporate Committee for any signs of maintenance issues, in particular with the central hot water systems, roof repairs and defects on balconies (typical leaky building issues)

· Body Corp Levies (is hot water supply included?)

· Pet policy and House Rules




Take Away

Due diligence is like the English proverbAn ounce of prevention is worth a pound of cure”.  It confirms a property is worth buying or not. If you fail to work through your due diligence check list, there is no cover for later claims.  Good luck



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Related Articles

Due Diligence Clauses - Why would you use them and Examples?

Buying a Home - Why do You need a Due Diligence Clause?

Financial Due Diligence - How to avoid a mortgagee-sale?

Buying process - Common pitfalls when buying a property



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