If you are thinking of buying a property you may want to consider adding a clause on the contract. Clauses, also known as ‘conditions’ can make a big difference, not only potentially saving you money but also avoiding some big issues.

Let’s just remind you that as a buyer the real estate agent isn’t working for you, they represent the seller, so don’t go it alone, call a settlement agent before you make an offer and decide on what clauses to use.

Let’s have a look at the most common clauses and their affect…

• Subject to finance
This clause notifies the seller that you need to sort out your finances otherwise you simply won’t be able to proceed. Before making an offer be sure to get your finance pre-approved this will save time and the potential heart ache of missing out on your dream home.

Watch out! Finance approvals expire and generally you have between 21 – 28 days to get your approval sorted, failure to comply might mean losing your deposit.

• Subject to building and termite inspection
This is a standard clause here in WA due to so many hungry white ants and some shonky DYI building renovations.

Watch out! These clauses whilst standard, they have very specific terms, so make sure you are aware of them or better still, speak to your settlement agent before signing the contract.

Fun fact: Building and termite inspections are not just for established homes you can have one done for a newly built home.

• Subject to inspection being to your satisfaction
This is a non-specific subjective clause that can accompany the “building & termite” clause giving you an opportunity to terminate the contract if the property fails to meet your expectations in anyway.

• Subject to sale
Much like a ‘finance clause’ you need to ensure all your ducks are in a row before you can purchase a property especially if your funds or equity are tied up in another property. That’s why “subject to sale” is pretty much a clause that says I can only buy your house if I sell mine.

Watch out! Sellers might choose a cash buyer over you.

• Early possession
Sometimes you just can’t wait to move in, maybe the in-laws are giving you the stink eye, your land lord keeps upping the rent or you can’t stand that housemate. If you can move in earlier why not ask the seller if they are keen to move out early?

Watch out! There are risks when taking possession of a property prior to settlement, speak to your settlement agent before you make any decision on early possession.

Fun fact: You can negotiate for either gaining early possession or for the seller to remain in the house for a few extra days. If they are staying they’ll be paying.

• Vacant possession
If the property you are buying is tenanted and it’s a fixed lease the tenants have the right to remain until the lease expires. If the lease is a periodic lease then you can request the seller arranges with the tenants to vacate.

• Subject to Lease or tenant remaining in the property
This is usually a clause for the seller who may wish to remain in the property especially if it’s a commercial property and they want to continue running their business from the premises. While more commonly a clause used by the seller it can give reassurance to the buyer that they have a tenant in place.

Watch out! Be sure to engage with a suitably experienced Lawyer or commercial property manager to ensure a lease agreement is in place.

• Subject to due diligence
Not a common clause here in WA but east coast buyers would be familiar with this one. The basic idea is that a due diligence clause will provide you, experienced inspectors or your settlement agent the time it takes to do all the necessary checks and searches.

Watch out! Due diligence searches can be costly. Yes they can save you money but be sure to understand the costs of what is being undertaken before you proceed.

Fun fact: The WA land registry Landgate have created a property interest report that captures over 100 potential interests that may affect your use and enjoyment of the property, none of which appear as a notification on the certificate of title.

• Subject to all electrical, gas, plumbing and equipment being in good working order at settlement
This can be a great clause when buying a commercial property where the equipment will be very costly to replace and/or is a significant part of the value of the purchase price.

Watch out! If the seller is leaving WA or is not a resident then any chance you have of remedying a faulty appliance after settlement will be very hard, be sure to request a final inspection as close to settlement as possible.

• Subject to a valuation
“Tell him he’s dreaming!”.
Everyone likes a good deal, so having a better understanding of how much a property is worth before you make an offer can save you thousands especially if the seller is being a little unrealistic in their expectations.

Fun fact: Valuations are a great idea where the property you are thinking of buying is unique in that there have not been many similar sales in order to compare the market price.

• Subject to seller providing approvals
Australia’s obsession with DYI can result in Local Councils issuing rectification or demolition orders for unapproved alterations, extensions and builds. How do you know that pergola is approved?

Watch out! Current owners might not have proof of approvals dating back to the previous owners, some councils can sometimes lose records or amend approval processes that make it hard to determine whether a structure is legal.

Fun fact: Title Insurance, a onetime payment policy, provides peace of mind for those unapproved home renovation carried out by previous owners. Speak to your settlement agent to find out more.