Purchasers should take care before signing a contract to purchase real estate, particularly at auctions. Special conditions can be used to pass a vendor’s risk to an unsuspecting purchaser.
We have shown that estate agents often insert nasty special conditions into contracts, but they’re not the only ones. Lawyers and conveyancers do it too.
A purchaser, intending to purchase at auction, asked for pre-auction legal advice on a contract prepared by Davis Lawyers of Melbourne. The contract contained the following special condition:
“12. The Purchaser warrants that he has not been introduced to the Vendor or to the property directly or indirectly by any Real Estate Agent other than the Agent herein described or other person who might be entitled to claim commission from the Vendor in respect of this sale and the Purchaser shall indemnify and keep indemnified the Vendor, at all times, notwithstanding settlement hereof from and against any claim or liability for commission or damages resulting from a breach of this warranty.”We advised our client that this special condition could require her to pay the vendor’s estate agency bill, possibly costing her many thousands of dollars. To explore the issue further we asked Davis Lawyers a series of questions.