Forums / Property Investing / Help Needed! / Renovating a property during settlement (vic)

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Viewing 14 posts - 1 through 14 (of 14 total)
  • Profile photo of jmsracheljmsrachel
    Participant
    @jmsrachel
    Join Date: 2012
    Post Count: 711

    Hi Everyone,

    To keep a long story short, I submitted an offer to the agent last week at a lower price then the asking price and he came back with no the vendor is asking for another $3000. The property needs a complete make over so i offered to pay the extra $3000 on the condition that i can start the renovation during settlement, and this clause to be written on the contract. They accepted so upon signing of contracts i noticed the clause stated that the vendors give me permission to access the property during settlement on the condition that i execute a license agreement that is prepared by my solicitor at my cost.

    I refused to sign the contracts as in my opinion it is the vendors solicitor that should prepare the documents and i sign. After all the license agreement is to mainly protect the vendor and there property so i beleive they should prepare it all.
    I thought a simple clause in the contracts was good enough to protect everyone and no need for other licenses and documents.

    I'm Interested to see what you think??

    Joe

    Profile photo of jim64jim64
    Member
    @jim64
    Join Date: 2012
    Post Count: 52

    Hi,

    In SA we call it a license to occupy,usually the conveyancer does the paperwork for this,at the buyers cost.After all,weigh up the cost between getting early entry versus the cost of the license,they dont cost that much.It also protects the vendor forcing you to settle,i have heard of stories where early access is given,and the buyer squats,or doesnt settle for whatever reason.Its a fair enough ask from the vendor in my opinion,the early entry could gain you big $$$$$$$$$$$$$$$ in forward time.

    Cheers

    Profile photo of WomeninPropMelbWomeninPropMelb
    Member
    @womeninpropmelb
    Join Date: 2008
    Post Count: 234

    A licence agreement is usually at buyers cost. There are a lot of things that don’t seem fair but that is the way it is.
    The vendor is under no obligation to allow you entry – really it is to your advantage. And think of the benefit- you get to improve the property while not paying interest.
    You can go back to your original offer I guess and not be accepted…. I am not sure you can just walk away from this now. If I were you., I would ask someone legal- a solicitor. I like conveyancers better – they seem to have a better idea of things but I know when this has come up in the past – the conveyancer did not want a bar of it.

    Profile photo of jmsracheljmsrachel
    Participant
    @jmsrachel
    Join Date: 2012
    Post Count: 711

    My solicitor seems to think the vendor should foot the bill as they are the ones that want the license agreement. We just wanted a clause in the contract stating we can access the property during settlement. I will most likely go back to my original offer and start the work after settlement. I haven’t signed so I can’t see why I can’t pull out. Thanks for the advice!

    Profile photo of WomeninPropMelbWomeninPropMelb
    Member
    @womeninpropmelb
    Join Date: 2008
    Post Count: 234

    If you have not signed – then you can pull out. It is not the way things run in Victoria- the buyer has to sign before the agent takes it to the vendor. In this case I guess the vendor has varied the contract making it not agreeable to you.
    You can start the work after settlement.
    The licence contract is really to protect you, and the scope of the works, not the vendor.

    Profile photo of Property TraderProperty Trader
    Participant
    @property-trader
    Join Date: 2002
    Post Count: 111

    Hi jmsrachel,

    Taking one step back in the a few other questions also ask as well;

    1. How much of a discount to get off the property? What are the big discounts? 40% +, an average discount of 30% or a run-of-the-mill 15%? I always believe that you make money when you buy, especially doing renovation projects in this current market. Depending on your answer, I would then determine whether I would seek early access to the property or not. At a big discount, I wouldn’t even bother asking for early access.

    2. What is the duration of your settlement period? It is only a short period we wouldn’t bother or I just do clean-up job outside of
    the house.

    3. Is the house occupied? From my personal experience working around people still living in the house is an absolute nightmare and it becomes more trouble than it’s worth. In this case, I normally ask for an early settlement so I can get the renovation project started earlier.

    4. Level of renovation work before settlement? From my personal experience, if I had early access to a property to do the renovation
    work, then I would only invest in what I’d be prepared to lose as many things can go wrong during the settlement process and you might need to walk away from the property and therefore not settle on. This is normally reinforced to me when I seldom asked my solicitor about it.

    5. From my expense rather than go loggerheads with the seller, just go back in a nice way asking and work out an arrangement that suits
    both of you. Either they can come down to just tidying the outside of the property or bring settlement for seeking start your renovation project earlier.

    Hope this helps.

    Kind regards,
    Jason Moore

    Property Trader | Boston West Pty Ltd
    http://bostonwest.com.au
    Email Me | Phone Me

    Private money lending opportunities available paying upto 12%, secured by bricks and mortar!

    Profile photo of Brian PobjeBrian Pobje
    Participant
    @brian-pobje
    Join Date: 2012
    Post Count: 21

    No offence to any solicitors or conveyancers but……. they can really destroy a deal for a buyer and a seller.

    I have been in real estate for over 16 years and the number of deals that have fallen over to the legal people is just ridicules.

    The vendor does not have to give you access, you do not own the property as yet, what if you are allowed to start the renovations but for some reason then cannot settle on the property and the vendor has a half finished job.

    To me you need to weigh up the cost of gaining access for 3k + costs opposed to waiting till settlement to start your renovation.
    How much will your solicitor charge to prepare the document, it should not be that expensive.

    Please bare in mind that the solicitor works for you, he or she only gives advice.

    If it is a good deal and gaining early access will help you in the long run then i would suggest that you instruct your solicitor to prepare the documents, if 3 k makes a huge difference to the deal then maybe the deal is not right.

    I have seen it too many times when solicitors and egos spoil what you are trying to achieve.

    Profile photo of Miss JayMiss Jay
    Member
    @miss-jay
    Join Date: 2012
    Post Count: 4

    Hi,

    I purchased a property (owner, not investment) some years ago overseas and started renovations prior to settlement with the cavet "occupation under licence" in the contract.  this meant that I could enter and comence work on the property prior to settlement on the priviso that if the property failed to settle I would forgo any renovation expense I had incured and all improvements would remain the property of the vendor.  IF the sale fell through the vendor had the right to seek valuation from a mutually approved surveyor and if damage to the value of the proeprty had been sustained by my renovation work I would make good the repair work (again at my cost) to the satisfaction of the surveyor.  My 'protection' was that if the property increased in value during this time the vendor could not increase the price.  whilst this seems skewed in favour of the vendor it worked in my favour as I paid rent to the vendor for the time I was renovating meaning that I could start earlier and be finished soon after settlement.  the renovations made a huge increase in value to the property and although I admit the market was rising, I sold the property 2 years later for approx 85% increase in value.

    As far as costs go – you want to get in early, you have to pay.  I had my solicitor prepare the contract so I could controle what went into it – any amendements they wanted to make to the contract were at their expense.  If you want ot change the contract you need to be prepared to pay for it – this is not about protecting the vendor, this is about giving you the opportunity to access the property sooner.  otherwise wait until settlement.  if you have a clear picture of what needs to be done you can maxmise the settlement time by planning your renovation, buying materials etc and being fully ready to commence work on day 1.

    If the discount you are looking at is 3K then look at how much the contract will cost to prepare both in cost and running back and forth.  You may decide to look at an expediatied settlement in exchange for the $3K – I have done this in the past "you want an additional $3K? then settlement needs to be 4 weeks not 6" etc – this too has worked for me with no additonal cost in solictors fees.

    Just some thoughts….

    Profile photo of jmsracheljmsrachel
    Participant
    @jmsrachel
    Join Date: 2012
    Post Count: 711

    Thanks everyone for your help. I called the agent today and simply told him i refuse to pay the additional costs so i'm no longer interested in the property. Get a call back 10 mins later, his solicitor mate can do it for free as he owes him a favour . Had the license agreement checked out by my solicitor and once i got the green light signed contracts tonight.

    Moral of the story? No matter how wrong you might be stick to your guns and it might just turn in your favour!

    Profile photo of Miss JayMiss Jay
    Member
    @miss-jay
    Join Date: 2012
    Post Count: 4

    excellent result I'd say!

    Profile photo of jmsracheljmsrachel
    Participant
    @jmsrachel
    Join Date: 2012
    Post Count: 711

    And i found out the agent altered the contract himself! Is that legal? Since when is a real estate agent also a solicitor?

    Profile photo of Brian PobjeBrian Pobje
    Participant
    @brian-pobje
    Join Date: 2012
    Post Count: 21

    What state are u in?
    In NSW the agent is only allowed to make changes within the bold box on the front page of the contract. They are not permitted to change or alter any other part of the contract.

    Profile photo of Ephraem1Ephraem1
    Member
    @ephraem1
    Join Date: 2012
    Post Count: 17

    good on you jmsrachel for getting the license for free! I have often found that the less interested you sound during a negotiation the better your position becomes. this seems to be another proof for that.
     I have heard of changes being made by laypeople before, but i would suggest to get an opinion on legality from your solicitor

    Profile photo of WomeninPropMelbWomeninPropMelb
    Member
    @womeninpropmelb
    Join Date: 2008
    Post Count: 234

    I am not sure that you get far “the less interested you seem”. You can miss out on good deals because the agent thinks you are not all that interested. The agent has a lot of power – like it or not.
    As an agent- we were diligent in letting potential buyers know when a property came onto the market. If you seem less interested – you could miss out.
    Ok, there is always another coming around the corner as an investor- but why not let the agent do some of your leg work for you? Let them tell you when something is coming up – or when a new property comes on the market? Let them vie for your attentions..

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