How one email cost a buyer $14,000



How one email cost a buyer $14,000

A recent settlement highlighted the need for clients to fully understand the standard clauses in a contract and the definition of the terms used.

One of our sellers recently signed a contract that included a structural inspection annexure in the standard REIWA format.

The inspection identified structural defects in  the roof structure which the buyer reported to the real estate agent via email. After discussion with the seller, the agent advised the purchaser (again via email) that the seller had verbally agreed to remedy the Structural Defect.

The seller eventually sought & received quotes ranging from $10-14,000. Unfortunately the seller did not have the required funds. It was only at this point that we became aware of the issue.

We immediately recommended he seek legal advice (and recommended MGB Legal).

In summary the solicitor advised:

  • Clause 3 of the Annexure stated that the Buyer may at any time within three Business Days after the (due) Date serve a Structural Defects Notice on the Seller giving the Seller five Business Days to agree to remedy the Structural Defects
  • The buyer’s initial email to the seller did not constitute a “Notice” as defined in clause 21 of the General Conditions.
  • The due date had now passed
  • The seller had never agreed in writing to remedy the Structural Defects

The seller’s solicitor served a Default Notice on the buyer who elected to settle without any further claim/compensation in relation to the Structural Defect.

Moral of the story?:

  1. Ensure you read & understand the clauses in a contract & the definition of legal terms therein.
  2. Ensure that you understand the time limits within a contract
  3. Ensure that any “Notice’ is sent/received in accordance with the methods permitted (emails don’t count!)
  4. Remember that the real estate agent is acting as the agent of the seller
  5. Consider seeking legal advice when appropriate.