One of the important legal concepts that govern the relationship between a buyer and a seller is that of ‘caveat emptor,’ a Latin phrase that means ‘let the buyer beware.’ In simple terms, it means that in a sale transaction, the buyer should take reasonable precaution to investigate and consider the product he or she is buying or else he or she is buying ‘as it is’ inclusive of any obvious or hidden defect.
Although modern developments and trends in consumer law have reduced the weight of this principle on the buyer through instruments such as warranty, there is still a need for all buyers to ‘look before they leap’ literally. A buyer should not expect to buy a perfect property but if you are well informed and know what to look for, you will pay a fair price based on the true state of the property.
Some years ago, a man who had children from two different women died without leaving a Will but left a property, which was not properly registered in his name. The building on the land was in a dilapidated state and with multiple tenants, who each entered the property at different times and many of whom were owing the landlord many months in unpaid rents. However, it did have something going in its favour, which was the fact that it was located in an area with a good deal of commercial activities.
The beneficiaries were united in their decision to sell the property and they gave the instruction to sell to an experienced real estate attorney. The property was offered for sale ‘as it is.’ Interested buyers were told the various defects and they were given generous discounts based on the state of the property. The beneficiaries nominated the administrators of their estate and they applied for and obtained letters of administration to enable them to legally dispose of the property or enter into an agreement with third parties. Each of the obvious issues was intelligently dealt with and the property was sold profitably. All the stakeholders were satisfied with the transaction. The moral: several challenges that crop up when buying a property can be dealt with if the transaction is handled by experienced professionals and open sellers.
However, the problem often occurs where buyers are ignorant of the responsibility that is indirectly placed on them and considering the fact that not every seller is open or prepared to be fair. More often than not, the seller’s agent is reluctant to disclose issues that he or she feels could lead to a legitimate reduction in the sale price or give the buyer a better bargaining power. It is in instances like this that key issues that we are considering become relevant.
The preliminary place to start is usually with a simple question, ‘Why does the seller want to sell?’ The answer to this question could be a serious pointer to what to look for especially when the seller is selling a single property or his entire stake in an area. More often than not, sellers will tell their agents why they want to sell the property and if you have engaged the services of an experienced real estate agent, they can discreetly find out the real reason why the property is being offered for sale.
One of the critical issues that you should look for when buying a property is whether or not the building has a subsoil problem. Experienced buyers or buyer’s agent will walk round the property and look for water marks and peeling paints at strategic portions of the property. If there is a subsoil problem, it simply means that you are effectively buying a bare land since the building on it will need to be demolished and a new and solid foundation constructed before you can build on it. You will also need to involve a structural engineer who should be able to tell you if it makes economic sense to buy the property at the price being offered considering the additional costs you will incur.
Closely connected with this is where the property has structural problems such as faulty foundation or decking. It is always better to buy a building that is structurally sound even though it is older, than buying a new or newer building that is not structurally sound. A structurally sound building can accommodate serious renovation without costing a fortune. However, some properties are in such a poor structural state that the only reasonable thing to do is to pull them down totally.
Another factor that is becoming important to consider is to check the building approval or zoning status depending on what you intend to do with the property. For instance, if you intend to use a property for commercial purposes, you need to be sure that the property is within a commercial zone because it may not be easy to change the use of the property thus defeating the purpose of your purchase. Sometimes you will need to apply for permits before you can carry out some modifications such as where there is a limit on the number of floors that could be erected in a particular area.
Finally, other issues that could be salient are potential negative developments in the area that could have an effect on property value. For instance, an area that has been affected by underground oil spillage that once such an issue becomes pronounced would drive down the value of properties in that area and make sale very difficult. The moral: be fully aware of the issues surrounding the property you want to buy so that you know you are paying a fair price and making a purchase you can live with.
Source: The Punch Newspaper
