Be wary of Vendor prepared soil test special conditions
For many Australians, buying vacant land in a new estate, and then building their dream home, is a cheaper alternative to buying an existing residential dwelling. Buying vacant land in a new development, and constructing a new home, can also be an attractive proposition, as a new home generally has more modern conveniences, better insulation, and is more energy efficient. In regional centres such as Ballarat, the growth and expansion of new land estates and the construction of new housing has been phenomenal.
At Nevett Ford, we are seeing this surge of new land and housing activity in Ballarat reflected in the number of clients seeking our advice in regards to purchasing vacant land. Noticeably, in this day and age, we see that clients understand the importance of making their Contract subject to a satisfactory soil test. Obviously, the importance of a soil test on vacant land cannot be underestimated, particularly in light of the legislative provisions.
For example, when land is sold prior to the registration of the subdivision and subdivided lots, under the Sale of Land Act 1963 (VIC), the Vendor has certain obligations to disclose whether there have been any changes to the natural surface level of the soil of the land. Typically, this statutory requirement requires Vendors to disclose whether fill has been placed on the lot or abutting the lot. However, there is no specific obligation to disclose the actual soil grade itself. The various soils fall under categories under Australian Standards 2870/2011. Ultimately, for any Purchaser, the grade and condition of the soil is key to the construction of your house.
Why should you view the condition and grade of your property’s soil as critical to the construction of your dream home? To put this into context, if the soil condition of the land that you are purchasing is particularly poor, then more substantial and expensive foundations (sometimes described as footings) for the house will be required. This can increase the cost of construction, to the point that building the house is no longer within budget or alternatively the more expensive foundations may exceed your construction loan from your bank.
As mentioned previously, we are finding that many Purchasers are requesting that their Contract for the purchase of vacant land, be made subject to satisfactory soil test. This trend is very encouraging to see. However, more recently, we have seen a trend from some developer Vendors that is starting to undermine the protective nature of soil testing for the Purchaser.
In particular we have found that some Vendor developers are preparing Contracts which already include a soil test special condition in the Contract, without the Purchaser specifically asking for it. At first glance you may think that the Vendor is doing you a favour. But in our experience, many of these pre-prepared soil test special conditions are not worth the paper that they are written on.
For example, we have seen soil test special conditions prepared by the Vendor, that state that if H2 or H2-D footings can be constructed on the soil, then the soil test will be deemed to be satisfactory. Such wording is cunning. The reason being is that in many cases, building on H2, H2-D, E, or P – class soil can be a lot more expensive than other classes of footings that can be built on better quality soils, such as M – class (or better).
Essentially, this sort of Vendor prepared soil special condition is in effect stating that poorer quality soils are satisfactory to the Purchaser. Which in turn, completely nullifies the real purpose of a soil test, which is to provide some protection to a Purchaser.
Accordingly, we advise Purchasers of vacant land to seek independent legal advice prior to signing a Contract of Sale of Land for vacant land or vacant land off the plan. Particularly where, the Vendor has provided their own soil test special condition. Ultimately, the wording of any soil test special condition provided by the Vendor must be carefully scrutinised. And in some cases the wording of that special condition may need to be amended to ensure that it provides you the Purchaser, with greater protection.
If you have question in regards to soil test special conditions or any other queries relating to buying or selling vacant land please feel free to contact one of the members of the Nevett Ford Property and Conveyancing Team on 5331 4444.