SPECIAL CONDITIONS IN PROPERTY CONTRACTS

The importance of special conditions in property contracts was considered recently by the Supreme Court of Queensland in Gilson v Flamingo Enterprises Pty Ltd [2010] QSC 53.

Before construction

The plaintiff agreed to buy a unit from the builder which was still under construction. Not being able to see the end result before investing in the property, the plaintiff relied on two aspects. One was the plan of the unit and the other a special condition in the property contract.

The buyer was keen on having ‘unobstructed ocean views’ from the unit she was about to buy. After discussing the possibility of complying with her specific request, a special condition was included in the contract: “The positioning of the unit must provide unobstructed ocean views.”

The developer and the buyer then signed this property contract which included this special condition.

Post construction

The buyer to her disappointment discovered that the contract did not comply with the special condition. After the unit was ready, the ocean views were obstructed from different angles of the unit. She therefore sought to terminate the contract.

The Supreme Court carefully considered the connotation of the special condition and the phrase ‘unobstructed ocean views’. After a personal inspection by Justice Daubney of the unit, it was found that the view from one direction was considerably cut off by other buildings and from another, was completely obstructed.

Justice Daubney held that whilst the buyer could not expect a luxurious panoramic view, she was entitled to expect more than just mere glimpses.

In summary

The Supreme Court found that the developer was in breach of the contract not having satisfied the special condition.

Special conditions form important aspects of negotiations between parties as well the contract itself. This essential term was breached and hence the plaintiff was entitled to terminate.

Moreover, this special condition was suggested by the buyer herself and the agent and developer both agreed to the suggestion. Property contracts can be particularly tricky where buyers rely on unit plans and conditions and where builders are simultaneously dealing with several buyers and units.

However, developers should only accept such conditions if they can genuinely comply with them.