Buyer Due Diligence in NSW When Sellers Are in Dispute — What to Look For Early
As a buyer, you focus on the property: location, condition, price and potential. Yet sometimes, what’s happening in the sellers’ lives can be just as important. When sellers are separating, disputing an estate or involved in family conflict, those issues can spill into the transaction. Your aim is not to solve their dispute, but to avoid your purchase becoming collateral damage.
The first clue often appears in conversation. The agent might mention that “the vendors are divorcing” or that “the family is selling mum’s house”. None of this is inherently a problem, but it should prompt extra questions. You want to confirm that the right people are signing and that there is no one sitting in the background ready to lodge a caveat or seek an injunction at the last minute.
Your adviser will start with the title search. Do the names on title match the names on the contract? Are there any caveats, notices, or references to court orders? If two people are on title but only one is signing, why is that? In an estate sale, is the executor properly appointed, and are they the ones signing? If separation is involved, have any property orders been made by a court, or is the matter still unresolved?
If there are existing court orders, it is usually a good sign. Orders that the property be sold, that property be transferred, or that proceeds be held in a particular way mean a judge has already turned their mind to the issue. In those situations, your contract and settlement arrangements should be consistent with the orders. If there are no orders and the parties are clearly in dispute, the risk of something going wrong increases.
Practical contract protections can help. For example, you might require a warranty that there are no undisclosed caveats or injunctions, and that no one else has a right to prevent the sale. In complex cases, you might insist on written consent or acknowledgment from a non‑owning spouse or beneficiary who has an obvious interest. Your settlement date might also need to build in time for the sellers to obtain any necessary court approvals.
Imagine you are buying from an executor of an estate where one beneficiary is unhappy and has lodged a caveat. That caveat needs to be addressed before you can obtain clear title. Your contract could state that the executor must remove the caveat by a specified date, and that if they cannot, you may rescind and recover your deposit. You might also want to see any court proceedings that are on foot, so your adviser can assess whether there is any realistic risk of the sale being challenged.
Buying from sellers who are in dispute is not necessarily something to avoid. Sometimes it is the reason the property is available and the price is realistic. But you should not be the last one to know there is a problem. Good due diligence brings the issues to the surface early, lets you price the risk, and ensures your contract and timing reflect the reality behind the “for sale” sign.
Declaration: This article provides general information for NSW purchasers and is not legal advice. You should obtain advice specific to your purchase and the seller’s circumstances before signing a contract.