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Wed, 30th Jan 2019

Selling Property Privately - Drafting the Agreement

Every sale of land in New Zealand needs to be recorded in writing in order to be enforceable by either the seller and the buyer.  In the normal course of selling a property through a real estate agent, the agent will prepare the “Agreement for Sale and Purchase of Real Estate” for the parties. 

However, if a property is sold privately, the parties have to agree for one of them to draw up an Agreement.  This is usually completed by a lawyer.  The Agreement sets out any conditions, the timeframes and – of course – the purchase price. 

There are no set rules about who is responsible for the cost of preparation of the Agreement, and the parties will have to agree on the issue during their negotiations. 

Lawyers in New Zealand use a standard form of agreement which is regularly updated to reflect the latest law changes.  It is therefore not advisable to re-use an older form.  By using a standard form, lawyers throughout New Zealand will be familiar with the (considerable) small print and all potential situations are likely to be covered. 

The seller will provide details on the property, such as its legal description and the name of the registered owners.  The buyer can then stipulate which conditions they wish to include in the Agreement.  The most common clauses are

  • A finance condition – to allow for bank/kiwisaver and/or home start grants to be applied for and approved.
  • A builder’s report condition – to have a suitably qualified builder look in, over and under the building, advising of any issues which may affect the buyer. This can include general maintenance matters as well as serious defects, such as an undetected leak causing rot. 
  • A LIM report from the local council – to ensure that any buildings on the property are properly consented by council and to check on zoning, flooding, natural hazards, etc.

There are of course many more conditions which are specifically tailored to the parties’ circumstances.  Does the buyer have to sell another property before committing to the purchase?  Is the property bare land which usually attracts another set of inquiries?  Does the seller have to disclose any deficiencies for unconsented building work? 

The conditions need to be fulfilled by a certain date, until either all conditions are met, or the contract is cancelled.  If the buyer can satisfy all the conditions on time, the Agreement is declared unconditional and then proceeds to settlement. 

It is common for the purchaser to pay a deposit to the seller upon the Agreement becoming unconditional.  If the buyer then fails to settle, the seller is entitled to keep the deposit and still has other rights under the agreement.

Entering into an Agreement for Sale and Purchase of Real Estate is a considerable commitment.  We therefore emphasise the need to have the Agreement drawn up in a professional manner, and to take legal advice prior to signing the Agreement. 

If you have any queries at all, or are looking at buying or selling privately, we can certainly help you in the process of drafting an Agreement which meets your individual situation. 

  • Posted By: Alex Martin on Wed, 30th Jan 2019 @ 10:55:28

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