Buying a Residential Property
Generally property owners list their properties with an agent or advertise them themselves (a private sale). The agent is employed by the owner (vendor) and takes a commission from any sale that they are successful in making.
There are many ways in which property is bought and sold in New Zealand but the most common are private sale or sale by a real estate agent by way of offer, tender or auction.
People selling their property privately often ask that the purchaser prepare and present the offer, which in turn the purchaser asks their solicitor to prepare. The offer is usually in the form of an agreement for sale and purchase. There is a commonly used standard agreement for sale and purchase, however this invariably requires alteration and amendment. We are able to do this and provide advice not only on the purchase of a property being sold privately but also to vendors wishing to sell privately. We cannot however act for both the vendor and the purchaser.
Sale by Agent
Agents are employed by vendors to sell property on their behalf and are usually paid by way of commission from the sale of the property. There is often scope to negotiate these rates and this should be done at the outset when agreement is reached to list the property. Although the agent shows prospective purchasers through the property and often drafts the offer or organises the tender or auction, they represent the vendor, not the purchaser. Their job is to get the best price and conditions they can for the vendor. Agencies are commonly either exclusive or general. During an exclusive agency and unless it is otherwise agreed the agent is entitled to commission regardless of who it is that sells the property, even if you sell the property yourself.
Before signing anything we strongly recommend that any prospective purchaser consult a solicitor. It is essential for the purchaser to understand the terms of the contract and ensure any conditions, amendments, or additional terms that would suit them are included in the contract. It is certainly less expensive and stressful for the purchaser to resolve any issues before signing the contract. It can be very difficult to do so afterwards. The vendor should also consult a solicitor at this stage. Remember, legal fees for buying or selling a property are usually only a fraction of that charged by real estate agents and miniscule when compared to the price and significance of the asset involved.
Sometimes properties are sold by other methods such as auction and tender. Most people are familiar with the concept of selling by auction, however terms and conditions for auctions can vary significantly and the sale is often effectively on an “as is where is” basis. Tenders can also vary significantly. Essentially, these involve all interested parties putting in an offer at a set time on terms and conditions specified in the invitation to tender. With both auctions and tenders it is important to have legal advice on the form and content of the documentation.
Besides the legal description of the parties and the property, and the usual considerations of price, deposit, possession date, and chattels, purchasers need to consider what conditions or other terms they wish to have in the contract.
A condition will provide a timeframe for its satisfaction. It is possible to ask for an extension of the time frame but this does not have to be granted. A party for whose benefit a condition is inserted must take reasonable steps to satisfy that condition i.e. you are not legally entitled to simply change your mind and say a condition has not been satisfied. There are many conditions and which ones are included depend on the nature of the property, your circumstances, and those of the vendor.
There may also be other terms that need to be included in the contract depending again on the property being purchased and the vendor and purchaser’s circumstances. When purchasing land that is being subdivided, apartments in the process of being built, farmland, leasehold, company share properties, or land with a building to be constructed, there are numerous considerations and additional factors that must be taken into account.
Once the contract has been confirmed your Solicitor will assist you through the process prior to settlement which includes arranging insurance, signing documentation from the lender if you are borrowing to complete the purchase, inspecting the property prior to settlement and so on.
There are also related issues such as relationship property (formerly called matrimonial property) matters, ways of owning property, and taxation. Every property acquisition is different and in each case the parties should have legal advice prior to committing themselves.
There are many other factors and considerations. It is prudent that people obtain legal advice prior to entering into contracts. The purchase of a home or investment property represents a major investment and proper advice is relatively inexpensive particularly when compared to the level of that investment.
To see if we can help you email us at email@example.com or call us on 04 381 2234 and ask to speak to a lawyer. All enquiries will be kept in the strictest confidence.
Capital Law, Lawyers, Level 5, Petherick Tower, 38-42 Waring Tay;lor Street, Wellington, New Zealand
This article contains general background information only; it is not a comprehensive explanation and not applicable to all circumstances. It is not legal advice or legal opinion. It is not intended nor should it be used: as a basis for taking or refraining from any particular course; or, as a substitute for legal advice.
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