LawWorks News

Advice Before You Sign a Contract to Purchase Property - April 2009

Whether buying your first home or regularly buying commercial property, we can often save your resources if we can advise on your contract to purchase before you sign.  With many residential and commercial buildings being affected either by “leaky building syndrome” or similar defects, the wording of a condition in the agreement can be critical. Conditions must be inserted in an agreement before it is signed by the vendor (seller) and the purchaser.  We can ensure that the wording of conditions is tailored to your specific circumstances.

 

We often recommend the inclusion of several conditions to allow purchasers to be certain that matters requiring completion, qualification or certainty will be dealt with before the agreement becomes unconditional and the purchaser is legally bound to settle.  Sometimes one carefully worded due diligence condition will protect a purchaser by allowing them to make inquiries and satisfy themselves that they are buying what they think they are buying.

 

The following are examples of matters which may require certainty before the purchaser becomes legally bound to complete:

 

            Title;

 

            Finance on terms acceptable to the purchaser;

 

            Review of the terms of a residential tenancy or commercial lease;

 

            Building inspection, which may extend to requiring the report of an engineer or some other specialist;

 

            Accountants or valuer’s report;

 

            Land Information Memorandum from the local council;

 

            Body Corporate matters (in the case of apartments).

 

Sometimes, these enquiries will need to be completed prior to signing any contract. This is the case where you buy at auction, and possibly in rare other circumstances.

 

But in most cases, vendors will agree to allow a purchaser a reasonable time from the time a contract is signed by both parties to undertake and complete research or to achieve a certain outcome (such as the sale of another property) before the agreement becomes unconditional and the purchaser is bound to complete the purchase.

 

The wording of the clauses relating to those conditions can vary dramatically. Sometimes the wording will assist a purchaser, sometimes the wording will assist or favour a vendor.  Don’t get caught.  Ask us to advise on the wording of a contract before you sign.

 

For further information contact

 

            Tony Walker                  Email: tony@lawworksnz.com

                                                DDI: 3039916

or

            Sarah Edmondson          Email: sarah@lawworksnz.com

                                                DDI: 3039915

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