By New Zealand Law all Contracts for the sale of land and property must be Negotiated in Writing. Most Licensed Real Estate Companies will use the standard form which is prepared by the Real Estate Institute of New Zealand and the Auckland Law Society. This contract covers the legal issues necessary to protect both parties and enable a satisfactory Real Estate Transaction.
Contracts can be written up subject to various conditions so that the purchaser or seller can satisfy their own needs. An example of the more common ones are:
- Subject to Finance. This allows the buyer time to confirm or arrange their finance from the banks or any other lending company. Generally this condition isn’t more than a week, but in any case has to have an end date for satisfaction, upon this date been reached you can apply to have an extension through your Solicitor.
- Subject to the sale of another property. This condition also needs to have a time limit on it. Generally this is negotiated between the parties. This will give the person buying the property to have enough time to sell their own house in order to buy. This condition is usually followed by an escape clause. This allows the seller to continue marketing their property and being able to accept another offer that is better to the seller( this can be a lower price, it doesn’t matter). This is then called a cashing out contract. The original contract then has the agreed on working days to go unconditional. If they do not then their contract is void and the cashing out contract is executed and closed.
- Subject to a report of the building or land or a LIM. This gives the purchaser to do any homework on the property once a price has been agreed to. This could include a builder, a plumber, an electrisation or any other thing that the purchaser wants to do their homework on. But things you want to be investigated must be stated on the contract before it is accepted.
Once all conditions are met the contract becomes Unconditional and binding on both parties. This means the sale must settle as detailed in the contract. The payment of any deposit mentioned is payable upon this time. If you buy through a real estate agency the deposit is usually held in a trust account for 10 working days.
You can bypass the conditions part and put what we call a cash unconditional contract in to the seller. This means that you are happy with the house at the time of putting a contract in and if the seller accepts the price you submit will be one you buy the property at. being unconditional you will then pay the deposit and settle on the date in the contract. Unlike many parts of the world you do not need to get surveys etc on every property. In New Zealand a property can’t be sold without a title and its generally the duty of the seller to get everything in order.
The day of settlement is the day when the balance of the payment is made, this being the total purchase price minus the deposit which was payed at the unconditional date. The money is usually transferred via the solicitor. This is the day you pick up your keys to the property and take over the legal rights to the property. You can move in this day 🙂
A solicitor is a lawyer. When you deal with them in terms of a property sale they look after the legal aspects of the sale like transfer of money, transfer of title and things like that. Basically when the contracts are agreed on, sent to the solicitor, and becomes unconditional the job of the real estate agent is all but complete. A good agent should keep in touch with both parties, bring them together, and make sure that a smooth transition of settlement takes place.
The fees associated with buying a property in New Zealand are very minimal. The only fees that you need to pay are the solicitors fees for buying, which can be anywhere between $500 – $1000. But could be more or less depending on the area your buying. Also if you want to have any inspections done or a LIM report done you will also need to pay for those. Costs on these are minimal though. So really for buying residential property in New Zealand what you put on the contract is what you pay.
There is other things associated with buying property in New Zealand. Other ways of buying such as tender and auction are available but the principle is the same. For more questions or to find out more call or email an agent. They will be able to assist you with your questions. Remember that to have the agent sell you a house as a buyer it’s not costing you anything, and you get their knowledge and support the whole way through.