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.
Hi,
I’m interested in buying property in New Zealand, but have little prior experience in it. Would like to ask some questions about the payment process in New Zealand.
1) Is there a fixed downpayment involved after purchasing property?
2) How are payments made typically? e.g. progressive? and do payments have to be made during the construction process?
Thank you.
Thanks for your question. Generally the way it works is that you agree on the price from the person selling, then once thats secure you pay a deposit, usually about 10% of the purchase price. but honestly this is not a legal requirement, just makes it easier for a seller to accept your offer.
This will then hold the property for you untill the settlement date which is when you pay the rest of the money that you owe. This date can be any length of time but needs to be accepted by the person selling the house.
In terms of payments made during the construction process, that would be up to each individual building firm and how they deal with the building process. But you would in most cases need to buy the land first if you wanted to build on it.
I hope this helps.
Just came across your blog, thanks for enlightening us. I’m just making sure I understand every aspect before taking the plunge. A question I have is regarding post settlement.
I can’t seem to find any rules about possessions left by sellers after settlement. Do you purchasers have the rights to keep/discard items left by the seller after the house has transferred ownership? i.e. items not listed under chattels?
Andy,
After settlement legally whats in the house is yours. You have taken possession of the property and whats there is yours. You may need legal advise on this matter. Its a slight grey area and if the seller wishes to leave possessions there after settlement they need to have a request made through their and your solicitor.
Hello
Your website is really great, and straightforward for dummies like me! So I have just put an offer in on a property and it has been accepted. Now I need to organise the finance, but I am wondering where you get your deposit that you pay to the land agents trust? It seems that this is due before the mortgage would be paid out? Or can you get an advance? How does it work if you are getting a no deposit mortgage?
Thanks for your reply, I am quite anxious that I am expected to pay $17500 tomorrow and I am yet to sort my mortgage finance, or figure out how you pay this deposit!
Allie
Sorry for the delayed response to your question.
If I have read your situation right you need to ask the the person/bank you are recieving the finance from to advance the amount you require for the deposit.
In most cases that I understand this can be done.
I hope that you get this sorted.
D
hi i had my business up for sale privately and had a buyer but she backed out i listed with an agent and now the buyer has come back to me as she changed her mind do i still have to pay the agents commission as the buyer was interested before i listed with her
In that case I would get legal advice by your solicitor about that. Within the real estate industry itself if a buyer is introduced by a certain agent and then later down the track the buyer is interested again the original agent still has a right to a commission. I am not sure about how it works outside this sorry. I will find out myself. But my advice would be talk to your solicitor and get proof that you introduced the buyer to the property yourself.
Sorry I couldn’t help any more but that is a tricky situation on both sides of the argument.
On mortgage contracts, It is my understanding that under NZ law mortgage contracts must be signed by a borrower usually the person wanting the mortgage and the lender usually a Bank or Finance company.
When signed say in blue ink by both parties this is known as good consideration, my question is this, I have signed a Banks mortgage contract but are yet to sight the original contract signed by the Bank, I have asked the Conveyancy firm and they have failed to respond at all, so I have asked the Bank for the original contract and they said I already have their copy….guess what, they haven’t signed the contract…what is the go here?
I have challenged the Bank to produce my original contract so I can view both sides of the papers and to view the Banks signature but they can’t or won’t produce it.
Is their some deception at work here or is this some kind of sinister fraud being played out that appears to be global? Please advise as to what you think is happening to us all.
have emailed you william.
Deon, awaiting your reply!
????? if you have no idea please say so.
sorry. understood. Cheers.
Hi
I have just accepted a no deposit offer as my house has been on the market since Mar this year and the offer was a reasonable one. My agent felt comfortable accepting a no deposit offer and feels the purchaser will in good faith follow through if the conditions are met. The conditions are finance which my agent said they actually already had approved just needed to meet the banks conditions on the following, a structural engineers report and insurance (due to the CHCH earthquake). I am quite sure these will come up fine as my house had no damage other than the chimney which has since been recitfied.
My question is what happens if the offer goes unconditional (due on 2nd nov) and then settlement is the 26th nov, what happens when i have either found another house, or a place to rent signed a rental agreement etc, packed the house and payed for movers etc and then they pull out of the offer – I am concerned with no deposit there is no recourse.
Can you advise what I could do in this instance even though its unlikely?
Thanks
Hi,
As soon as the buyers meet the conditions on the sale and purchase agreement the offer will become unconditional.
When that happens the contract is binding and it is just waiting for settlement.
So when that happens on settlement day the full amount will pass through the solicitors offices and any debts or surpluses given out.
The deposit if there is one is generally held by the Real estate agents office untill settlement.
The only real reason a deposit is usually made is so that the agent has control of the cash for terms of commission. So the take the deposit and then give the balance of the deposit minus the commission to the solicitor on settlement day. But in your situation the agency will have to invoice the solicitor and then issues can arrise for them if there is a dispute.
So the deposit only really benefits the agency.
For you, when your property goes unconditional you should be safe to plan your next move etc.