November 26 2018
Checking the conditions
Given the significant financial commitment involved in purchasing a property, you want to make sure your investment is sound. One way of ensuring that a property is right for you is to include some conditions in your agreement for sale and purchase. If you do so, the purchase will only go ahead if your conditions are met. An agreement with no conditions included is ‘unconditional’ and you are obliged to complete the purchase once the agreement is signed.
Some common conditions that can be included in an agreement are conditions that give you time to sell your existing property, check what restrictions there are on the property’s title, or get a building report before the agreement becomes unconditional.
Depending on your situation, you may be able to rely on the standard conditions on the front page of the agreement. You can also write additional conditions or alter the standard conditions on the ‘Further Terms of Sale’ page.
The wording of a condition can be critical and may determine whether you can rely on it to cancel your agreement. If not written precisely to cover your situation, you could be obliged to satisfy the condition even where a ‘deal-breaker’ issue comes to light.
We should emphasise that the conditions are not there as an ‘out’ if you simply change your mind about a property purchase. Correct wording of conditions is vital. We will work with you to ensure you present the best possible offer to a vendor that also protects your interests if the conditions are not satisfied.
The concept of buying ‘everything but the kitchen sink’ is one that does not apply to property purchases as a matter of course. Many household items that you will see in an open home will not actually be sold with the property.
Only ‘fixtures’ are automatically sold with a property. Fixtures are items that are permanently fixed to the property such as showers and electrical wiring. All other moveable items are ‘chattels’ and are only included in the sale if specifically listed in your agreement for sale and purchase.
A standard agreement includes a list of suggested chattels, such as the stove and light fittings. This list can be tailored to include any chattel you wish to buy with the property, if the vendor agrees of course.
It is not always obvious whether an item is a chattel or a fixture. Misunderstandings can easily arise and lead to a later dispute. To help avoid this, we recommend carefully checking the chattels list in the agreement. When in doubt about whether something you wish to buy is a chattel or a fixture, you should include it in the chattels list. This way, you will be clear what items you are buying with the property.
Deciding a settlement date
Having made all the arrangements to buy or sell a property, making a quick decision on the settlement date may be a priority. Before you decide, however, do think hard about the time needed to complete the ‘behind-the-scenes’ work for the transaction, including our work preparing for the property transfer.
The time needed before settlement date will be greater in transactions involving:
- Mortgages or home loans as your lender will need time to process the relevant documents
- KiwiSaver funds as some KiwiSaver providers can take more than three weeks to process an application to withdrawal funds
- Property where a tenant needs to be given notice to move, which is generally a minimum of 42 days, and
- A vendor or purchaser who lives out of town as they may be delayed in meeting their lawyer.
Also, if you are selling your house before buying another, you may want a delayed settlement or for settlement of both transactions to occur on the same day to ensure you have somewhere to go.
It is important to get the settlement date right at the outset. The other party may not agree to change the settlement date later and, if you are not prepared by settlement date, you may have to pay the other party compensation.
To help avoid this situation, common practice is to set the settlement date as a certain number of working days from the date the agreement becomes unconditional. The number of working days required ultimately will depend on what work needs to be done prior to settlement. If you need assistance, we can offer advice on how much time you likely will need for your particular transaction.
Letting fees are now defunct
From 12 December 2018 tenants can no longer be charged a letting fee. The legislation banning letting fees was passed in late October.
Many tenants paid their landlord a letting fee of a week’s rent plus GST at the beginning of their tenancy. These letting fees cover the costs of the landlord’s letting agent or lawyer in setting up the tenancy.
Whilst tenants will be pleased with this change, landlords have given the news a lukewarm response saying that the letting fee ban may lead to rent rises.