An agreement for the sale or purchase of property is arguably the most significant contract that most of us enter into.
How often do you show this binding and significant document to your lawyer before you sign it?
In our experience, the answer is: not often.
It’s common for us to receive a document that might need tweaking at best, and, re-writing at worst: if your interests are to be protected.
Agreements for the sale and purchase of property must be in writing, to be enforceable. As a purchaser, you are making an offer to buy someone’s property. The vendor receives your offer and has three options:
(a) Acceptance – game on
(b) Rejection – game over
(c) A counter-offer – game still in play
If the vendor accepts your offer, they sign and date it. You have a binding agreement which is usually conditional but not necessarily (if it is a tender or auction agreement). An unconditional agreement means you are absolutely committed to the purchase.
If the vendor alters your offer (creating a counter-offer), they sign with the amendment, and give it back to you to accept, reject, or counter. The “game” begins again. There is still no binding agreement in place.
You only have a binding agreement when all the terms and conditions of a written offer have been accepted in writing by both the vendor and the purchaser.
Reviewing the terms of your offer – whether you are a purchaser or a vendor – is always recommended. The Auckland District Law Society standard form of agreement includes that recommendation. Sometimes there is pressure on a party “to sign” but even a telephone call to discuss the terms in the context of your position can often prevent you being bound to an agreement that doesn’t suit you.
Agents like to include a condition along these lines: “this offer is subject to solicitor’s approval of the form and content of this Agreement”. This is useful only if agreement post acceptance can be achieved. If the parties cannot agree to a term or condition being varied after the fact, then the Agreement falls over. At that point, both parties have formally instructed their lawyers to act – all for no purpose. It is better to get the terms of the offer sorted before acceptance takes place.
It is helpful to you (and to us) to hear from you as soon as you begin the process. We can advise you better if we understand your wider situation and circumstances – why you are selling and where you are going; are you a first home buyer or have you done this before; what debt will you need to repay if you sell; as a buyer how are you funding this – kiwisaver, gift from parents, money currently outside of New Zealand; what time frames are in place – is there enough time to do everything.
We understand that the negotiation process can be stressful. We will give you an independent review of what you are committing to within the context of where you are now and where you want to be.
It can be hard negotiating with one party. A purchaser in a “multi-offer” situation has to think about their offer in competition with other offers being made. We can help in ensuring you make your best offer but without compromising your contractual safety!
If you are selling, then get in touch with us when you list with your agent, or advertise a private sale.
If you are a buyer, then give us a call to talk through the process – either to reacquaint yourself or to hear it for the first time.
Talk to us before you sign an Agreement for Sale or Purchase, Legal Executive Margaret Mary De Goldi (DDI 03 343 8381 / firstname.lastname@example.org).