On 14 October 2022 the Real Estate Authority (REA) released updated consumer guides. These guides provide key information on sale and purchase agreements and agency agreements. The refreshed guides are in response to shared feedback from industry participants and aim to provide clear information on the process of buying and selling properties in New Zealand.
The Guide to Sale and Purchase Agreements
This guide covers what a sale and purchase agreement is, what’s in it and what happens after you sign it. Also covered is what to do if you have a problem and where to go for more information.
CLICK HERE to view the updated version of the guide.
Sale and purchase agreements are legally binding contracts so it’s important to have a thorough understanding of the process and the conditions contained in the agreement.
The agreement lays out some of the fine details covering the price, included chattels, prerequisites such as other property sales, property inspection, and settlement date. The agreements can appear varied depending on the sale method. A sale and purchase agreement for a property sold via auction may differ to a property sold via tender for example.
Some of the important details in the contract include the title type (freehold or leasehold), the deposit required to pay, how many days the buyer/seller must meet conditions, and the rate of interest the buyer will be required to pay on any overdue payments. The contract outlines the general obligations that both parties must comply with. These include access rights, insurance, compensation for default and eligibility for migrants. Although the guide provides thorough information it’s important to have a lawyer check over the agreement and explain anything that’s not clear.
Covered in the guide are some of the specific conditions that a buyer may stipulate in the agreement. These include title search, finance, valuation report, LIM reports, inspection, engineer/surveyor’s report, and if the agreement is conditional on selling another home.
After the agreement is signed both parties will need to work through the conditions until the agreement is unconditional. Once this stage is reached the buyer is legally obligated to commit to the purchase of the property.
If there are any issues with the process the guide provides information on how to proceed. Issues are generally initially discussed with the real estate professional. If the matter cannot be resolved, it’s advisable to contact your lawyer.
The Guide to Agency Agreements
This guide covers what an agency agreement is, what the real estate professional should tell you before you sign, and what to do if there is a problem.
CLICK HERE to view the updated version of the guide.
An agency agreement provides the real estate agency the authority to market your property for sale. It lays out the terms and conditions of your contract. Some of the important information contained in the agreement include crucial details about the property. These include the address, chattels included, land areas, number of bedrooms and bathrooms, etc. Any important information regarding code of compliance, faults, and any planned developments nearby that may affect the property must also be included in the contract. The agency must also include the commission arrangement.
The agency will provide some important information in the agreement, such as the written estimate of your sale price, how they recommend selling the property (such as tender, auction, deadline, etc), what expenses you’ll be obligated to pay and when the agreement ends.
The guide also provides a clear path on what to do if there any issues that need resolving.
Buying or selling a house can be a particularly daunting experience. These guides are here to help provide a clear path on this process and ultimately assist both parties achieve their goal. For more information on the guides available head to REA’s web page here https://www.rea.govt.nz/buyers-and-sellers/read-our-guides/.
Photo by Leon Seibert on Unsplash.