As agents, we always make every effort to sit down with all interested parties to fill in an agreement. However, in the fast paced world we live in, sitting down with everyone is often not practical. Sometimes purchasers have to fill it out themselves and email it through due to time constraints. What often transpires is an agreement missing crucial information (something common that comes to mind is the settlement date). Only last week I had a tender sent through that was signed and initialed but had nothing else in the contract completed. By nothing I mean no names, price, settlement date, deposit date, nothing at all. I thought it would be prudent to outline some basics of filling out an Auckland District Law Society sale and purchase contract that has been approved by REINZ.
There are different versions of the agreement depending on whether you are attending an auction or submitting an offer via tender, deadline or by negotiation. In addition to this different companies often present their documents with their own bespoke addendums etc. It would be far too convoluted for me to specifically go through each contract and detail exactly how to fill it in. Rather I will highlight some of the basic areas that should be addressed.
This is a practical “how not to miss crucial information” blog. For information on how to put together a winning sale and purchase agreement click HERE.
First things first….
Run the contract past your solicitor
This goes without saying. A good solicitor will help protect you against making a bad decision. From checking the title and contract to ensuring a smooth settlement date, it is worth finding a good one who is experienced in the art of conveyancing.
Are there any cross outs in the general terms of sale?
It is common for some companies to standardly cross out parts of the general terms of sale. Perhaps amending things like who the deposit is paid to, the timeframe for paying the deposit and the title requisition clause. In estate or mortgagee sales the vendor warranties will often be deleted. Again, this is what your solicitor is for, get them to check over the contract and make sure these cross outs will not have any adverse consequences.
Check to make sure there have been no extra conditions inserted in the further terms of sale
The further terms of sale page is where you will want to add any extra conditions of sale. If you are wanting to make an unconditional offer make sure there are no pre-inserted conditions here by the company or agent selling the home. It is common to see companies insert conditions here with the premise that buyers will cross them out if they do not want or need them. Make sure you don’t miss out on a property because of some pre inserted condition/s you don’t know about.
If you are wanting to add conditions contact your agent or solicitor to have these inserted in the further terms of sale. Depending on the type of agreement there may be check boxes (yes/no) for conditions. If you check yes to any conditions please note these revert to the conditions stipulated in the general terms of sale. These often have a long conditional period which will make your offer more unattractive. You may like to reduce the number of days in the general terms or write your clause in full on the further terms of sale. Again, contact your solicitor or agent for advice here.
Read and sign any addendums the contract has
This could be in the form of a tender addendum, multi offer form etc. As an example, a tender addendum will often have an irrevocable period in which your offer can’t be retracted. Of course we are always working to provide an answer as soon as possible but it is worth knowing these things.
OIA (overseas investment act) form
Our company has a dedicated OIA form. The premise of this is to confirm that a purchaser can buy a home in New Zealand without OIA consent. For most people and situations, consent will not be needed but it always pays to check. Touch base if you have any questions. Fill and sign this form.
Disclosures
All companies should have a disclosure form that they have filled out with the owner. It must be stressed that although these are thorough, purchasers do have to undertake their own due diligence and make themselves comfortable with the property they are purchasing. There will be an area/s to initial and/or sign.
Filling in the main part of the agreement
As mentioned in the introduction there are multiple forms of the agreement. So it would be redundant and convoluted for me to state exactly where you need to write in specific pieces of information. I will rather provide you with the main pieces of information that need to be inserted for completeness.
- Don’t worry about dating the contract. The date will be added when the offer is actually accepted and the property is now “in contract”.
- Full name/s or entity the property will be purchased in will need to be written in. Insert “or nominee” after the name if you think there could be an additional purchaser or you are contemplating forming a company/trust.
- Purchase price. This goes without saying. There isn’t much of a contract if there is no purchase price. Usually the last thing purchasers want to fill out with me when going through a sale and purchase. It is always tough to pin a price on a property. Perhaps think about it from the point of view of “what would I be prepared to lose it for”.
- Deposit amount is commonly 10% but it doesn’t have to be. It could be lower or higher than this and can also be a nominated figure. Try not to make it so low it affects the attractiveness of your offer. Note the deposit may be payable upon acceptance (when the owner signs the agreement and accepts it) or confirmation/unconditional (when the conditions are satisfied). Note the wording here.
- Settlement date – ask the agent what would be a preferable settlement date for the owners. If there is no pre-inserted settlement date and try to accommodate as best as possible. Remember that settlement must take place on a working day. You may like to write “or by mutual agreement” to show your flexibility here.
- Schedule 1 (GST information) – always talk to your solicitor, accountant or agent as to your intentions and how this affects your GST position.
- Ensure you check through the chattels list. Make sure that what you assume is going to stay with the home will stay.
- The majority of residential properties in NZ will be sold with vacant possession. If you are taking on the existing tenancy, check the details in the contract. Ask for a copy of the tenancy if it is not part of the information pack.
- Fill in your details and your solicitors details where appropriate. Initial all pages and sign where appropriate.
You should now be ready to cross your finger, toes and eyes and hope for the best 🙂
Good luck to all those out there looking at the moment. I am only a phone call away if you have questions.
