The negotiation process of buying or selling a property is vitally important. As a vendor, you are negotiating the terms of the sale of what is most likely your most valuable asset. As a purchaser, you are committing yourself to the purchase of a substantial asset and it is critical that you have appropriate conditions to complete a proper due diligence investigation. If you are buying at auction then this due diligence has to be carried out ahead of time.
Advice for Vendors
Contact us before you contact your real estate agent. With one quick telephone call, we can help you to identify any issues that might cause problems for you later on in the sale process. These can be matters as diverse as unconsented work, defective cross lease titles, boundary issues or tenancy timeframes. Once the real estate agent has prepared the agreement, whether for an upcoming auction or in anticipation of a sale by negotiation, ask your real estate agent to send it to us for a final check. We can ensure that you are protected and that the all aspects of your property sale are properly covered.
If the property you are selling is owned by your family trust, you should apply for an IRD number for your family trust as soon as possible. Settlement of your sale will not be able to be completed until the IRD number is available. This is because the “main home” exemption does not apply to property owned by family trusts.
Advice for Purchasers
We recommend that you always have us check the agreement for you before you sign. When you are in the midst of negotiations, you may feel under pressure to sign an agreement immediately. You are much better to let us review the agreement for you before you sign. Don’t rely on the agreement’s standard Land Information Memorandum (LIM) and builder’s report conditions – we can draft a more comprehensive due diligence clause which will protect you better and give you more discretion to carry out a full due diligence on the property to make sure it is right for you.
Important due diligence matters include checking the legal title, obtaining a LIM from the local Council, obtaining a builder’s report and a contamination testing report, and confirming your finance.
It is particularly important to let us check the contract before you commit yourself if you are purchasing a new house or apartment off the plans. We will be looking to help you ensure that your deposit is protected in the event that the builder gets into financial difficulties. We may recommend that you purchase the land prior to the commencement of construction or that you caveat the title to protect your interest. Alternatively the purchase agreement may be able to be kept conditional until the issue of title and/or the completion of construction to safeguard your deposit.
If you are relying on a Kiwisaver withdrawal and/or a Homestart grant for your first home purchase, please contact us as early as possible, before you have signed the agreement. Timeframes are critical and we can help you ensure that the dates for payment of the deposit and settlement in the agreement are achievable.
In summary, don’t treat the negotiation of your agreement for sale or purchase lightly. It is an important legal document, and once it is signed it is usually too late to negotiate changes. Avoid costly mistakes and stress and take advice from your lawyer before signing.