Sale and Purchase Agreement Clauses NZ: What You Need to Know
When it comes to buying or selling property in New Zealand, one of the most important documents you`ll need to understand is the Sale and Purchase Agreement (SPA). This legal contract sets out the terms and conditions of the sale, including important clauses that protect both the buyer and the seller. Here are some of the key clauses to be aware of when reviewing an SPA in New Zealand.
1. Settlement Date
The settlement date is the day on which the ownership of the property is transferred from the seller to the buyer. This date is typically set several weeks after the SPA is signed, to allow time for the buyer to arrange finance and for any necessary inspections or repairs to be completed. It`s important to ensure that the settlement date is realistic and works for both parties.
2. Deposit
The deposit is a sum of money that the buyer pays as a sign of good faith, and to show their commitment to the purchase. In New Zealand, the deposit is typically 10% of the purchase price, although this can be negotiated. The parties should agree on how the deposit will be held, and what will happen to it if the sale falls through.
3. LIM Report
The Land Information Memorandum (LIM) is a report that provides information about the property, such as its zoning, building consents, and any other factors that may affect its value or use. The SPA should include a clause that makes the sale conditional on the buyer receiving a satisfactory LIM report, and allows them to withdraw from the sale if the report reveals any significant issues.
4. Chattels
Chattels are movable items that are included in the sale, such as appliances, curtains, and light fittings. The SPA should specify which chattels are included in the sale, and their condition at the time of the sale. If there are any disputes over chattels, the SPA should include a process for resolving them.
5. Vendor`s warranties
The vendor`s warranties clause is a promise by the seller that they have provided accurate and complete information about the property, and that there are no undisclosed defects or issues. This clause is important because it gives the buyer some protection against any surprises that may arise after the sale. The warranties should be clear and specific, and any exclusions should be noted.
Conclusion
The Sale and Purchase Agreement is a critical document in any property transaction in New Zealand. By understanding the key clauses that are typically included, both buyers and sellers can protect their interests and ensure a smooth and successful sale. It`s important to work with a qualified lawyer or conveyancer who can guide you through the SPA process and provide expert advice on any issues that may arise.