Written by Mike Parker - Partner (Property)

In a standard ADLS agreement for sale and purchase, there is no legal requirement for the vendor to provide the purchaser with a property that has been cleaned (and cleared) from head to toe. Notwithstanding this, we have noticed an increasing expectation by purchasers that this is the condition they will find the property in.

A situation recently arose when we acted for vendors who were selling a lifestyle property. On the day of settlement the purchasers refused to settle because of the items that remained on the property. The vendor acknowledged that the property had to be sold with vacant possession (i.e. all personal items cleared from the property prior to settlement) but were of the view that the miscellaneous items that remained on the property, which included scrap metal and wood, would be of use to the purchaser. The vendor had the property cleared and settlement subsequently took place.

The question raised from this case is whether the vendor was actually obliged to have the property cleared of those items on settlement.

In the absence of anything expressly included in the agreement for sale and purchase, the state that purchasers expect to receive on settlement comes down to the questions raised by the purchasers with the vendor and/or agent when viewing the property, and the representations made by the vendor and/or the agent. If the purchasers in the above case had already been given assurances that the miscellaneous items located in the sheds or barns would be cleared prior to settlement, then the purchaser should be able to rely on that representation. Otherwise, the purchasers should expect to take possession of the property as it is, minus the personal possessions.

That might sound like common sense, but it is surprising how often such issues can create last minute delay and stress, as well as extra cost, to the vendor and the purchaser. We sometimes see clauses in agreements prepared by the agent with a list of items that the purchaser requires the vendor to attend to prior to settlement.  Such lists include things like having carpets vacuumed, lawns mowed and garden weeded, cupboards, drawers, showers and windows cleaned inside and out, oven to be cleaned, and all rubbish removed from the property if the rubbish removal day is more than 48 hours after settlement.

Our recommendation is that if there are particular items lying about the property that the purchaser expects will be removed from the property, or certain things that the purchaser requires to be done to ensure the property is taken over in a certain condition, then including a clause in the agreement covering those matters may save time, stress and money at settlement time.

Written by Louise Maginness – Registered Legal Executive (Residential Property)

In 2018 the government made changes to the Overseas Investment Act (“OIA”) requiring all purchasers to complete and sign a Residential Land Statement in which they declare whether they require approval from the Overseas Investment Office (“OIO”).

Over the past year, completing Residential Land Statement forms have become just part of the purchase documents that we ask purchasers to complete prior to settlement.  On occasion agents have forwarded the completed Residential Land Statement to us with the signed agreement.

We have heard of a few situations where a vendor was selling their property via auction.  They had already signed an agreement for a new purchase which was subject to them selling their existing property.  At the auction, the property sold unconditionally and therefore the vendor was able to confirm the further terms for their purchase.  Everything was fine until it was discovered that the purchasers of their existing property needed consent from the OIO.  This creates a serious issue for the vendor as they have relied on the unconditional auction agreement to confirm their purchase.

There are penalties for entering into unconditional agreements (where OIO consent is required) before consent is granted.  We advise any overseas person who wants to purchase residential land to obtain legal advice before signing an agreement for sale and purchase. 

An ‘overseas person’ is defined under the Act as a person who is neither a New Zealand citizen nor ‘ordinarily resident in New Zealand’.  A person is ‘ordinarily resident in New Zealand’ if they:
• hold a residence class visa; and
• have lived in New Zealand for the last 12 months; and
• have been present in New Zealand for at least 183 days in the last 12 months; and
• are a New Zealand tax resident.

The restrictions do not apply to citizens or permanent residents of Australia or Singapore who live in New Zealand.

Agents should always ask any prospective purchaser if OIO consent is required before signing agreements and need to complete the OIA Consent information on the front page of the agreement before finalising any agreement for sale and purchase.  You may need to obtain proof of citizenship and check their visa statuses to confirm their status.  If the sale and purchase requires OIO consent, the agreement must be conditional on consent being obtained.  If OIO consent is required, it may take a while to process the application – depending on how complex the application is.

There are many criteria and requirements for submitting an application to the OIO.  We advise any overseas person who wants to purchase residential land to obtain legal advice before signing an agreement for sale and purchase to ensure an application is processed in a cost effective and timely manner.

We have developed presentations covering the legal topics you are interested in. This series will include presentations from a range of our specialist teams and cover both professional and personal areas.

There will be no charge for these events and drinks and nibbles will be provided. These presentations will offer you the opportunity to learn and ask questions in a relaxed and social atmosphere.

We would love to see you at our next seminar: Construction Toolbox - Thursday 24 October

Doors open at 5pm for drinks and nibbles, seminar starts at 5.30pm 

In this quickfire session our specialist construction law experts will share some legal tips, tricks and recent developments in the building industry. They will then open to the floor for questions and discussion.

This presentation is ideal whether you are an owner, builder, subcontractor or otherwise involved in the construction industry.

To register for this event or for more information please contact Rebecca Connaughton on rebecca.connaughton@cavell.co.nz

Partner - Property

Phone: +64 3 339 5645

Mobile: +64 21 226 2630

Email: mike.parker@cavell.co.nz

Registered Legal Executive - Property

Phone: +64 3 339 5643

Email: louise.maginness@cavell.co.nz

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