Conveyancing.co.nz Sellers Guide   

  So you're looking at selling a property in New Zealand? Below is our guide pointing out a few tips from a legal and conveyancing viewpoint. We trust that you'll find the content below informative. If you require any further explanation we invite you to call us 0508 4 LAWYERS (0508 452 993) or email us with any further queries you may have.

The contents of this guide refer to the Real Estate Institute of New Zealand and Auckland District Law Society Agreement for Sale and Purchase (Eighth Edition 2006 (3)) which is called "the standard agreement" in this guide.  The guide highlights a number of important areas of the standard agreement and some other areas which may be of interest to you.  It is not intended to be exhaustive.  The guide is intended for general information purposes only and should not be acted upon without specific advice related to your own circumstances.

1. Contractual Warranties  
   1. The current edition of the Real Estate Institute of New Zealand and Auckland District Law Society Agreement for Sale and Purchase (Eighth Edition (3)) contains a number of standard warranties.  In this guide we call this agreement "the standard agreement".  It is possible the agreement you have signed is not on the standard agreement, in which case you should seek further legal advice.  It is also possible that the agreement you have signed contains additional warranties.
       
   2. The warranties in the standard agreement are given in respect of your actions up until the date you enter into the agreement and then subsequently for the time between the date of the agreement and settlement.  They include warranties:
       
      1. that you have not received, nor have any knowledge of any requisitions or outstanding requirements in respect of the property from any local or government authority - for example a notice to fence a swimming pool, or that a building does not comply with the building code - which you have not disclosed to the purchaser;
          
      2. that you have not given any consent or waiver in relation to any application under the Resource Management Act directly or indirectly affecting the property which has not been disclosed in writing to the purchaser.  This could extend, for example, to a consent you have given relating to neighbouring property developments;
          
      3. that all electrical or other installations on the property are not subject to a security interest;
          
      4. that all chattels you have agreed to sell to the purchaser will be in the same state of repair on settlement as they were when the contract was signed (subject to a fair wear and tear exception).  This means you will have to fix any chattels which break down before settlement (except where the breakdown is by reason of fair wear and tear);
          
      5. that, where you have done any work to the property which required a building consent, that you obtained the consent that, the work was carried out in accordance with the consent, and that where appropriate you obtained a "code compliance certificate";
          
      6. that you have complied with all obligations imposed on you under the Building Act in relation to building warrants of fitness etc.  Building warrants of fitness are generally more applicable to commercial or rental income properties and are not required in respect of most private dwellings;
          
      7. in the case of a unit title property, that all body corporate levies have been paid, that there are no unsatisfied judgements outstanding against the body corporate, that copies of all insurances arranged by the body corporate will be made available to the purchaser five working days before settlement and that a certificate will be provided under section 36 of the Unit Titles Act 1972 within the same period.  A section 36 certificate is usually given by the secretary of the Body Corporate and sets out, amongst other things, the amount of the contributions payable and whether or not your contributions are up to date.  You must ensure that the Body Certificate is able to give the appropriate certificate.  If you are unable to provide a copy of the relevant insurance policies or section 36 certificate in time, the purchaser may be able to delay settlement (but still take possession of the property) until the 5th working day after you provide the information.
          
   3. The full extent of the warranties is set out in clauses 6 and 7 of the standard agreement.
       
   4. If you are not in a position to give any particular warranty you should seek legal advice immediately.
       
2. Cross Leases and Unit Titles  
   1. If your house is on a cross lease or unit title, there are special provisions in the standard agreement relating to this type of ownership.
       
   2. In the case of a cross lease, if there have been any alterations to the flat or unit since the Flat Plan was deposited, the consent in writing of all other owners should have been obtained.  If alterations extend the dimensions of the flat or unit and are enclosed, then the flat plan should have been amended to show the alteration.  If this is not the case under clause 5 of the standard agreement, the Purchaser can require you to rectify the title, by obtaining the consent of the other owners, depositing a new cross lease plan (and possibly cross Lease) and getting a new title issued.
       
   3. If the purchaser makes a requisition, you must advise the purchaser within five working days whether you are prepared to satisfy it.  If you are unwilling to satisfy it and advise the purchaser within five working days to this effect, the purchaser has a further five working days to waive the requisition.  If the purchaser does not waive the requisition, either you, or the purchaser can cancel the agreement.  If you do not respond to the purchaser's requisition within the five working day period, you will be deemed to have accepted the requisition, and must comply with it.  The time limits are very important.
       
   4. In the case of buildings and structures erected on "exclusive use" areas, after the deposit of the original flat plan, the purchaser generally has no right to requisition, provided the consent of the other owners was obtained to the building or structure.  You can, however, be requisitioned to provide a copy of the written consent.  If you cannot satisfy the requisition, and advise the purchaser within the five working day period, then unless the purchaser waives the requisition, either party may cancel.
       
   5. Similar provisions apply in respect of Unit Titles, except that to remedy the defect you will need to obtain the consent of the body corporate and deposit a redevelopment plan or a new unit plan and you may also need to register transfers and other documents before you can provide good title to the purchaser.
       
   6. It is therefore important:
       
      1. if your property is a cross lease or unit title property; and
          
      2. you have made any alterations to it (or are aware of any alterations which have been made to it), which are not shown on the cross lease plan or unit plan; and
          
      3. for which the written consent of the other owners (or in the case of a unit title, the body corporate) was not obtained; and/or
          
      4. in respect of which a new flat plan or unit plan was not deposited;
          
         that you immediately seek legal advice, preferably before signing the agreement.
          
3. Goods & Services Tax  
   1. Usually Goods & Services Tax will not be payable on the sale of your own house.  However, if you are a "registered person" for GST purposes, it is important to check the legal position, and to ensure the contract clearly states whether the purchase price is inclusive of GST or not.  If the matter is not covered in the agreement and you are liable for GST it must be met out of the proceeds of settlement.
       
4. Tenants  
   1. If the property you are selling is tenanted, the contract should clearly state whether the property is sold with "vacant possession" or "subject to existing tenancies".
       
   2. Except in the case of a "fixed term" tenancy, where you agree to sell a tenanted property with vacant possession, you are required at law to give the tenant at least 42 days notice, to vacate the premises.  Therefore you need to ensure that settlement occurs at least 42 days after the date on which the agreement becomes unconditional, to give you time to give notice to the tenant.
       
   3. Where the property is tenanted you should let us know immediately.
       
   4. In the case of a fixed term tenancy unless the term expires before the settlement date, you will need to sell "subject to existing tenancies".
       
   5. Where the property is sold subject to existing tenancies, you must give notice to the tenants of the purchaser's name, address and occupation at point of sale and rental will be apportioned along with rates.  If the tenant paid a bond arrangements will need to be made to transfer this to the purchaser.
       
5. Important Dates  
   1. The agreement includes a number of important dates.  These include the dates on which the conditions in the contract are to be satisfied and the possession and/or settlement date.
       
   2. The conditional dates are the dates on which the various conditions in the agreement must be satisfied.  For example, the agreement may be subject to the purchaser selling another property or obtaining finance.
       
   3. The settlement date (usually the same as the possession date) is the date on which the purchaser is required to pay the purchase price, and the date on which you must hand over the keys of the property and sign the necessary documentation authorising the registration of the property into the purchaser's name with Land Information New Zealand.  You must also obtain discharges of all mortgages and charges affecting the property on that date.  Generally speaking you must vacate your house no later than the settlement date and time.
       
   4. Where the agreement refers to 'working days' you need to be aware that in addition to weekends and public holidays not counting as working days, the period commencing on 24th December and ending on 5th January the following year are not considered to contain any working days for the purposes of the agreement.
       
6. Insurance  
   1. Check that your house is insured for its full value, preferably on replacement terms.
       
   2. If for any reason the house suffers major damage and becomes un-tenantable prior to settlement the purchaser may elect to cancel the contract if the damage has not been put right by settlement, even though the contract has become unconditional.
       
   3. You should only cancel your existing insurances after settlement has taken place.
       
7. Rates  
   1. Please pay all rates bills that fall due for payment before settlement date.  This will include both local authority and regional council rates.  Rates will be apportioned between you and the purchaser on settlement.  Where the rates have not been fixed for the rating year by the settlement date, estimates and allowances may be made to cover the position.  These are included as adjustments on the "settlement statement" given to the purchaser's solicitors before settlement.
       
   2. Where your property is on a water meter you must arrange for the meter to be read, and pay for your water use up until the settlement date.
       
   3. We will make the necessary arrangements to ensure that the relevant council is aware of the sale but you will need to cancel any automatic credit or debit authorities you have given.
       
8. Telephone and Power Connections  
   1. It is your responsibility to arrange directly with the telephone company for the transfer and disconnection of your phone.  You must also arrange with the Electric Power Supply Authority and the Gas Authority for final electricity and gas meter readings to be taken, and for accounts to be forwarded to you at your new address.  You are responsible for paying for consumption up to the date of settlement.
       
9. Legal Formalities  
   1. In most cases registration of the transfer of the property out of your name into the name of the purchaser is affected electronically by us.  Your mortgagee will also give us authorities to discharge its mortgage electronically.
       
   2. Before we can proceed to register the transfer to the purchaser we will need to sign the appropriate approvals and we will also need photographic proof of your identity.  Acceptable forms of identification are your drivers licence or passport.  We will contact you to make the necessary arrangements.  Once you give us your authority, it is irrevocable if settlement proceeds.
       
   3. If you have a mortgage, the mortgage will need to be discharged by settlement.  This will usually mean the amount secured by the mortgage must be repaid on settlement or arrangements made with your lender if this is not to occur.
       
   4. Sometimes the mortgagee will charge a fee for early repayment, and an administration charge in connection with the execution of the discharge.
       
10. Settlement, Possession and Keys  
    1. On settlement, the title to the property and discharges of all mortgages are handed to the solicitors for the purchaser, in exchange for the payment of the purchase price.  At this time the property ceases to be yours.
        
    2. Keys are normally required to be handed over on settlement through the land agent or through your solicitor, although occasionally the parties make some private arrangement.  You should not allow the purchaser into possession until settlement has actually taken place as you could be severely disadvantaged if for any reason some unexpected difficulty arises, causing settlement to be postponed or even avoided, or if damage occurs on the property.
        
    3. Unless the agreement provides otherwise, the purchaser is entitled to vacant possession of the house on the settlement date.  If for any reason you are not in a position to move out by the settlement date, you should make some mutually satisfactory arrangement with the purchaser.  If you do not, you may have to pay interest or rental to the purchaser (the former calculated at the default rate shown on the contract on the whole of the purchase price, less any deposit paid or due, and the latter being a fair rental for the property form the possession date in the contract until possession is actually given).  In addition, you may be liable to the purchaser in damages (including the purchaser's costs of temporary accommodation).

Online Conveyancing Limited thank Kensington Swan for assistance with our Sellers Guide. Kensington Swan, with offices in Auckland and Wellington, are one of New Zealand's leading Property and Commercial Law Firms. They carry out conveyancing for companies and individuals from Multi National Property Developments through to Affordable Residential Conveyancing for single house sales & purchases. Kensington Swan won the Lexis Nexis NZ Large Firm of the Year Award in 2007.