So OK how does it really work?
In this Example there are the following two people (or business entities, but that's a separate story):
- John Smith – the Seller AKA the Vendor AKA the Transferor
- Paul Jones – the Buyer AKA the Transferee
John Smith has a property he would like to sell so he lists it on TradeMe. Paul Jones sees the listing and contacts John who invites him to go and look at the property. Paul likes it and accepts the price that John wants - which is the current GV. They shake hands on it.
John obtains a contract for the sale from here the NZ Law Association: Sale & Purchase of Real Estate Eleventh (3) Edition. You should check for any later editions. John could have got the contract from his solicitor - at a cost.
John draws up the contract (note this is not the current contract form for proprietary reasons):
John has provided Paul with a copy of a Title Search which has the Land's formal description. John has also provided enough documents for Paul to decide he does not wish to purchase a LIM from the local council. If you don't have enough information about the building and all the building consents associated with it you'd be advised to pay for a LIM and make the LIM a condition of the contract.
Paul has also decided that he does not wish to pay for an independent building inspector to check out the building - he thinks his site visit and the existing documents suggest it would be a waste of money. This again is a decision not to be taken lightly. If you are unsure about the house you should include a Building Report as a condition of the contract.
You might also consider a "due diligence clause" - something along the lines of
"The Purchaser will have until [some date] to complete Due Diligence with the option to cancel the agreement should said due diligence not be completed to the purchaser's satisfaction (See HERE & do some research - go google).
Paul fills in the Further Terms of Sale page like this:
Paul and John both sign the contract and each retains a copy. John passes his copy to his solicitor.John obtains a contract for the sale from here the NZ Law Association: Sale & Purchase of Real Estate Eleventh (3) Edition. You should check for any later editions. John could have got the contract from his solicitor - at a cost.
John draws up the contract (note this is not the current contract form for proprietary reasons):
Paul has also decided that he does not wish to pay for an independent building inspector to check out the building - he thinks his site visit and the existing documents suggest it would be a waste of money. This again is a decision not to be taken lightly. If you are unsure about the house you should include a Building Report as a condition of the contract.
You might also consider a "due diligence clause" - something along the lines of
"The Purchaser will have until [some date] to complete Due Diligence with the option to cancel the agreement should said due diligence not be completed to the purchaser's satisfaction (See HERE & do some research - go google).
Paul fills in the Further Terms of Sale page like this:
In the next Post I will show you how to fill in the Transfer Instrument ready for the Vendor to sign and have witnessed.
Is a S&P agreement actually required in order to change the title? In our case it is a transfer of the house between daughter and mother and both are just as happy to fill out the transfer instrument and manual lodgement form and be done with it. Do LINZ require the S&P in order to process the transfer instrument?
ReplyDeleteLINZ do not require an S&P agreement. They will be likely to phone the transferor (I assume the mother) to check that she is happy to do the transfer. That's about it. If there are other children in the family, however, you might have problems later if they contest the transfer. In that case an agreement would be a supporting document to have at hand. I'm not a solicitor. My rule of thumb is that if I can't be sure that I can understand and cover all the issues it's better to use a solicitor.
ReplyDeleteThanks! It's the other way round. My wife bought the property a couple years ago and now we're living in one home so it is a liability. Her mother is happy to purchase the place and rent it out as an investment. The only issue might be that the bank might insist a lawyer be involved, because she will need a mortgage to purchase (and so disburse her daughter's mortgage) - both are with ANZ. We'll see if we can get away with as little lawyer involvement as possible.
ReplyDeleteYou will need a solicitor. The bank holding the new mortgage will insist a solicitor does the conveyancing. You will probably have to have another solicitor handle the other side as well - because it requires a discharge of mortgage. DIY really only works if either the seller is mortgage free or the buyer is paying cash.
ReplyDeleteGreat blog. This blog is written in such a way that it every individual who read this get plenty of knowledge.
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ReplyDeleteHi would you have a scanned copy of the Sale contract that you could email? We are working from Australia.
ReplyDeleteSorry. They are under copyright so you have to hunt around on line for one.
ReplyDeleteHi, so you can download one off the internet for free if you can find one listed on a site and then it does not breach copyright? Is that correct?
ReplyDeleteI have also been contacting stationery stores for the CCH contract but none seem to have it. Would you indicate to me which one specifically has that form. Thank you.
ReplyDeleteWhitcoulls at South City i think but can't be sure. It might have been a stationary in Riccarton. I'll have a receipt for it somewhere buried under a zillion others. I'd seen it at other stationaries previously when hunting for standard lease agreements. Shouldn't be hard to find - send the pic above of the front page to the stationary's head offices which i'm sure are on line and they will tell you - i should also do it and add it as a note somewhere - or you can add a comment once you find out ;-)
ReplyDeletei use the Law Association now https://portal.thelawassociation.nz/Legal-Forms/
DeleteKia ora, Im buying my sons house, there's no mortgage because we've settled it, no complications, can I just skip to the transfer document. He lives in Australia, the house is here, I'm not happy with the quotes I've received from conveyancing services
ReplyDeleteif there's no mortgage on the property before the sale and there'll be no mortgage after the sale then you can just transfer it. You prepare the transfer document - get your son to sign it in front of a JP or equivalent. The witness will have to be easily contactable because LINZ will probably check.
DeleteJust make sure your transfer document has all the correct details in the correct places and you should be ok.
Ditto for the manual lodgement form (http://diyrealestateinnz.blogspot.co.nz/2015/08/diy-purchase-of-real-estate-in-nz-linz.html)
make sure you read all of my pages and you should have no problems
murray
It seems very hard to find this form on line or through book shops.
ReplyDeleteAny pointers?
The only ones I can find are expensive - i recently bough a 2 pack from here https://portal.thelawassociation.nz/Legal-Forms/
DeleteExcellent posts to read keep it up and keep going on this way. And keep sharing these types of things Thanks.
ReplyDeleteRental Property Management Auckland
I am transferring a property and there is a covenant pursuant to the RMA. When I put in Fee simple do I then just give only the number of the interest or/and the description of the interest as given on the title
ReplyDelete1. your comment should probably be under a different section of this blog as it does not specifically relate to the contract.
Delete2. Though I did study covenants when i went to Uni that was 40 years ago and in a different country (Australia) so I am no expert at all.
3. The golden rules is always do your research - you can study the acts relating to your covenant and the land transfer regs etc. If you put in the work I'm sure you will figure it out. It's not rocket science :-). If you do it would be great if you then came back here and wrote up a comment for subsequent readers - i'd mention your comment in the main body of text. Good luck :-)
Fantastic blog! Do you have any tips and hints for aspiring writers? I’m planning to start my own website soon but I’m a little lost on everything. Would you propose starting with a free platform like WordPress or go for a paid option? There are so many options out there that I’m completely overwhelmed .. Any suggestions? Many thanks!
ReplyDeletebeleggen in vastgoed
I struggle to find NZ S&P agreements (to purchase) online.
ReplyDeleteSeems Whitcoul's dont sell them anymore. ANy suggestions, please.
yes. All tied up by NZ real estate machine. I bought a 2 pack from here: https://portal.thelawassociation.nz/Legal-Forms/
DeleteMy sister and I inherited our parents lifestyle block. No mortgage. My son and his wife want to purchase (cash) my sisters half share in the property. A simple transaction (no GST) - no strings attached. We want to avoid solicitors fees - can we draw up our own simple S & P agreement. Just get lawyer to register title change - or can we do this too? Thanks
ReplyDelete1. I'm not a solicitor. 2. You might be a solicitor playing dirty. 3. You provided too few details.
DeleteYou do not really need a contract if the title is already in your names and there is no dispute between you and no party is likely to fuck over the other party at a later date (eg one of you is handicapped). AFAIK you don't need a solicitor unless the purchaser is going to take a mortgage to make the purchase. You just need to fill out the necessary transfer documents, pay the fee, notify the council for rates. My advise is that if the property is worth a lot (like millions) a lawyer is the least of your problems but if it's only worth a few tens of thousands then go for it.
Hi
ReplyDeleteI'm unable to download the Sale & Purchase agreement, are you able to send me a copy?
Regards Warren
sorry. I got lazy and just bought a 2 pack from here https://portal.thelawassociation.nz/Legal-Forms/
DeleteA very nice content along with very good information and it is very useful, Thanks for share.
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Thank you.
Delete