Understanding the sale and purchase agreement when buying

A sale and purchase agreement is a legally binding contract between you and the seller.

Summary of important things to know
  • You must sign a written sale and purchase agreement when you buy a property.

  • Always check your sale and purchase agreement with a lawyer or conveyancer before signing. You need to read and understand the agreement before you sign it.

  • You should always get legal advice before you sign the agreement and throughout the buying process.

  • You can negotiate the conditions in a sale and purchase agreement.

  • A sale and purchase agreement becomes unconditional when all the conditions are met.

  • The agent helps you and the seller to include the conditions you both want. Even though the agent works for the seller, they also have to deal fairly and honestly with the buyer. They can’t withhold any information, and they must tell you about any known defects with the property.

  • Before you sign a sale and purchase agreement, the agent must give you a copy of the REA New Zealand Residential Property Sale and Purchase Agreement Guide. They must also ask you to confirm in writing that you’ve received it.

IMAGE: Reading
  • Title search

    This is done by your lawyer or conveyancer to check who the legal owner of the property is and to see if there are any other interests over the property such as caveats or easements.

    Learn more about titles

  • Obtaining finance

    This refers to you being able to arrange payment, for example, a mortgage or a loan. Some agreements may stipulate (for the benefit of the vendor) that if you are unable to secure financing and cannot to satisfy this condition, you will need to supply evidence from your bank confirming your finance was declined. If you cannot supply supporting evidence, you may still be required to proceed with the sale.

    Learn more about financing

  • Sunset clause

    A sunset clause is the date and time your offer expires.

    Adding a sunset clause to the sale and purchase agreement allows you to have certainty that your offer has either been accepted or declined by that date and time so you are free to offer on other properties. If you make an offer on another property while you are waiting to hear back about your first offer, you could end up in a situation where both offers are accepted and you have committed to buy two properties.

  • Valuation report

    A bank may require you to obtain a valuation of the property (an estimate of the property’s worth on the current market) before they agree to a loan.

    Read more about valuations

  • Land information memorandum (LIM)

    Provided by the local council, this report provides information about the property such as rates, building permits and consents, drainage, planning and other important information.

    Read more about LIM's

  • Satisfactory property inspection report

    If this is a condition of the sale you can use who you like to inspect the property, but we recommend using a registered property inspector. If the report isn’t satisfactory to you, you may be able to withdraw your offer on those grounds, but the vendor may ask to see a physical copy of the builder's report.

    Read more about the property inspection reports

  • A satisfactory toxicology report

    You can request a report to detect if a property has been contaminated by the preparation, manufacturing or use of drugs (including methamphetamine).

    Unless there is strong suspicion or information from Police or forensic experts that a property has been the site of production or heavy use of methamphetamine it may not be necessary to commission a report. Talk to your lawyer or the real estate agent before making an offer if you are concerned the property may be affected.

    Read more about meth contamination

  • Engineer’s or surveyor’s report

    Similar to a property inspection report but more focused on the entire section and the structure of the property.

  • Sale of another home

    You may need to sell your existing home in order to buy another. You may add in the condition that the contract is conditional upon securing an unconditional contract for the sale of your own home first by a certain date.

  • COVID-19 impacts

    Talk to your lawyer about what might happen if COVID-19 impacts you or the other party. You may want to include a condition in your agreement about what happens if you are unable to settle on settlement day.

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Understanding the sale and purchase agreement

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