Understanding the sale and purchase agreement when selling

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

Summary of important things to know
  • You must sign a written sale and purchase agreement when you sell 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 selling 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 buyer to include the conditions you both want. Even though the agent works for you, they also have to deal fairly and honestly with the buyer. They can’t withhold any information, and they must tell the buyer about any known defects with the property.

  • If your agent or anyone related to them wants to buy your property, they must get your written consent to do this. They must also give you an independent registered valuation of your property.

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

  • You can download our New Zealand Residential Property Sale and Purchase Agreement Guide.

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  • Title search

    This is done by the buyer’s 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.

  • Finance

    This refers to the buyer arranging payment, for example, a mortgage or a loan.

    Some agreements may stipulate (for your benefit) that if the buyers are unable to secure financing and cannot to satisfy this condition, they will need to supply evidence from their bank confirming that their finance was declined. If they cannot supply supporting evidence, they may still be required to proceed with the sale.

  • Sunset clause

    The buyer may add a sunset clause to the sale and purchase agreement — this is the date and time their offer to you expires. Buyers add this clause so they can make offers on alternative properties if the seller takes time to respond to their offer.

  • Valuation report

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

  • 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.

  • Satisfactory property inspection report

    If this is a condition of the sale, buyers can use who they like to inspect the property, but we recommend they use a registered property inspector.

    If the report isn’t satisfactory to you, and the buyers withdraw their offer on those grounds, you may ask to see a physical copy of the builder's report.

  • A satisfactory toxicology report

    Buyers 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. Buyers should discuss this with their lawyer or the real estate agent before making an offer and inserting this clause.

  • 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

    The buyer may need to sell their own home in order to buy another.

    They may add in the condition that the contract is conditional upon securing an unconditional contract for the sale of their home first by a certain date.

  • COVID-19 alert level changes

    Before you start receiving offers, consider whether you want to include a condition in your agreement to protect you against a sudden change in alert level, which may prevent you from being able to settle on settlement day. Prospective buyers may choose to make this a condition of their agreement too.

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Understanding the sale and purchase agreement

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