Signing an unconditional purchase agreement means that once you have signed the contract for the sale of property you are bound to proceed with the deal no matter what.
Having a conditional contract for purchase means that the contract is dependent on something; it may relate to such matters as finance, search and approval of title, unconditional sale of the purchasers own property or receipt of a satisfactory builders report.
Lawyers include conditions into contracts, meaning you can cancel (or renegotiate the price) if an issue arises before the condition is satisfied.
Key conditions we recommend are:
Solicitor approval
Ideally, talk to your lawyer before signing. A Solicitor’s Approval clause is not a “get out of jail free” card. There are only 10 days for you to get your lawyer to approve the agreement, and even then they can only refuse approval if they hold genuine legal concerns – not because you have made a bad decision. It’s in your best interests to speak with a lawyer before signing in order to avoid this situation.
Building and Electrical inspection
These inspections often discover issues that even the vendor did not know about. Issues raised in a building report often result in a price reduction! Post the Christchurch earthquake, an engineer’s report is a must for a commercial property as insurers and bankers require the building to meet the current code. Having these inspections done means that you can make an informed decision about whether you want to continue with the purchase. You may also need to provide a valuation for the property.
Finance
Get written confirmation that the Bank will provide finance to you on the property you intend to purchase, and check you can meet any conditions the bank may impose.
LIM
The LIM (Land Information Memorandum) contains information on building consents and other useful information such as drainage and zoning of the property. You can match the consents to any alterations you can see. If there is non consented building work, be very careful before agreeing to go unconditional. For example if the LIM report shows that a fire was not installed legally and then causes a fire, insurance may not over this - this can be very expensive!
If you go ahead with an unconditional contract and later have a problem with the property, you may have a claim for misrepresentation against the vendor if they have made active misrepresentations (including half truths) in relation to the property. Keep the advertisement and if there are matters relating to the property that are important to you, write these down. This would assist proving the basis on which you bought and your reliance on statements made. However it is recommended you see a lawyer before signing anything to add conditions and ensure that you are better off in the long run.
