Property Sales

You have decided to sell your house. What do you need to do before you put it on the market? 

This guide deals with the process once a purchaser has been found, in particular the agreement for sale and purchase, warranties, the offer, conditions, escape clauses, title, confirmation of contract and everything after that.




This guide deals with the process once a purchaser has been found. There are many preliminary matters that you need to deal with before then, such as:

  • Setting the price
  • Preparing your home for sale
  • Deciding on which sale method to use
  • Your lawyer can help you with these decisions. Alternatively, there are many resources available such as the Trade Me Property website.


Starting the legal process

Once a purchaser is interested the next step is for the purchaser to make an offer. If the property is being marketed by a real estate agent the agent will prepare the offer on the purchasers behalf and, after signature by the purchaser, submit it to you. If there is no agent then it is normal for the purchasers lawyer to prepare the offer.

The Agreement for Sale and Purchase / Contract

The form of Agreement for Sale and Purchase commonly used is a form jointly prepared between the Real Estate Institute of New Zealand and the Auckland District Law Society, commonly called the "ADLS 9th Edition". This contains the terms of the purchasers offer to you. When signed by the purchaser it is an offer by the purchaser to you to buy the property on the terms set out. Once accepted by you it is a legally binding contract which neither party can withdraw from unless any conditions contained in the contract have not been satisfied or, in certain circumstances, when a party is in breach.


The ADLS 8th Edition contains certain warranties given by you as seller. You need to be aware of those. They are:

  • If the property is a vacant residential lot that all boundary markers are present and will be in their correct position as at the possession date.
  • That as at the date of the agreement you have not received any notice or demand and have no knowledge of any requisition or outstanding requirement in relation to the property.
  • You have not given any consent or waiver which directly or indirectly affects the property and which has not been disclosed in writing to the purchaser.
  • That all the chattels will be delivered to the purchaser in the same state as they were at the date of the agreement.
  • That all electrical and other installations on the property are free of any charge.
  • There will be no arrears of rates or water rates.
  • If you have done or caused or permitted to be done on the property any works requiring a Resource Consent or Building Consent that Resource Consent or Building Consent was obtained, the works were completed in compliance with such consents, and where appropriate a Code Compliance Certificate was issued for those works.
  • That between the date of the agreement and settlement, you have not given any consent or waiver which directly or indirectly affects the property and that any notice or demand received which directly or indirectly affects the property has been delivered forthwith by you to the purchaser.
  • There are further warranties and undertakings of a procedural nature that are included in the agreement, which will be dealt with as part of the sale process.


Before you consider an offer you must decide on the following:

  • The price ("purchase price")
  • The deposit (normally between 5% and 10% of the purchase price)
  • The settlement/possession date (the day you receive the purchase price and give possession/ownership of the property to the purchaser)
  • Chattels/furniture to be included
  • Any conditions that you are prepared to accept (see below)


When considering an offer you need to decide whether you will accept an offer subject to conditions. The real estate agent or your lawyer can help you with these. Common conditions are:

  • The purchasers lawyer approving title
  • The purchaser obtaining satisfactory finance
  • The purchaser obtaining a satisfactory LIM
  • The purchaser obtaining other satisfactory reports such as a building or valuation report
  • The purchaser selling their existing home
  • The conditions will have to be satisfied within a certain time. It is the purchasers obligation to take all reasonable steps to ensure that they satisfy those conditions by that time. If a purchaser does not take such reasonable steps to satisfy such conditions then the purchaser may not be able to validly withdraw from the contract if those conditions are not satisfied and could, in fact, be in breach of the contract. If that happens you should discuss that with your lawyer.

You may also consider imposing a condition that you obtain a replacement property satisfactory to yourself. For obvious reasons that type of condition is not particularly attractive to a purchaser.

Building report

There are two common ways of wording a building report condition. The first is entirely subjective and reads something like this:

"This agreement is conditional upon the purchaser obtaining a report from a builder on the property on terms and conditions entirely satisfactory to the purchaser within five working days of the date of this agreement."

If there is anything wrong with the property whatsoever then the purchaser may withdraw from the agreement (although there may be an argument that if a particular defect was readily apparent to the purchaser, say the fact that the house needed painting, then the purchaser cannot rely on that defect to withdraw).

A second common type of building condition is more akin to a building requisition. In this type of clause the purchaser must submit a copy of the report to the seller specifying any defect and if the seller agrees to remedy such defect then the purchaser cannot withdraw. That type of building report condition is of course more prefereable from a seller's point of view.

Escape clause

If the contract is to be subject to a condition that the purchaser sells their existing home or some other condition that contains a long time period for confirmation you may consider putting in an escape clause. That entitles you to continue to market the property and accept another offer, commonly called a "back up offer". The escape clause provides that if you give notice to the purchaser that you have received another satisfactory offer then the purchaser has a fixed time period, normally 3-5 days, to confirm the contract. If the purchaser does not confirm within that time you can cancel the contract in which case the back-up offer is in force.


Your lawyer will search the title. It is your obligation as seller to give the purchaser clear title on settlement. That means that any mortgages or other charges shown on the title have to be cleared by you on or prior to settlement.

There is a requisition procedure provided for in the contract enabling a purchaser to requisition the title if the purchaser takes a valid objection to the title. If you cannot satisfy that requisition then you have a right to terminate the contract. The net effect of this is that even where there is an otherwise unconditional contract the purchaser still has a right to object to title and if you cannot satisfy that objection the contract is normally terminated. You need to discuss that with your lawyer especially if you intend to enter into another unconditional contract to purchase a replacement property on the basis that you have an unconditional sale contract.


On the date for confirmation the purchasers lawyer will, hopefully, confirm the conditions. If the conditions are not confirmed you have to decide whether to grant an extension, if requested by the purchaser, or terminate the contract. You will need to instruct your lawyer to do that. The contract does not automatically terminate. Once confirmation is given, the contract is binding on both parties and enforceable by both parties.

After confirmation

Once the contract has been confirmed your lawyer will attend to the legal documentation, including obtaining any discharge of mortgage required, to enable settlement to take place and possession to pass on the settlement date. You will need to attend to the practical aspects such as:

  • Moving home
  • Cancelling houseowners insurance
  • Advising people, authorities and organisations that need to be notified of your move
  • All other ancillary matters
  • Your lawyer will provide to the purchasers lawyer a statement (called a "settlement statement") setting out the amount required on settlement including an apportionment of any outgoings, such as local authority rates.

Prior to settlement you will need to see your lawyer to sign any necessary documentation and advise your lawyer of what you want done with the proceeds of sale.


On the settlement day your lawyer will collect from the purchasers lawyer the amount required to complete settlement of the purchase and repay any loan outstanding that is secured against the property. The purchaser is entitled to vacant possession of the property as soon as the monies have been paid over and to have the legal title transferred. After settlement the local Council and QVNZ are notified of the change of ownership.

Local authority rates

On settlement local authority rates are apportioned between the seller and purchaser. As most rates are payable by instalment your lawyer will normally apportion the rates on the basis that all current instalments, and the next instalment due, are paid or will be paid out of the proceeds of sale.


After settlement your lawyer will provide you with a full report setting out the details of the transaction and pay any balance settlement proceeds to you or to your nominated bank account.


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