When you are selling, or buying, a property you are probably dealing with your most valuable asset, so it’s important to do it right and very important to understand the legal procedures involved. You want this experience to be as stress-free as possible.
Once you’ve chosen a real estate agent, the method of sale and a buyer has been found, then the next step is to sign a sale and purchase agreement. This is a legally binding contract between the buyer and seller. It’s important that you read and understand the sale and purchase agreement before signing it – as already stated get legal advice before signing. Sometimes there are extra steps involved depending on the type of property you are selling. For example, if you are selling a unit title property, you have legal obligations to make statutory disclosures to the buyer – your lawyer can explain what they are and when you have to make them.
The agreement should contain details of the property being sold, the price, any conditions of the sale, and any chattels (items of personal property that were never intended to be fixed to the house and can be removed without causing damage to the property, for example the stove) that are included in the sale. Remember, not to sign the agreement before discussing it with your lawyer. If you are selling a unit title property you must not sign the agreement until you have made pre-contract disclosure to the buyer. Be aware that you can’t usually change the agreement once you’ve signed it.
Make sure the deposit you receive is sufficient to cover any commission to the real estate agent that will fall due when the contract becomes unconditional (even if the buyer fails to complete the purchase).
When selling a property, it is important to ensure that all chattels included in the sale are in the same condition on settlement date as they were at the time the contract was signed. If you are the seller, and you owe money on any of the chattels being sold with the property, which may have a charge over them, it is important that you let your lawyer know.
Your lawyer can guide you regarding any buyer requests to resolve any problems with the title or Land Information Memorandum (LIM) report and will check that all the conditions have been met. Once this happens the contract is declared unconditional.
Once your sale agreement has become unconditional, there are some procedures that will be undertaken on your behalf. You will sign all documentation required to complete the sale. The transfer will be done by way of e-dealing with the Land Titles Office so you will need to sign an authority that enables the lawyer to transfer title to the buyer and also a tax statement for IRD.
Prior to settlement taking place, you will need to organise your move and change of address. Advise power and other utility companies of your moving out date and have meters read. Only cancel your insurance once settlement is complete, as if settlement is delayed for any reason, you would not want to be without insurance cover. The buyer will be entitled to inspect the property before settlement – make sure a suitable time can be arranged for this. Provide your real estate agent with a key to the property which can be handed over once settlement has been completed. Generally, the rest of the keys are left inside the property.
If there is a mortgage registered against your title your lawyer will obtain a repayment amount from your mortgagee and make all necessary arrangements to repay it from your sale proceeds and discharge the mortgage from the title. If you are selling a unit title in a unit title development, you will need to make pre-settlement disclosure to the buyer. Your lawyer will need to make sure your levies are up to date and obtain the appropriate certificate from the body corporate.
Your lawyer will also obtain rating details from your local rating authority (usually your local council) and make the necessary adjustment between you and the buyer to ensure each party pays their fair share of rates. If the property has a water meter, a final water reading for the property will be arranged on settlement and sufficient funds will be retained to pay this account.
It is also important to consider additional costs - these may include legal fees, real estate agent fees, valuation fees, building inspection fees, body corporate fees, mortgage discharge fees, and moving costs. Your lawyer will send you a detailed statement showing all receipts, payments, and fees which were deducted from the sale proceeds.
At Treadwell Gordon we are experts in residential property who can help make your property journey straightforward and protect your interests every step of the way.
