Property buyers will no longer be able to bluff their way out of a purchase, as they now have to provide proof if they do not have enough cash.
The Real Estate Institute of New Zealand is warning consumers they are no longer able to use finance clauses to step away from a property purchase.
Up until now, the purchaser’s word has generally been enough for someone to pull out of a contract. But only if a finance condition has been inserted into the sale and purchase agreement.
However, with the new changes, purchasers will have to provide evidence if they are unable to raise finances and they want to end the agreement.
“This is a significant change to the sale and purchase agreement, and it’s imperative that consumers understand the implications, as if they can’t provide evidence they can’t raise the finance, they could be forced to proceed with the purchase or face other legal action by the vendor,” REINZ chief executive Bindi Norwell said.
“It’s also essential that anyone looking to purchase a property takes legal advice and talks to their financial provider so that they understand exactly what they’re signing or else the implications are pretty significant.”
Other fundamental changes to the sales and purchase agreement in New Zealand include:
- An optional toxicology report condition is included on the front page and in the general terms.
- A detailed process to resolve compensation disputes between vendors and purchasers has been added.
- “Fixtures” and “chattels” have been removed and replaced with new definitions and warranties.
“The last time changes of this scale were made to the sale and purchase agreement was seven years ago, so it’s really important that anyone looking to buy a house understands the elements of these changes that impact consumers directly,” Ms Norwell said.