The importance of Lawyers within Residential Conveyancing
Why Lawyers are crucial for Residential Conveyancing
Do You Need a Lawyer for Residential Conveyancing?
Buying or selling a home can look simple: attend open homes or auctions, make an offer, sign the agreement, and wait for settlement. But many of the issues that matter most are not obvious from a viewing.
Behind the scenes, matters such as the title, LIM report, easements, cross-leases, covenants, building issues, insurance, and finance can all affect the value, use, and saleability of a property and by the time these issues are discovered, the agreement may already be unconditional. Get legal advice early on and save yourself from a headache later.
What are conditions?
Conditions are clauses in a Sale and Purchase Agreement that must be satisfied before the agreement becomes unconditional. They give the parties time to investigate important matters before they are fully committed. If there are no conditions, then the Agreement is unconditional the moment it is signed no ability to back out, if issues are later discovered or if your finances take a hit.
Common conditions include finance, LIM, building report, title, insurance, toxicology report, sale of the purchaser’s existing property, and broader due diligence.
These conditions must be selected on the agreement or added as additional conditions prior to signing.
A condition is as good as it is worded.
A condition is only as useful as its wording. If it is too narrow, too vague, or has unrealistic timeframes, it may not provide the protection intended.
For example, if a purchaser needs to sell their existing home first, they may not want to spend money on reports or other investigations until they have an acceptable offer. If that condition is not drafted properly, the purchaser may face unnecessary costs or deadlines that do not work commercially.
Likewise, if a vendor provides a LIM or building report, a purchaser should be careful before removing their own conditions. Otherwise, they may lose the ability to raise issues discovered in those reports.
Conditions can protect Vendors too
Conditions are often discussed from the purchaser’s perspective, but they are also important for vendors. A vendor should understand what a conditional offer is, how long the conditions will run, and when the agreement is likely to become unconditional and most importantly, how and when do they get their money.
An offer with broad or numerous conditions may be less certain than one with fewer, clearer conditions and shorter timeframes. Vendors may also need to consider escape clauses (the ability to consider other offers), rights to remedy issues before cancellation, or tighter deadlines.
Conditions can also directly protect vendors. Disclosure clauses, “as is, where is” terms, and non-reliance clauses can help clarify the basis of the sale and reduce the risk of disputes later. It’s best to speak with a lawyer and understand if such clauses are needed for your specific needs.
Ultimately, conditions are a key part of structuring the transaction, influencing both the certainty of the deal and the allocation of risk between the parties and having a lawyer involve earlier on can save you a headache later on.
Getting a lawyer involved
Getting a lawyer involved early ensures you fully understand what you are committing to before problems arise. If you talk to a lawyer after the agreement is signed it can make it much harder to raise issues, renegotiate, or walk away. At worse if you entered into an unconditional agreement at signing, you won’t have the luxury to reconsider.
Lawyer can help check whether the right conditions have been included, add new ones or tailor existing conditions to your needs, determine whether the timeframes are realistic, and inform you of what exactly you are getting into. This is important for both purchasers and vendors.
As the age-old saying goes, “An ounce of prevention is worth a pound of cure.” Spending a little time getting advice before signing can save a lot of stress, cost, and uncertainty later.
If you are thinking about buying or selling, contact Davidson Legal at 03 365 6050 or admin@davidsonlegal.co.nz before signing your next Sale and Purchase Agreement. We can help you understand what you are agreeing to and make sure the right protections are in place.
For further updates and information please keep an eye out on our website in the coming year or feel free to contact us.