Selling Property By Private Sale: What Are The Legal Requirements?

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Selling your house by private sale (without the aid of a real estate agent) is becoming more common in New Zealand. If you are considering selling your house by private sale there are a few legal issues to consider before you start.Sale by Vendor:o On TradeMe to complete strangero To a friend or person you knowo Someone already introduced to you as a likely person

Legal Advice
Talk to your lawyer first who will advise you of what your obligations are to a purchaser and what documentation you will need.

The Agreement for Sale and Purchase
The Agreement for Sale and Purchase is the legal contract onfirming the sale between you and the purchaser. It is a good idea to get one drawn up by a lawyer before you market the property. After it has been drawn up, your lawyer should go through it with you to explain how to ensure all the parts are signed correctly by both you as the sellor/vendor and the purchaser.

When you are discussing the agreement with your lawyer, your lawyer should advise you on additional clauses that can protect you as the vendor/seller. For example a cash out provision or waiving rights to requisition.

Disclosure
You may be required by law to disclose certain information about the property to potential purchasers (if they ask about them?). If your property is a Unit Title (body corporate) you have very specific additional requirements.

Your lawyer can advise you on your specific disclosure requirements. If you fail to disclose items that you are legally required to, the agreement may not be binding and/or the purchaser may be able to sue you for losses at a later date.

It is important you understand these details BEFORE you start marketing your property for sale.

Warranties and Chattels
You have obligations as a vendor in respect of warranties and chattels included in the sale. You need to list the chattels that will be included in the sale. There are standard chattels noted in the agreement and you must delete those not included or you will be liable to provide them.

Be aware that all chattels included must be in working order at the time of completion of settlement. Discuss this with your lawyer when they are drafting the Agreement for Sale & Purchase to ensure the fixtures and chattels reflect your home and your wishes.

Marketing the Property
There are certain rules regarding what you can say about a property when selling it. For example, a property can not be advertised as a “home and income” if it does not have the correct consent to do so.

When drafting the Agreement for Sale & Purchase, your lawyer should review the Certificate of Title for your property and provide advice as to what you can and can’t say about the property, based on the restrictions listed on the title.

It can be helpful if you think about how you were planning to describe the property (i.e. what you were going to say about it, not where it will be advertised etc) before you visit with your lawyer. This will allow your lawyer to advise you on the rules around how you can describe the property.

It may help to already have a LIM report available to show prospective purchasers, but this is not a legal requirement.

Open Homes
Be aware that you may need to check with your insurer regarding any losses incurred when you host an open home.

Negotiating the Sale
Negotiations between yourself and a purchaser may be difficult for some people. Make sure you write down notes of any discussions you have and include anything agreed to in writing inthe agreement. Each handwritten amendment needs to be signed or initialled by both parties.

It is important you understand the agreement and the implications of any amendments made during the negotiation process. If the prospective purchaser wants to add a condition or clause that you are not familiar with, it is a good idea to get your lawyer to review it, to ensure it is legal and so that they can explain to you what the implications of it are.

Filling out condition and settlement dates correctly in the agreement is very important. Your lawyer should advise you on how to ensure these dates are correct when discussing the Sale & Purchase Agreement.

The sale becomes binding when you have both signed the agreement.

Completing the Sale
When you have a signed agreement, make sure you send a copy to your lawyer straight away and contact them by phone to let them know that you are sending it to them. It is a good idea to double check that the purchaser has sent it to their lawyer as well, to ensure the transaction process flows smoothly.

From this point on, the sale will follow the typical conveyancing process.

Selling your property by private sale is a viable option, but it is important to remember that it is a legal process with a lot of rules and regulations. A little bit of investment in quality advice from a skilled property lawyer will help protect your from the risks of running foul of the law, the deal falling through, or the purchaser suing you for breach of contract or subsequent losses.

If you are looking for specific advice on selling your home by private sale, contact residential property expert, Fiona Taylor by phone on 09 837 6845 or email fiona.taylor@smithpartners.co.nz