Most people don’t have much experience selling a property, as many spend 10-20 years in the same house. It can be a daunting process, so we wanted to provide a step-by-step guide of the Sale & Purchase Agreement (SPA).
First thing to understand is that the SPA is the contract used to sell/purchase property in New Zealand. Every detail of the sale is presented in this contract, the front page of the SPA contains most of the important information, below is a copy of the front page which we will run through in detail.
First of all you have the vendors (seller) name, and the purchasers name, and some details on GST, no need to worry about this section unless you are GST registered which is unlikely. This section is followed by the property address, and the legal description of the property which will already be filled in when we send your offer.
Next section covers the purchase price, which is obviously a very important part of the contract, it then notes whether the price includes or excludes GST, again no need to worry about the GST component unless you are GST registered which would likely only occur if the property is owned by a business. We then list the deposit amount, which is a negotiable amount and could be $10,000-$20,000 or sometimes 5%-10% of the purchase price, it really just depends on what is agreed upon.
Next section covers the settlement date, another very important detail, this is the date that the money is transferred and the keys are handed over. This is also negotiated between both parties, we can generally be flexible on this date so just let us know what suits you.
We then get to the conditions section, the main ones being financing, LIM report, and builders report. These conditions allow the purchaser to get their money lined up, and a lawyer and builder to do some due diligence to make sure everything is as it should be and there’s no major surprises. Final part is the tenancies section, this just covers if there will be people renting the house at settlement or if the property will be vacant.
That covers the front page of the SPA and most the important information regarding the contract.
The next 15 pages are ‘General Terms of Sale’ which are generic terms that are in every contract and your lawyer will be familiar with.
The following page is the ‘Further Terms of Sale’ page which is another important one as this is where any extra clauses will be listed. These further terms could cover a wide range of things including granting access to the property for engineers or tradies to quote jobs, it could also cover further details around a due diligence period and extra details on lawyers reviewing the contract. We are happy to talk you through any extra clauses and exactly what they mean. Your lawyer will also be familiar with anything added in this section.
We are now up to page 19, as shown below. This covers any chattels that are included in the sale, chattels cover any items that are not permanently attached to the proeprty, the main ones are listed on the contract but others can be included. Next section is tenant details if any, this section is just left blank if the proeprty is occupied by the owner instead of rented out.
We are now at the end of the SPA, page 20 is the signature page, this is where both the seller & purchaser signs the contract to make it official. The final page #21 covers the vendors and purchasers contact details and their lawyers/solicitors details so all parties can be in contact with each other when required.
Now that the contract has been signed by both parties, the agreement is officially ‘under contract’ and is conditional upon all conditions/clauses being met. Once the clauses are met and the due diligence period is over, the contract then becomes unconditional and the agreed upon deposit is transferred.
Hope this makes sense! Please reach out for any further questions, we are more than happy to run through specific with you.
