Contract Clauses
This is not an exhaustive list as there are limitless clauses one can use in an agreement. All the obvious ones are here for a standard investor. NOTE: If in doubt check with your solicitor before using any clause if you are in any way uncertain about the details of any clause listed here!!
Access: QUOTING
This agreement is conditional upon access being given to the purchaser between the unconditional date and the possession date for the purpose of tradesman quoting for repairs to the property. (If any required).
Access: SUBDIVISION
This agreement is conditional upon access being given to the purchaser between the date of signing this agreement and the settlement date for the purposes of commencing subdivision application for the property. The vendor agrees to assist with this process by signing any necessary documents to facilitate the subdivision process. All costs related to this process are to be borne entirely by the purchaser.
Access: DUE DILIGENCE
The Vendor agrees:
1. To provide the purchaser (and/or its invitees) access to the property as many times as necessary in order to carry out its’ due diligence investigation (with consent of the vendor and giving the required notice to the tenants as per the Tenancy Act.)
Access: REPAIRS
This agreement is conditional upon access being given to the purchaser between the date of signing this agreement and the settlement date for the purposes of undertaking repairs to the property, to bring the property up to a condition suitable for renting.
Access: TENANTING
This agreement is conditional upon access being given to the purchaser between the date of signing this agreement and the settlement date for the purposes of showing prospective tenants through the property.
OCTOBER 2008 Updated access clauses from my solicitor
Access for prospective buyers/tenants
The Vendor hereby agrees to allow the Purchaser or their agent access to the aforementioned property from unconditional date for the purpose of showing prospective occupants through the property.
Access for improvements and prospective buyers/tenants
Upon the agreement becoming unconditional the Vendor shall allow the Purchaser access to the property in order to carry out cosmetic improvements to the property and show prospective tenants the property.
Arranging Finance
This agreement is conditional on the Purchaser arranging sufficient finance on terms and conditions satisfactory to the Purchaser, and advising the Vendor or the Vendor’s solicitor on or before 4.00 pm on ……………………………. This condition has been satisfied. This condition is for the sole benefit of the Purchaser.
NOTE:
This clause should be used with caution as it allows the Purchaser a wide discretion to bring the contract to an end. If the specific financial conditions in the “Financial Conditions” section of the front page schedule are completed, a clause of this nature would not be required.
However, The Financial Conditions section must be completed with caution; it has the effect of binding the Purchaser to the financial agreements as stated, something that must be clearly explained to the Purchaser.
Backup Agreement WHEN YOU ARE THE BUER
This agreement is conditional upon the cancellation or termination of the signed agreement for the sale of the property between the Vendor and (Name), such agreement being conditional until the (date). The Vendor agrees to take all necessary steps to cancel or terminate the said agreement immediately. The Vendor is lawfully entitled to do so and the Vendor also agrees not to grant any extension of the condition date there under nor to waive any right of cancellation or termination there under
Backup Agreement
This agreement is conditional upon a prior agreement for the sale of the property not being confirmed in all respects by ……………………………………………..……..(insert name) on ………………………………….………..(insert confirmation date) being the latest date on which a condition under the prior agreement is to be confirmed, or upon the earlier termination of the prior agreement. The Vendor agrees not to grant any extension of the confirmation date under the prior agreement and to take all reasonable steps to ensure cancellation or termination on the termination date.
NOTE:
The prior agreement may contain more than one condition and this clause refers only to the date on which the last of the conditions is to be satisfied, unless the prior agreement is earlier terminated. Care must be taken to ensure that there is a proper linkage between the prior agreement and the “back up” agreement.
It is preferable for the parties to have legal advice in drafting a backup agreement
Boat, Car or Caravan as Part Payment:
Under the heading “Balance of purchase price” insert:
1. By $ ………………………… in cash on the possession date
2. The balance of $ …………………………. by the Purchaser satisfying this sum by transferring to the Vendor on the possession date the ownership of the Purchaser’s (describe chattels, etc.) ……………………………………………………………………….
…………………………………………………………………………………………………
The provisions of Further Terms of Sale (-.0) are to apply.
Under the heading “Special conditions of sale” insert:
-.0 The purchaser warrants that the chattels referred to in the Schedule of Chattels for Transfer to the Vendor, in part satisfaction of the purchase prices, are or will at the time of settlement be the unencumbered property of the Purchaser and in good working order.
Building Permit
This agreement is conditional upon the purchaser obtaining from the relevant Local Body configuration that it will grant a building consent in respect of the section hereby purchased and sold on conditions acceptable to the purchaser.
Building report:
This agreement is conditional on an Inspection being carried out by an independent building inspector, and a report, satisfactory to the purchaser.
Building Inspection: ( When you want vendor to remedy)
This agreement is conditional upon the Purchaser being satisfied within (5) working days of the date of this agreement with a builders report on the subject property. Should the Purchaser be dissatisfied with matters contained in the report then the purchaser must provide a copy of the report to the Vendor giving rise to the said defect(s). Upon receiving notice from the Purchaser of the said defect(s) the Vendor shall advise the Purchaser within (2) working days whether or not the Vendor is prepared to remedy the said defect(s). In the event of the Vendor agreeing to remedy to said defect(s) then the Vendor warrants the said defect(s) will be corrected prior to settlement in accordance with the local authority’s requirements and at the Vendor expense. If the Vendor fails to respond or advise the Purchaser within the said (2) days that the Vendor will not remedy the said defect(s) then the Purchaser shall be entitled at the Purchasers discretion by notice in writing to the Vendor to cancel this agreement. Failing the giving of such notice to the Vendor the Purchaser shall be deemed to have accepted such said defect(s)”.
Cashback clauses:
14.0 This is an unconditional cash offer. However, the vendors may cancel this contract at their option at any time prior to …… by notice in writing to the purchaser’s solicitor.
15.0 If the contract is cancelled pursuant to clause 14.0 above then the vendors shall pay the sum of $XXXX to the purchaser by way of cancellation fee within 24 hours notice having been given pursuant to clause 14.0 above. Upon this payment being made the parties shall have no further claims against each other.
16.0 ..insert Agency… may continue to market the property for the vendors to obtain an unconditional contract for the vendors up until…..
17.0 If the vendors do not cancel the contract pursuant to clause 14.0 above then the purchaser and its agents shall be permitted reasonable limited access to the property (upon giving reasonable notice) prior to possession date in order to market the property for itself but taking into account that the vendors will still be occupying the home until settlement.
Cashout
If before the vendor has been notified that the condition(s) herein have been satisfied the vendor obtains an offer for the within property on terms acceptable to the vendor then the vendor may give the purchaser three working days’ notice in writing advising the purchaser of such offer and may, at any time after the expiry of such notice and before receiving advice of the fulfillment of the said condition(s) or of the waiver thereof by the purchaser, by further notice in writing to the purchaser cancel this contract.
Conditional on Approval or Consent
This agreement is conditional on the Purchaser obtaining at their cost, approval or consent for ………………………………………………….. from …………………………………………………. And advising the Vendor or the Vendor’s solicitor by 4.00 pm on ………………………. (Insert date) that such approval or consent has been obtained. The purchaser shall bear all expense involved and will use the Purchaser’s best endeavours to obtain such approval or consent within that period. This condition is for the sole benefit of the Purchaser.
Conditional on Resource Consent
This agreement is conditional upon the Purchaser at the Purchaser’s expense obtaining from the responsible authority by 4.00 pm on …………………………….. (insert date), any approval or consent necessary under the Resource Management Act 1991 for …………………………………………………………………………………………………………………….. upon terms and conditions satisfactory in the sole judgment of the Purchaser. The Purchaser will forthwith make application for such approval or consent supporting the same with all necessary plans, specifications and details as may be required by the responsible authority and will take all reasonable steps to obtain the said approval or consent by the above date. If the purchaser shall obtain such approval or consent upon terms and conditions satisfactory to the Purchaser the date for confirmation shall be automatically extended for such further time as is necessary for the determination of any appeal or other legal proceeding against or arising from the said consent or approval. This condition is for the sole benefit of the Purchaser.
NOTE:
Caution should be exercised in using this clause as the extension for the hearing of a possible appeal might delay confirmation for several months.
Conditional on Specialist’s Report
This agreement is conditional on the Purchaser being satisfied with a report on …………………………………… (describe subject matter of report) to be obtained from ……………………………………………………………….. Should the Purchaser in good faith be dissatisfied with any matter contained in the report the Purchaser may terminate this agreement by notice in writing to the Vendor or the Vendor’s solicitor, such notice to be received by 4.00 pm on ………………………… (insert date). If notice is not received within time this contract is at an end.
Conditional Upon Settlement of Purchaser’s Property Sale
This agreement is conditional upon settlement taking place on or before……………….. (insert date) of the sale of the Purchaser’s property situated at …………………………………………………………………… pursuant to the existing agreement for sale relating to that property. This condition is for the sole benefit of the Purchaser.
NOTE:
This provision should not be used without consultation between the solicitors for the parties. It virtually converts the agreement into an option. However, it might be intended that a Purchaser will not be subject to penalties if there is delay in settlement of the Purchaser’s own sale. If this is what is required, a suitable alternative clause should be drafted.
Due Diligence: NOTE: SEE PURCHASERS CONDITION
This agreement is conditional upon the purchaser approving (at the purchasers sole discretion) all matters that the purchaser considers may touch, concern or affect the property by …………………………….(insert date). This condition is inserted for the benefit of the purchaser.
Due Diligence
14.1 For the purposes of determining whether this property will meet our investment criteria, the Purchaser shall endeavour to notify the Vendor within 5 working days if the valuations/appraisals obtained identifies that this property will not meet these criteria. The Purchaser will advise in writing if these criteria are not met and this agreement will then be null and void.
14.2 This agreement is then conditional upon the Purchaser approving (in the Purchasers’ sole and unfettered discretion) all matters that the Purchaser considers may touch, concern or affect the property or the commercial viability of the transaction within 15 working days after sub-clause 14.1 has expired. If notice is not received in writing by the Vendor’s solicitor or agent by 5pm on the 15th working day after sub-clause 14.1 has expired of the purchasers’ approval of the property then the contract will be at an end. This condition is inserted for the sole benefit of the purchaser.
Due Diligence NEW for 2008 conditions
This agreement is in all respects conditional upon the Purchaser being satisfied that the property is suitable for the Purchasers requirements following the Purchaser carrying out a due diligence verification of the property. The date for fulfilment of this due diligence condition is 10 working days after the date of this agreement. The parties acknowledge that this due diligence condition is inserted for the sole benefit of the Purchaser and may at any time prior to this agreement being voided be waived by the Purchaser giving written notice of the waiver to the vendor. If this condition is not fulfilled the Purchaser shall not be obliged to state any reason for the Purchaser’s lack of satisfaction.
Due Diligence NEW for 2008 conditions
This agreement is entirely conditional upon the Purchaser approving in the Purchasers sole and subjective opinion all matters that the Purchaser considers may touch, concern or affect the property or the commercial viability of the transaction within 12 working days from the date of this agreement. The Vendor agrees to provide the Purchaser (and/or it’s invitees) access to the property as many times as necessary in order to carry out it’s due diligence investigation. This condition is inserted for the sole benefit of the Purchaser.
Escape Clause:
USE THIS WHEN YOU ARE THE VENDOR!!
If before this agreement becomes unconditional the Vendor enters into another agreement which is either conditional, or is unconditional in all respects except for being subject to non confirmation of this prior agreement, and which the Vendor in the Vendors judgement considers to be no less favourable, the Vendor may deliver to the Purchaser or the Purchaser’s solicitor notice in writing requiring the Purchaser to confirm this agreement as being unconditional.
The Purchaser shall have until 4.00pm on the third (3rd) working day after delivery of such notice to advise the Vendor by delivery of notice in writing to the Vendor or the Vendor’s solicitor that this agreement is unconditional, otherwise this agreement shall terminate. This condition is for the sole benefit of the Vendor.
Escape Clause:
Sometimes required by Vendor before accepting conditional offer
If before this agreement becomes unconditional the Vendor enters into another agreement which is either conditional, or is (delete reference to conditional agreement on instruction from Vendor) unconditional in all respects except for it being subject to non confirmation of this prior agreement, and which the Vendor in the Vendor’s judgment considers to be no less favourable, the Vendor may deliver the Purchaser or the Purchaser’s solicitor notice in writing requiring the Purchaser to confirm this agreement as being unconditional. The Purchaser shall have until 4.00 pm on the third working day after delivery of such notice to advise the Vendor by delivery of notice in writing to the Vendor or the Vendor’s solicitor that this agreement in unconditional, otherwise this agreement shall terminate. This condition is for the sole benefit on the Vendor.
NOTES:
1. The Vendor should be asked to decide whether or not a conditional backup offer should be able to trigger the escape clause.
2. A letter in exercise of this provision should be prepared by the Vendor’s solicitor.
Facsimile Execution:
(NOTE: Fax clauses are no longer required by law but many agents don’t know this.
This Agreement shall be deemed to be signed by a party if that party has executed any of the following formats of the agreement:
§ an original
§ a copy
§ a facsimile copy or
§ a photocopy of any of the above
The delivery by any party to the other of a facsimile copy of this agreement duly executed shall be deemed delivery of the original thereof and the party so delivering such facsimile copy shall deliver to the other party an original within 10 days. If the original is not so delivered, the party accepting a facsimile copy pursuant to this clause may in any court of law or other proceeding produce, or exhibit such facsimile copy as if it were the original there of and no party to this agreement may object to such copy being produced or exhibited as an original and shall be deemed to have waived any law of evidence or other requirement that an original executed document be produced or exhibited of its existence or of its contents.
Finance:
This agreement is subject to the purchaser arranging finance on terms and conditions acceptable to the purchaser in its sole discretion 5pm on ………………………….(insert date).
First Mortgage to Vendor
Under the heading “Balance of purchase price to be paid or satisfied as follows” insert:
1. By $……………… in cash upon the possession date
2. By the Purchaser executing in favour of the Vendor a first mortgage in respect of the property as described in Further Terms of Sale-.0 hereof
Under the heading “Further Terms of Sale” insert:
-.0 The first mortgage from the purchaser to the vendor shall secure the sum of $…………………….. The mortgage shall be for a term of ……………. years with interest at ……………………% pa (penalty rate …………% pa) calculated with monthly rests and payable monthly from the possession date. In addition to payment of interest the Purchaser shall make reduction in the principal sum of $…………………….. each month. The Purchaser may make additional payments in reduction of the principal sum, interest to cease on such additional payments as from the next monthly interest day but any such additional payment(s) shall not relieve the Purchaser from the obligation to make the compulsory principal payments. Such mortgage will be prepared by the Vendor’s solicitor at the expense of the Purchaser and shall be in the standard form published by the Auckland District Law Society.
NOTE:
It is preferable to have a copy of the mortgage form annexed to the agreement.
Land information Memorandum (LIM):
This agreement is conditional upon the purchaser obtaining from the Territorial authority by …………………………………………….(insert date) a Land Information Memorandum (LIM) which discloses information which is in all respects satisfactory to the purchaser. The purchaser is to notify the vendor or the vendors solicitor by 5 pm on the above date that this condition has been satisfied or the agreement will be at an end. This condition is inserted for the sole benefit of the purchaser.
Option to Purchase:
NOTE:
An option to purchase should adopt the standard form Agreement for Sale and Purchase of Real Estate, thereby incorporating all its standard conditions.
To: …………………………………………………………………….( name of option holder)
In consideration of the sum of $ ………………………. (the receipt of which is acknowledged) I grant to you (or your nominee) an option to purchase the land and chattels (if any) described in the attached form of Agreement of Sale and Purchase of Real Estate upon the terms and conditions set out. The sum paid in consideration for this option shall be credited towards the purchase price if you exercise this option but otherwise shall be forfeited to me.
This option can be exercised by you at any time before 5.00 pm on ……………….………… (insert date) (time being of the essence) by delivery of (acceptance in the form annexed) to my solicitor …………………………………..………………………….……………. (insert name) at ………………………………………………….
DATED: / / 20
………………………………………………..
Signature of Owner Granting Option
Exercise of Option
To: ……………………………………………………………………………………(name of owner)
In exercise of the option granted by you to me to purchase the land and chattels (if any) described in the attached form of Agreement for Sale and Purchase of Real Estate and upon the terms and conditions set out, I now tender such Agreement signed by me, together with payment (specify whether by bank cheque, solicitor’s trust account cheque or otherwise) of the deposit specified in the Agreement.
DATED: / / 20
………………………………………………..
Signature of Owner Granting Option
Conditional on Expiry of Prior Option:
This agreement is conditional upon the option over the property previously given by the Vendor to ……………………………………………………………………………………………….
(insert name of other purchaser) not being exercised by the expiry time of ………………. pm on ……………………….……………. (insert date). The Vendor will notify the Purchaser or the Purchaser’s solicitor not later than ………………. pm (insert time at least one hour later), whether or not the prior option is exercised.
NOTE:
Care must be taken to ensure that there is a proper linkage between the time limits in the first option and in this agreement and in the event of doubt legal advice should be obtained. (see Clause 1.1(7) of General Terms of Sale).
Property envelope:
This agreement is conditional on the purchaser visiting the council and inspecting the property envelope by …………………………………………….(insert date) The purchaser is to notify the vendor or the vendors solicitor by 5 pm on the above date that this condition has been satisfied or the agreement will be at an end. This condition is inserted for the sole benefit of the purchaser.
PURCHASERS CONDITION (NOTE: USE THIS INSTEAD OF THE PHRASE DUE DILIGENCE)
This agreement is conditional upon the purchaser approving (at the purchasers sole discretion) all matters that the purchaser considers may touch, concern or affect the property by …………………………….(insert date). This condition is inserted for the benefit of the purchaser.
Purchasers Existing Contract Unconditional:
This agreement is subject to and conditional upon the sale of the Purchaser’s property at ……………………………………………………………………………………….(insert address ) to ………………………………………………………………(insert name of purchaser ) pursuant to the agreement for sale and purchase already entered into by them becoming unconditional on or before the ………………………………….(insert date). If such sale does not become unconditional by that date or such later date that the parties hereto agree upon then this agreement shall be voidable at the option of either party and if voided the deposit and all monies paid by the purchaser shall be refunded to him forthwith and neither party shall have any right or claim against the other.
Purchaser’s Property Sale Becoming Unconditional:
This agreement is conditional upon the existing agreement dated …………….. (insert date) for the sale of the Purchaser’s property situated at ………………………………(insert address) to ………………………………………………. (insert name) becoming unconditional on or before …………… (state time) on …………………………(insert date). The Purchaser is to notify the Vendor or the Vendor’s solicitor by 6.00 pm on the date on which the existing agreement becomes unconditional that this condition has been satisfied or this agreement will be at an end. This condition is for the sole benefit of the Purchaser.
NOTE:
Care must be taken when using this clause to ensure that it is correctly liked to the time limits in the Purchaser’s existing conditional contract and that there is sufficient time after the time limit set in that agreement to communicate acceptance to the Vendor under this contract. The normal cut-off time for satisfying conditions (5.00 pm – see Clause 1.1(7) General Terms of Sale) has been extended by one hour in this clause in order to allow for that communication. However if the stated time in the prior agreement is earlier than 5.00 pm then the time under this clause should be set at no less than 1 hour after that time.
Purchaser’s Property Sale:
This agreement is conditional upon the Purchaser entering into a contract for the sale of the Purchaser’s property situated at …………………………………………………………………..
for $ ……………….. (or such lesser amount as the Purchaser shall accept) and otherwise on terms and conditions satisfactory to the Purchaser which contract is to become unconditional no later than 4.00 pm on ………………..……… (insert date). The purchaser is to notify the Vendor or the Vendor’s solicitor by 5.00 pm on that date that this condition has been satisfied or this agreement will be at an end. This condition is for the sole benefit of the Purchaser.
NOTE:
This clause allows the purchaser one hour to confirm satisfaction of the condition to the vendor. Care must be taken to ensure than any agreement entered into by the Purchaser takes into account the standard time limits in this agreement. The normal cut-off time for satisfying conditions is 5.00 pm (See Clause 1.1(7) of General Terms of Sale. If in doubt legal advice should be obtained.)
Purchasers Unconditional Sale:
This agreement is subject to and conditional upon the purchaser arranging an unconditional sale of the purchasers property at ………………………………………………(insert address) for not less than ……………………………..(insert price) or such lesser amount as may be acceptable to the purchaser on or before the ……………………………….. ( insert date ). If this condition is not satisfied by the date aforesaid or such later date as the parties hereto agree upon then this agreement shall be voidable at the option of either party and if avoided the deposit and all moneys paid by the purchaser shall be refunded to him/her in full forthwith and neither party shall have any right or claim against the other.
Purchasers Works:
Upon taking possession of the property the purchaser may undertake such work and improvements on the property (including construction work) as the purchaser may require but subject to compliance with all appropriate statutory and regulatory requirements. The vendor shall undertake such matters & sign such documents as are necessary to support the purchaser in any application to the appropriate regulatory authority in respect of such works provided that the purchaser shall be responsible for all application costs in undertaking such matters. The purchaser shall be responsible for payment of all local authority rates from the possession date. The purchaser shall be responsible for all risks in respect of any work undertaken by the purchaser upon the property.
Sale on Credit Terms
Under the heading “Balance of purchase price to be paid or satisfied as follows” insert:
(i) By $………………………. in cash on the possession date.
(ii) By the Purchaser paying consecutive monthly payments of $……………………., the first of which shall be paid one month following the possession date, such payments to be applied by the Vendor firstly in payment of interest at the rate of …………..% pa (penalty rate …………….% pa) calculated with monthly rests and payable monthly and secondly in reduction of the balance of the purchase price. On ………………………………………… (insert date) any balance of the purchase price then outstanding shall be paid. The provisions of Further Terms of Sale (-.0) are to apply.
Under the heading “Further Terms of Sale” insert:
-.0 Sale on Credit Terms
-.1 The purchaser may at any time make additional payments in reduction of the balance of the purchase price. Interest shall cease upon any such payment as from the next interest day. The making of any additional payment(s) shall not relieve the purchaser of the obligation to continue to make the compulsory periodic payments.
-.2 During the term of this agreement the Purchaser will keep the property and buildings or other improvements erected thereon in good and tidy condition and repair and will keep any buildings insured in the joint names of the parties for their replacement value, will pay all outgoings in respect of the property and will attend to any requisitions of any statutory authority arising in respect of the property. If the Purchaser fails to meet the obligations under this clause the Vendor may do so and recover the amount paid from the Purchaser together with interest at the penalty rate for the period the Vendor is out of pocket. The proceeds of any insurance claim shall be received by the Vendor and may be applied in or towards payment of the balance of the purchase price and other monies owing hereunder.
-.3 During the term of this agreement the Vendor may mortgage or re-mortgage the property provided always that the combined amount of any mortgages does not at any time exceed the balance of purchase price from time to time owing hereunder. If the Purchaser caveats the property, the Purchaser shall, at the Purchaser’s expense and without delay make available to the Vendor any consent to the registration of any such mortgage (or variation of mortgage).
-.4 The purchaser may remedy any default by the Vendor under any mortgage of the property and any money paid by the Purchaser in so doing shall be deemed to be a payment in reduction of any portion of the purchase price outstanding hereunder.
-.5 The purchaser shall, if called upon by the Vendor to do so, take title to the property and execute in favour of the Vendor a first or first and second mortgage(s) upon financial terms and conditions no less favourable than those under which the Purchaser holds the property under this agreement.
-.6 If, during the continuance of this agreement, any agreement for sale and purchase, exchange or other disposition of the property is entered into the balance of the purchase money and all other monies owing hereunder shall thereupon at the optionof the Vendor becomes due and payable.
NOTES:
1. The contract does not become binding on the Purchaser until three days after the disclosure provisions of the Credit Contracts Act 1981 have been complied with.
2. If there is to be a sale on terms with settlement delayed for more than 93 days after the date of the agreement, the transaction may be affected by the accruals provisions of the Income Tax Act 1994. The provisions of the Goods and Services Tax Act might require payment of GST on the whole purchase price at the time of payment of the deposit or first instalment. Parties should not enter into agreements without obtaining appropriate professional advice and the necessary clauses should be prepared after consultation with the parties’ solicitors.
Sale of Sections on Credit Terms
Under the heading “Balance of purchase price” insert:
The sum of $……………………………. shall be paid by consecutive calendar monthly instalments of $…………………………… commencing on …………………………………………………. and terminating on …………………………………………………… when any balance owing shall become due and payable and title shall be given and taken. The instalments include interest at the rate of ………………% per annum (penalty rate …………..%) calculated with monthly rests from the possession date and shall be applied by the Vendor firstly in payment of such interest and secondly toward reduction of the balance of purchase price. The provisions of Further Terms of Sale apply.
Under “Further Terms of Sale” insert:
-.0 The purchaser shall have the right to pay the whole or any part of the outstanding balance of purchase price at any time and interest on any amount(s) so paid shall cease from the next interest calculation day following any such payment; but the Purchaser will have a continuing obligation to make compulsory payments in reduction of the purchase price.
NOTES:
1. The contract does not become binding on the Purchaser until three days after the disclosure provisions of the Credit Contracts Act 1981 have been complied with.
2. If there is to be a sale on terms with settlement more than 93 days after the date of the agreement the transaction may be affected by the accruals provisions of the Income Tax Act 1994. The Provision of the Goods and Services Tax might require payment of GST on the whole purchase price at the time of payment of the deposit or first instalment. Parties should not enter into such agreements without obtaining professional advice and ensuring the appropriate clauses have been prepared after consultation with the parties’ solicitors.
Second Mortgage to Vendor
Under the heading “Balance of purchase price to be paid or satisfied as follows” insert:
1. By $………………… in cash upon the possession date
2. By the Purchaser executing in favour of the Vendor a second mortgage(subject only to a first mortgage of not more than $……………………, including any priority amount, in favour of ………………………………………………………….), as described in Further Terms of Sale -.0.
NOTE:
The proposed first mortgage should also be described in the Financial Conditions section of the schedule.
Under the heading “Further Terms of Sale” insert:
-.0 The second mortgage from the Purchaser to the Vendor shall secure the sum of $…………………… and shall be for a term of ………………….. years with interest at ……………………% pa (penalty rate …………% pa) calculated with monthly rests and payable monthly from the possession date. In addition to payment of interest the Purchaser shall make reduction in the principal sum of $…………………….. each month. The Purchaser may make additional payments in reduction of the principal sum, interest to cease on such additional payments as from the next monthly interest day but any such additional payment(s) shall not relieve the Purchaser from the obligation to make the compulsory principal payments. The provisions of subclause 8.3 shall apply to the mortgager as if it were arranged pursuant to a financial condition. Such mortgage will be prepared by the Vendor’s solicitor at the expense of the Purchaser and shall be in the standard form published by the Auckland District Law Society. The Purchaser shall have the right to renew or extend the first mortgage or to arrange a new first mortgage provided that the mortgage to the Vendor is reduced by the amount (if any) by which any new or increased first mortgage exceeds the amount of the first mortgage stated in the financial conditions. If no first mortgage amount is stated the total of the first mortgage and second mortgage shall not exceed ……………% of the purchase price.
NOTE:
It is preferable to have a copy of the mortgage form annexed to the agreement
Solicitors approval:
NOTE: “Solicitors Approval” clauses should not be used. The standard form agreement provides in clause 5.0 for requisition of the title by the Purchaser. The right to requisition arises only when there is a defect in the Vendor’s title not known to the Purchaser at the time the contract was made.
The courts have consistently held that a “solicitor’s approval” clause cannot be used to justify withdrawal from an agreement for other than legal reasons relating to issues such as validity of title or capacity of the proposed Purchaser. If a Purchaser does not wish to be bound until another person has agreed with the Purchaser’s judgment in entering into the transaction, a clause to the following effect might be used.
This agreement is conditional upon the Purchaser being satisfied, after taking such advice as the Purchaser may wish, that the property is in all respects suitable for the Purchaser. The Purchaser shall notify the Vendor or the Vendor’s solicitor not later than …….. pm on ………………………………………..(insert date) that this condition has been fulfilled or this agreement will be at an end and the deposit paid (if any) will be returned to the Purchaser. This condition is for the sole benefit of the Purchaser.
Sunset Clause:
This agreement is rendered null and void if not signed by the vendor and faxed or delivered to the purchasers solicitor before ____AM/PM on _____/_____/______
Tenants Notice:
This agreement is conditional on the Tenants being given notice to leave prior to settlement date.
Tenants Notice to continue tenancy:
This agreement is conditional on the existing tenants giving written notice that they will continue to tenant the property and sign the enclosed New Tenancy agreement and inspection report prior to ……………………………..(insert date).
Title not yet Issued:
FURTHER TERMS OF SALE
14. Definitions
”Vendor’s Land” means all those Lots or parcels of land contained in Certificates of Title held by the Vendor under identifiers XXXXXXXXX
“Subdivision” means the Vendor’s subdivision into residential Lots of the Vendor’s land to be generally in accordance with those Lots comprising the Vendor’s land shown on Plan intended to deposit under No.
“Deposited Plan” means the deposited plan referred to in the definition of ‘Subdivision’.
Vendor’s Subdivision
15. This Agreement is conditional upon the issue of title to the property from the Land Transfer Office at INSERT CITY. The Vendor will with all due diligence as soon as practicable and at the Vendor’s own cost do all things necessary to complete the subdivision and obtain a separate title to the property.
16. Whilst the Subdivision will be substantially in accordance with the deposited plan the Vendor shall be entitled to make all alterations or variations to the deposited plan such as may become necessary during the course of the subdivision which the Vendor or the Vendor’s consultants are of the opinion are necessary or desirable to complete the objects of the subdivision PROVIDED THAT at any such alterations or variations do not result in any material adverse affect on the value of the property or the Purchaser’s use and enjoyment of the property.
17. The Purchaser acknowledges that the Purchaser has inspected the property and that the Purchaser purchased it solely in reliance in the Purchaser’s own judgment and not on any representation or warranty made by the Vendor or any agent of the Vendor.
18. The Purchaser will not lodge a caveat against any part of the title to the Vendor’s land prior to the issue of a separate certificate for the lot being purchased by the purchaser. Should the Purchaser do so, the Vendor will be entitled to require the Purchaser to remove the Caveat or (at the Vendor’s option) to consent to the registration of any instrument creating or evidencing any easement, reservation, mortgage or other encumbrance which the Vendor is entitled to create or grant in terms of this Agreement. The costs of obtaining the consent or having the caveat removed will be payable exclusively by the Purchaser.
19. The property is sold subject to all existing fencing covenants, drainage or water rights, building line restrictions and other easements, reservations and exceptions of any kind as shown on the present titles, and to any easements, rights, restrictions, consent notices, or other encumbrances which may be reasonably required by the vendor. The Vendor reserves the right to grant or create any easements, rights of way, building line restrictions or other encumbrances which may be required to complete the Subdivision. The Purchaser agrees to take title subject to these encumbrances and to execute all documents and to do everything required to enable the vendor to complete the Subdivision. The Purchaser will be promptly notified in writing of any additional easements, rights, restrictions or encumbrances required by the Vendor.
Transfer
20. The Purchaser shall not be entitled to a transfer of the property or call for settlement until a new certificate of title to the property is issued and a search copy (as defined by s.172A of the Land Transfer Act 1952) is available.
No Warranty
21. The Vendor gives no warranty to the Purchaser as to when a new title to the property will issue nor as to when the Purchaser will be able to register a Memorandum of Transfer of the property to the Purchaser.
Lowest Price
22. The purchase price for the property is the lowest price that the parties would have agreed upon for the property under the Rules relating to the accruals treatment of income and expenditure in the Income Tax Act 2004 and on the basis no income or expenditure arises under those Rules.
Entire Arrangement
23. This Agreement records the entire arrangement between the parties relating to the matters dealt with in this Agreement and supersedes all previous arrangements whether written, oral or both relating to such matters.
Display Signs
24. The Vendor may both before and after settlement hereof take such steps as it considers necessary to sell or lease any other property in the Subdivision and in particular the Vendor may maintain any form of sign on the Vendor’s land PROVIDED THAT the Vendor shall not cause undue interference or inconvenience to the Purchaser. The Purchaser shall not be permitted to erect any sign indicating that this section is available for sale until after settlement of the Purchaser’s purchase of the property.
Conflict
26. If there is a conflict between the general terms and conditions of this agreement and the special conditions contained in the further terms of sale, then the special conditions shall prevail.
Execution by Facsimile
27. The Vendor and the Purchaser agree that the transmission by facsimile of this agreement duly signed by one party (“the first party”), shall, when signed by the other party (“the second party”), and transmitted by facsimile to the first party or that party’s agent or solicitor, be conclusive evidence of the signature of the agreement by the second party, for the purpose of satisfying the provisions of the Contracts Enforcement Act 1956.
Vendor’s Solicitor’s Costs
28. The Purchaser shall pay the Vendor’s solicitor’s reasonable costs in connection with the preparation of this agreement and sale of the property to the Purchaser.
Valuation:
This agreement is entirely conditional upon the Purchaser obtaining and approving in the Purchaser’s sole and subjective opinion a valuation within 7 complete working days after the date of the agreement. Should the Purchaser not approve the valuation then the Purchaser shall not be obliged to give any reason for it’s disapproval to the Vendor. This condition is inserted for the sole benefit of the Purchaser
Vendor Mortgage
($ insert amount) of the purchase price shall be satisfied by the purchaser executing and handing to the Vendor or Vendor’s solicitor on the date of possession a registrable second mortgage of the said land to secure such sum (ranking after first mortgage securing a principal sum of not more than ($ insert amount ). The mortgage will secure repayment of such sum on the day ( # – insert number ) years after the date of possession and shall provide for payment of interest on such sum or the balance outstanding from time to time computed form the date of possession and payable quarterly thereafter such interest to be at the rate of ( # – insert number ) % per annum (reducible to (# – insert number ) % per annum if paid within 14 days of the due date and if the Purchaser does not default under any obligations under the mortgage). The mortgage will contain a right of repayment by payments of ($ insert amount) or any multiple thereof on any interest due date. The mortgage will not be transferable and will contain all other usual covenants, terms and conditions contained in mortgages of the like nature prepared by solicitors practising in Auckland Law Society District including the powers of sale and re-entry into possession upon default. The mortgage will be prepared, stamped, and registered by the vendor’s solicitors at the expense in all things of the purchaser. If the purchaser is an incorporated company the mortgage shall be personally guaranteed by the directors thereof ( and the purchaser undertakes to obtain execution of such guarantee by the directors on or before the date of possession) and shall contain a provision to prohibit the transfer or allotment of any shares in the existing or any increased capital of the company to any person, company or other body other than existing shareholders unless with the prior consent in writing of the Vendor. The Company will on settlement send to the Vendors solicitor duly completed its declarations or other documents as are required to enable compliance with all the relevant provisions of the Companies Act 1955 and its amendments such documents to be prepared by the Vendors solicitors and completed and registered at the expense in all things of the Purchaser.
