Contract guide

Understanding the Sale & Purchase Agreement

The standard ADLS/REINZ Sale and Purchase Agreement is the legally binding contract used for nearly all residential property transactions in New Zealand. Because signing this contract commits you to the purchase or sale, understanding its terms is vital.

Request a Conveyancing Quote

Contract Anatomy

✔ **Particulars**: Names, titles, deposit sizes, and price tags.

✔ **General Terms**: Standard pre-printed warranty rules.

✔ **Further Terms**: Custom clauses tailored by your lawyer.

✔ **Signatures**: Execution that establishes binding liability.

1. Particulars of Sale

Located on the front page. Contains the names of the buyer and seller, the purchase price, the deposit amount (normally 10%), the settlement date, and the legal description of the property (Record of Title index).

2. General Terms of Sale

Pre-printed statutory rules covering how deposits are held (10 days in agent trust accounts), default interest rules for delayed settlements, boundary adjustments, and the vendor's standard chattels warranties.

3. Further Terms of Sale

A blank section where custom conditions are inserted. This is where we write clauses to protect you, such as unconsented works remedies, drainage easements vetting, or toxicology tests.

Standard Protective Conditions (The "Big Three")

1. The Finance Condition

The finance clause must name a specific lender and timeframe (normally 10 to 15 working days). A buyer cannot simply cancel the contract because they changed their mind.

Reasonable Endeavours Rule: Under NZ law, you must actively attempt to secure finance. If your application is rejected and you cancel, the seller's solicitor can demand a formal bank rejection letter. Changing your mind without applying constitutes a breach of contract.

2. The Building Report Condition

This clause requires a report prepared in writing by a qualified building inspector. If structural defects are found, you must notify the seller within the specified timeframe. You can request the seller to repair the issues, negotiate a price deduction, or cancel the agreement if defects are severe.

3. The LIM Report Condition

The Land Information Memorandum (LIM) is a council summary of the land (consents, zoning, flooding, drainage). The standard ADLS contract provides a strict process:

**15 Working Days**: The standard window to request and audit a LIM report (Auckland Council standard processing takes 10 working days).
**Objection Notice**: If the LIM reveals unconsented works or flooding hazards, we submit a formal objection to the seller's lawyer.
**Remedy Cycle**: The seller has 5 working days to agree to fix the issues. If they refuse, you can choose to cancel the contract.

THE SOLICITOR APPROVAL CLAUSE

Many buyers ask to insert a "Solicitor's Approval Clause," believing it allows them to cancel the contract if they change their mind. This is a dangerous misconception.

Legal Limitation: NZ courts have ruled that a solicitor's approval clause is restricted to technical legal issues (such as problems with the title, easements, or the legal form of the contract). A lawyer cannot refuse approval because you decided the price was too high or found another property.

Negotiation & Counter-Offers

When an offer is submitted, the seller can accept it, reject it, or counter-offer. A counter-offer is made by crossing out the buyer's price or conditions, writing the new terms, and initialing the changes.

**The Initialing Cycle**: The contract moves back and forth. Each cross-out must be initialed by both parties. **A binding contract is only established once all crossed-out changes are fully initialed by both buyer and seller.**

We review these crossed-out amendments during negotiations to ensure you do not sign off on clauses that compromise your deposit security or waive vendor warranties.

Vet Your Agreement Prior to Signature

Do not sign developer or standard contracts without a professional legal review. We offer rapid turnarounds for contract vetting. Request a quote online today.

Get a Conveyancing Quote

Contract FAQs

A **conditional contract** is signed but contains active conditions (e.g. finance or LIM) that must be satisfied by a certain deadline. An **unconditional contract** has no remaining conditions. Both parties are legally committed to complete the purchase; the buyer must pay the deposit, and backing out at this stage constitutes a major breach of contract.

Yes, provided you have a finance condition in the contract and have made "reasonable endeavours" to obtain approval. If your bank declines your mortgage application in writing, you can cancel the contract without penalty. However, if the contract was signed "unconditional," you cannot pull out, and failure to settle will result in the loss of your deposit and daily default interest penalties.

Under a standard ADLS agreement, the deposit is payable immediately upon the contract becoming unconditional (unless a different date is written in the particulars). The deposit is paid to the real estate agency's trust account, where it must be held for 10 working days before being released to the seller's lawyer.

Discuss Your Residential Transaction

Get in touch with Quay Law to review a Sale and Purchase Agreement, audit a land title, or arrange legal settlement.