Are you selling a property? Can you meet the standard warranties in the Law Association Agreement for Sale and Purchase of Real Estate?

A couple were getting ready to extend their family and decided they needed to sell their first home and upscale. They had been diligently putting money aside for their future purchase, and to help save money they had done work on the property themselves without seeking any professional help or advice.

One piece of work they did themselves was build a 1.7 metre retaining wall as they were concerned about a bank near the property. They had also put up with inconveniences like the gas hobs no longer igniting, instead using a match.

They did not think it was important to disclose any of this to the agent once the property was listed.

When the purchasers were doing their inspection before settlement, they noticed the gas hobs were not working, and became aware that the owners had built the retaining wall without getting the relevant sign offs from Council for the work. 

Notice was then given to the vendors about these issues, which were breaches of the vendor warranties.  The purchasers demanded that the vendors get a Certificate of Acceptance from the Council for the retaining wall, and have the gas hobs fixed in a proper and workmanlike manner prior to settlement.

The lawyer for the vendors confirmed that the vendors were in breach of the standard warranties in the Law Association Agreement for Sale and Purchase and that they would have to contact the Council and pay to remedy the issues. The vendors had to scrape around for additional funds to fix the issues, and were then under unexpected pressure to pay for their own new purchase.  

As a vendor you should check that you can meet all the standard warranties given in the vendor warranties section of the Law Association Agreement for Sale and Purchase, such as:

• You have not received any notice or have any knowledge of any requisition or outstanding requirement from a local or government body, or under the Resource Management Act, or from any tenant or other party that affects the property (directly or indirectly) that you have not disclosed in writing to the purchaser before they signed the agreement;
• That any chattels included as part of the sale, and all plant, equipment, systems or devices which provide any services or amenities to the property (such as heating system) are in reasonable working order;
• Where the vendor has done, or allowed to be done, any works at the property the vendor got the relevant consent (if required), as far as the vendor is aware the works complied with the relevant consent, and a code compliance certificate was issued for those works if one was required.

If a vendor carried out work that required a code compliance certificate and did not obtain one, or is selling a chattel like a oven which they know is not in reasonable working order, they should record this in the Agreement and make sure the Agreement says the vendor warranties do not apply in respect of that matter. Their other option is to fix the issue (if possible) before marketing the property. 

Whether you are buying or selling it always pays to take legal advice before signing an Agreement for Sale and Purchase of Real Estate.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.