When do I have a binding agreement to buy Real Estate in New Zealand?

An Agreement for Sale and Purchase of Real Estate in New Zealand must be in writing.

When all parties to the Agreement have signed the same Agreement, they have entered into a binding agreement and are in good faith meant to try to satisfy any conditions in the Agreement and then complete the transaction.

It is important that the parties have signed the same Agreement. This does not mean that the original signatures for all parties have to be on the same document (the ADLS Agreement for Sale and Purchase of Real Estate Eleventh Edition 2022 (2) has a standard clause that allows the Agreement to be signed in counterparts and those parts together form one agreement); it means that the terms in the Agreement must be the same.

So, if the Purchasers added all the key terms such as price they are agreeing to pay, settlement date, conditions etc to an Agreement, initialled each page and any hand written additions or alterations, and signed their usual signatures on the signing page, presented this Agreement signed by them to the Vendor, and the Vendor then signed the Agreement without making any amendments or alterations to it, then the parties have a fully signed binding Agreement.

Counter Offers

However, if the Vendor signs the Agreement presented by the Purchaser but changes a term in the Agreement, say the Vendor crosses out the purchase price and writes in a higher purchase price, initials the change and present the Agreement back to the Purchasers, this is a counter offer. There is no binding agreement between the parties unless both parties initial any change made to the Agreement.

It is of note that unless it is a tender process, if one party makes a counter offer and the other party does not accept the change, then the party who made a counter offer cannot just go back to the previous version of the Agreement and accept it; they need the other party to agree to re-offer the previous offer, because a counter offer is a rejection of the previous offer and a start of a new offer.

If it is a tender process, any counter offers will not be a rejection of the first Agreement submitted by the Purchasers. Until the end of the stated period in the tender process (usually 1 or 5 working days from the closing date and time for the offers) the Purchaser cannot withdraw the offer made in the first Agreement and the Vendor can go back and sign that version of the Agreement despite any counter offers made.

If there is no fully signed Agreement, and it is not a tender process, then usually you can withdraw any Agreement you have presented by giving written notice to the Vendor before the Vendor signs, providing this is done within a reasonable period of time.

Making an offer and determining what your position is can be difficult and stressful, so it pays to take legal advice about any offer you are making and have a lawyer help you through the process. 

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.

Andie Donnelly