Matt and Jenny wanted to buy an investment property. They found a bach they loved and entered into a private sale with the vendors to purchase the property.

When it came to signing the sale contract, the vendors (or sellers) presented them with a very basic A4 piece of paper containing only a few conditions. Generally, sale contracts are drawn up in the standard form Agreement for Sale and Purchase template, used widely throughout New Zealand. The template is designed to give better protection to both the vendors and the purchaser’s interests.

However, Matt and Jenny were not too fussed about the legalese, and the conditions, although brief, seemed to cover all their concerns. They considered having their lawyer check the fine print but wanted to save on costs.

Soon after paying the deposit Matt and Jenny discovered the bach had building work done without consent of the Council, and bad foundations. They found it extremely difficult to cancel the contract given the terms were not in the standard form, and the conditions did not allow for cancellation on this basis.

Eventually, the vendors agreed to release them from the contract; however, this came at a price. Matt and Jenny had to forgo their deposit to avoid a Court order being made against them for their performance of the contract they had entered into.

Had Matt and Jenny requested the standard Agreement be used, or had their lawyer review the basic sale contract, it is likely the couple would have been in a much better position. By trying to cut corners at the beginning, they ended up losing out in the long run.

If you are entering into a major transaction such as purchasing a property, ensure you are protected as best as possible by having your experienced property lawyer review the necessary paperwork.