Com­mon prob­lems with house sales

The Napier Mail - - WHAT’S ON - ALAN KNOWSLEY Col­umn cour­tesy of RAINEY COLLINS LAWYERS phone 0800 733 484 www.rain­ey­collins.co.nz If you have a le­gal in­quiry you would like dis­cussed in this col­umn please email Alan on aknowsley@rain­ey­collins.co.nz

We are of­ten asked to ad­vise on sales of houses and the prob­lems that can arise.

One con­cern is to en­sure that the seller (ven­dor) is not in breach of the war­ranties they give as to build­ing work.

When a ven­dor signs an agree­ment for sale and pur­chase, they war­rant among other things that they have not com­pleted any works to the prop­erty that re­quired coun­cil con­sent with­out ob­tain­ing such con­sent, and that they have ob­tained a Code Com­pli­ance Cer­tifi­cate for any work.

If a pur­chaser dis­cov­ers that works had been com­pleted with­out coun­cil con­sent or that there is a miss­ing Code Com­pli­ance Cer­tifi­cate, then the pur­chaser is en­ti­tled to com­pen­sa­tion for a breach of the war­ranty.

If it comes to light that the seller has ei­ther com­pleted works to the prop­erty with­out con­sent (when coun­cil con­sent was re­quired) or has com­pleted works but not ob­tained a fi­nal Code Com­pli­ance Cer­tifi­cate, then fur­ther en­quiries need to be made.

The ven­dor will need to make en­quiries with the coun­cil to as­cer­tain what they need to do to en­able them to ob­tain the nec­es­sary cer­tifi­cates to cer­tify the works com­ply with the rel­e­vant build­ing con­sent. Once this has been ob­tained, a spe­cific ven­dor war­ranty should be in­cluded in the fur­ther terms of sale.

The war­ranty should out­line what work has been com­pleted, what the ven­dor is still re­quired to do to in or­der for coun­cil to cer­tify the works, what the ven­dor pro­poses to do to rem­edy this, and a time­frame for the rem­edy e.g. the set­tle­ment date.

It may also in­volve record­ing the set­tle­ment date to be a cer­tain num­ber of days af­ter the Code Com­pli­ance Cer­tifi­cate is is­sued.

Dis­clos­ing the is­sue and rem­edy of the same to pur­chasers early (as part of the fur­ther terms of sale in the agree­ment for sale and pur­chase) will avoid po­ten­tial is­sues and/or de­lays later on in the trans­ac­tion.

Ven­dors and pur­chasers should al­ways be en­cour­aged to take le­gal ad­vice where there is an out­stand­ing is­sue such as the ab­sence of a Code Com­pli­ance Cer­tifi­cate.

An­other com­mon oc­cur­rence is changes to an agree­ment for sale and pur­chase af­ter ex­e­cu­tion.

Of­ten af­ter an agree­ment is signed fur­ther ne­go­ti­a­tions are car­ried out be­tween the ven­dor, pur­chaser and agent.

It is worth­while not­ing that such ne­go­ti­a­tions do not make the cur­rent agree­ment in­valid. They also do not gen­er­ally mean that a new agree­ment and/or a vari­a­tion of an agree­ment need be en­tered into.

The most com­mon changes to an agree­ment in­clude the de­posit amount; the set­tle­ment date; re­quire­ments for ven­dor to rem­edy is­sues raised by builder’s in­spec­tions; early pos­ses­sion; and/or per­sonal ren­tal ar­range­ments be­tween ven­dor and pur­chaser.

If the ven­dor and pur­chaser ne­go­ti­ate any changes to the agree­ment af­ter ex­e­cu­tion they should ad­vise their le­gal rep­re­sen­ta­tives as soon as prac­ti­ca­ble.

The rep­re­sen­ta­tives can then record the agreed changes to the agree­ment by way of an ex­change of writ­ten com­mu­ni­ca­tions.

The par­ties may also want to get ad­vice on any changes be­fore they agree to them.

In some cir­cum­stances a ven­dor or pur­chaser’s le­gal rep­re­sen­ta­tive may in­sist on a re­place­ment agree­ment for sale and pur­chase.

If this oc­curs, it is vi­tal that the ear­lier agree­ment is prop­erly can­celled.

‘‘If a pur­chaser dis­cov­ers that works had been com­pleted with­out coun­cil con­sent or that there is a miss­ing Code Com­pli­ance Cer­tifi­cate, then the pur­chaser is en­ti­tled to com­pen­sa­tion.’’

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