Written from the trenches of Auckland real estate by Amit Sharma — Bayleys agent, 10+ years marketing experience.
This is the part of buying that people nod along to at the open home and then panic about at eleven at night three days later. It is worth understanding properly, because the sequence is unforgiving: in New Zealand the agreement binds you from the moment you sign it, and the conditions are the only exits you get.
Deposit: usually 10 percent on a residential sale, paid when the contract becomes unconditional. It is held in the agency's trust account and released after settlement.
Two details worth knowing. The deposit percentage is negotiable and is sometimes agreed at less than 10 percent — it is a term of the contract, not a law. And the money does not sit with the agent as a fee; it sits in an audited trust account, and the standard agreement provides for a stand-down period before any of it is released. If a deposit is ever requested into a personal or non-trust account, stop and call your lawyer.
Conditions: the most common are finance, building report, LIM, and toxicology. Each has a deadline. Miss a deadline and you may lose the right to rely on that condition.
Get the dates into your calendar the day you sign, working backwards. A LIM is ordered from the council and takes time to come back; a building inspector needs to be booked and then needs to write the report; your bank needs the valuation before it will confirm anything. Ten working days sounds generous until three of those things queue behind each other. If a deadline is going to be tight, ask for an extension in writing before it passes, not after.
A condition is also only as strong as its wording. "Subject to finance" with no further detail is weaker than a clause specifying the amount, the lender and the date. Your lawyer will tighten this if you give them the chance — which means sending them the agreement before you sign, not after.
The other clause worth asking about is the title itself. Cross-lease, unit title and leasehold each carry obligations that a standard freehold does not, and each has its own set of questions — a unit title should come with a pre-contract disclosure statement, and a leasehold has ground rent and review dates that will shape what the property is worth to you.
Going unconditional: the moment you confirm all conditions are met. From this point, you cannot back out without serious legal and financial consequences.
Before you confirm, do the boring check: does your insurer accept the property. Insurance is a precondition of almost every mortgage, and an insurer's view of a home's construction, cladding or flood exposure occasionally differs from everyone else's. Finding that out after you are unconditional is a bad day.
Settlement: usually four to six weeks after going unconditional. On settlement day, your lawyer transfers the balance, the title transfers to you, and you receive the keys.
You are entitled to a pre-settlement inspection, and you should take it. You are checking that the chattels listed in the agreement are still there and still work, that nothing has been damaged in the move-out, and that the property is in the condition you agreed to buy. Do it with the agreement in your hand and the chattels list in front of you — this is the last moment anything can be put right easily.
Common surprises: rates apportionment, legal fees, LIM cost, building report cost, and moving costs. Budget another one to two percent of the purchase price for these.
A few more that catch people out: your lender may require a registered valuation at your cost; body corporate levies apportion the same way rates do if you are buying an apartment or unit title; and if you are buying an investment property rather than a home to live in, the deposit your bank requires is typically larger than for an owner-occupier. Ask your broker for the specific number early, because it changes what you can bid.
Always — always — instruct a solicitor before you sign anything. Real estate contracts in New Zealand are binding the moment they are signed.
The most expensive five minutes in New Zealand property is the five minutes people spend signing at the kitchen table because they did not want to lose the house. A lawyer can read an agreement the same evening. Almost every serious problem I have watched a buyer walk into would have been caught by that one phone call.
None of the above is legal advice — the terms of your agreement are what govern your purchase, and your solicitor is the person to interpret them for your situation.