Property Law – Due Diligence Clause in your Sale and Purchase Agreement.
In a recent High Court case, the decision clarified when a property purchaser may lawfully exercise the right of cancellation in a conditional sale and purchase agreement pursuant to a due diligence clause.
The Court held that an agreement can be worded so as to make the satisfaction of a condition entirely a matter for subjective determination of a property purchaser.
This case is based on what the parties had done using a similar phrase to those below in their property agreement:
“.. the Purchaser being satisfied that…”
“In the event that the Purchaser is not satisfied with any aspect…”
“… the Purchaser shall not be obliged to give reasons …”
The Court stressed that it is a matter of wording in respect of the individual agreement. If a clause provides for a subjective determination without any obligation to disclose reasons, it is difficult to see how it can restrict the matters that the property purchaser can take into account.
This case highlights the importance of fully understanding and being aware of the implications of any legal contract and reinforces the importance of taking legal advice before signing a legally binding contract.
For further conveyancing information on your Agreements or Contracts contact Auckland law firm, Quay Law in Remuera.
Ph: (09) 5232408
Posted by Auckland Law Firm, Quay Law on 13/12/2011
Once again weathertightness issues regarding a property purchase have been highlighted. It is important to ensure yourSaleand Purchase Agreement includes the necessary conditions to enable your release from the property purchase should weathertightness issues be uncovered during the due diligence process. It is vital that you undertake an independent building survey as part of this due diligence process prior to declaring the Agreement unconditional.
Ask your building surveyor / inspector to look particularly for signs of water damage or potential leaks. They should use a moisture meter. These devices are generally non-invasive meters that can indicate moisture problems and water leaks without making holes in the walls. However, not all defects can be found, so ask the person doing the inspection to highlight the areas they couldn’t check and identify risk areas that might warrant further investigation.
It is once again opportune to highlight that if you are purchasing a property at an auction, you are deemed to have completed your due diligence prior to the auction and the purchase is unconditional on the fall of the hammer.
For more information regarding your conveyancing transaction please contact our property lawyers at Auckland law firm, Quay Law Barrister and Solicitor.
Posted by Auckland Law Firm, Quay Law on 21/07/2011
Property Law – Conditions in your Agreement for Sale and Purchase.
Legal Tip from Auckland law firm, Quay Law.
A finance condition should not be viewed as an option for being released from an Agreement for Sale and Purchase. Recent court cases have highlighted this issue and purchasers have found vendors taking them to court for having cancelled an agreement based on non-satisfaction of a finance condition where the vendor has subsequently found out that the purchaser has purchased another property for the same or even a greater amount.
Purchasers should consider the inclusion of a due diligence clause within their agreement, as this would give them the option of legitimately declaring the Agreement to be “at an end”.
It is always advisable to ask your Conveyancer / Property lawyer to review your Agreement for Sale and Purchase prior to it being signed by you.
Posted by Auckland Law Firm, Quay Law on 21/04/2011