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The Sale and Purchase Agreement is the most important document in your home-buying journey. It outlines the exact terms, timelines, and conditions between you and the seller. Once signed by both parties, it becomes a legally binding contract.
Whether you are a first-home buyer or an experienced investor, understanding exactly what you are signing is vital. In New Zealand, almost all residential property transactions use the standardised ADLS/REINZ (Auckland District Law Society and Real Estate Institute of New Zealand) agreement form.
Here is a comprehensive guide to navigating the agreement, structuring your offer, and protecting your deposit.
Bring in the professionals first
Never sign a Sale and Purchase Agreement without having it reviewed by your solicitor (property lawyer) and your mortgage adviser.
How the negotiation process actually works
When you decide to make an offer, the real estate agent will draft the agreement with your offered price and conditions. You will sign it, and the agent will present it to the seller.
The seller rarely accepts the first offer outright. They will typically cross out your price or change a date, write their counter-offer, initial the changes, and send it back to you. This back-and-forth continues until both parties agree on all terms and initial every change. The contract is only "live" once both the buyer and the seller have signed and dated the final version.
We would recommend keeping this in mind and working out a response ahead of time for when you get the call from the agent asking if you can offer a higher price.
The price and the contract deposit
When you fill out the front page of the agreement, you will state your offered purchase price and the deposit amount.
The contract deposit vs. your bank deposit
This is the most common point of confusion for buyers. The deposit written on the front page of the contract is not the same thing as the total deposit you are giving the bank to get your mortgage.
When is the contract deposit paid?
The agreement usually stipulates that the deposit is paid either "upon signing" or "upon the agreement becoming unconditional." We highly recommend instructing your solicitor to amend this so the deposit is only payable once the contract goes completely unconditional. This ensures your cash does not get tied up in an agency trust account while you are waiting for the bank or builder to approve the house.
Find out more about why there are '2 deposits' here.
The KiwiSaver timing issue
If you are planning to use your KiwiSaver for the contract deposit, you must be extremely careful. KiwiSaver funds take a minimum of 10 to 15 working days to process, and by law, the provider can only release those funds directly to your solicitor's trust account—never to a real estate agent.
Protective conditions
When you make an offer, you should almost always make it conditional. This means you are agreeing to buy the house only if certain requirements are met within a specific timeframe. If a condition fails (for example, the bank declines the house or the builder finds structural issues), your solicitor can cancel the contract, and you will not lose any money.
Here are the standard conditions you should consider including:
- Finance: Having a mortgage pre-approval is not enough. The bank must formally approve the specific property you are buying. They will check the property type, the location, and whether it requires a registered valuation. Your adviser will typically recommend requesting 10 to 15 working days to satisfy this condition.
- Building inspection: This gives you the right to hire a qualified building inspector to assess the property. Under the standard ADLS rules, if you want to cancel the contract due to a bad inspection, you must provide the seller with a formal written report from a qualified inspector detailing the objective faults.
- LIM (Land Information Memorandum): A LIM report is a summary of all information the local council holds on the property, including unconsented building works, flood zones, and zoning rules. The standard timeframe to approve a LIM is 15 working days. This is one of the upfront purchasing costs when buying a home.
- Title search: Your solicitor will pull the legal Record of Title to check for easements (rights for others to use your land) and covenants (rules restricting what you can build or do).
- Insurance: You should always include a specific clause making the purchase subject to arranging satisfactory house insurance. In New Zealand, banks will not lend you money if you cannot secure comprehensive house insurance. Never go unconditional without written confirmation from an insurer.
- Toxicology (Methamphetamine) testing: A standard clause allows you to have the property tested for meth contamination by a professional. If the results come back above the Ministry of Health guidelines, you can cancel the agreement.
The Working Day rule
Chattels, fixtures, and the final inspection
Defining the chattels
Chattels are the moveable items included in the sale. The back page of the agreement features a standard checklist for the stove, fixed floor coverings, blinds, curtains, and light fittings.
You must manually write in any additional items, such as heat pumps, dishwashers, heated towel rails, rangehoods, or security cameras. By signing the agreement, the seller legally warrants that all listed chattels will be in reasonable working order on settlement day. If an item is not written on the contract, the seller is legally allowed to take it with them when they move out.
The pre-settlement inspection
The agreement grants you the right to inspect the property one last time before settlement (usually two or three days prior). This is your opportunity to test the chattels, ensure the seller has removed all their rubbish, and confirm no new damage has occurred to the property since you signed the contract. If there is an issue, your solicitor can request that a portion of the purchase funds be held back until the seller fixes it.
The settlement date
Settlement date is the day your solicitor transfers the remaining purchase money to the seller, the legal ownership officially transfers to your name, and you get the keys.
You can negotiate the settlement date to be a specific calendar date or a moving target (such as 10 working days after the title is issued for a new build). Ensure you leave a comfortable buffer between your unconditional date and your settlement date so your solicitor has ample time to process your KiwiSaver withdrawals and finalise the bank mortgage documents.
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