Land Based Contracts Flashcards
ASP
agreement for sale and purchase.
The purpose: used by real estate agents to sell land and houses. The form used was produced by Auckland District Law Society and Real Estate Institute of NZ Incorporated.
why study land-based contracts
Land represents wealth. It is immovable, general doesn’t depreciate, value can be enhanced by building on it, used to provide income, accepted as security for mortgage, able to be inherited, not subject to capital gains tax, basis for local govt rating and can’t easily be destroyed.
We need to understand as our clients may work with land or we may be working with land. We sign contracts around land.
Given rise to many different activities.
Cases give rise to important principles (misrepresentation, remedies, FTA, formality, etc).
Advantages of ASP
- format - clearly details what needs to be contained and can check off each detail easily
Format of ASP
Standard provisions
- parties involved
- subject matter : property (legal description taken from certificate of title)
- payment of purchase price (deposit, balance of purchase price, interest rate for late settlement)
- possession and settlement date
- sale through and special conditions
general terms of sale
- definitions
- notices and schedule (list of chattels)
- deposit provisions
- possession and settlement provisions (last minute settlement 4-5pm)
- risk and insurance
- titles, boundaries and requisitions
- vendor’s warranties and undertakings
- claims for compensation
- unit tile and cross-lease provisions
- agency - statement that the sale has been effected through the names agency; agreement that vendor will pay REA’s charges including GST for effecting the sale
NZ Residential Property Sale and Purchase Agreement Guide
Have to be provided to buyer and seller. Before, they can sign a sale and purchase agreement for a residential property the REA has to obtain signed ack that they have received it.
Warnings
ASPs are important contracts. Need independent legal advice. i.e. binding contract.
conditional clauses
inserted for buyer’s benefits and arise after negotiations and commitments. e.g
- subject to finance being obtained from – to purchase property
- subject to sale of some specific asset by purchaser (before sale)
- subject to purchaser’s accountant verifying and approving business financial statements
- subject to obtaining LIM (Land Information memorandum)
- subject o checking out Local Authority resource consents, building consents and code certificate compliance and other approvals are valid, current and cover business activity (etc).
- subject to general due diligence clause (can only go so far)
- subject to inspection
- subject to approval by Solicitor and/or Title Search
- subject to last minute ‘upon settlement pre check’
- subject to warranty that all fixtures paid for, title will pass that securities given will be paid or released
- subject to insurance cover
- subject to confirmation that no litigation outstanding
- subject to meth contamination check
- subject to agreement by vendor to sign RotT (should be express term)
- subject to amount being held escrow for – period to cover stated situation (should be express term)
LIM
Land Information Memorandum.
Provided by local authority and contains information the local authority holds on property. Can include
- storm water
- drains
- rates
- valuation
- historic buildings
- motorway proposals affecting property
- etc
Costs between $350 -$500.
Clause 7
purchaser claims for compensation by a purchaser when there has been damage or other issues which reduce value and/or benefit of property to purchaser.
Can insist a proportion of purchase price be deducted at settlement and paid to a stakeholder who shall hold sum in trust pending resolution of issues.
Also states how to proceed if can’t agree on this.
May help having a pre-settlement check
Warranties
Certain warranties are given by seller
- vacant residential lot then all boundary markers are present and in correct position at possession date
- seller has not received any notice or demand and no knowledge of outstanding requirement
- seller has not given any consent or waiver that affects property which has not been documented in writing
- all chattels are in same state as they were at date
- electrical and other installations are free of any charge
- any work requiring Resource Consent or Building Consent had them and were completed in compliance
What work may require a permit or building consent
Decks (greater than 1m from ground).
New carports and conservatories
Plumbing
Checklist for ASP
- date - correct date
-
Checklist for ASP
- date - correct date
- purchaser - the name of person purchasing house
- property - address, estate and legal description of property
- purchase price - what you have offered in numbers and words
- deposit - deposit amount (if and when contract becomes unconditional)
- possession - check date is correct
- conditions - correct and agree
- tenancies - check to see if any
- further term of sales
- schedule 1 (Chattels) - what you expect
- check all pages are there
- check no clause has been crossed out
- check all pages and amendments are initialled
- sign copy of title
Certificate of Title
Contains
- record type
- computer register title reference
- land district
- date of issue of title
- prior title reference
- details of land in title
- current owner
- list of current registered interests
- example of document reference
