Sale & Purchase agreements – new considerations

by | May 12, 2020 | Blog, First time buyers, General property Law, Sale and Purchase

We’re all excited to move to level 2 on Thursday. Nobody more so than those in the midst of selling or buying property. To help prepare and manage risk in these uncertain times, we’ve put together some extra clauses to consider including in agreements for sales and purchase.

Extra clauses could assist sellers and buyers to manage uncertainty a return to COVID-19 Level 3 or 4 could bring to their transaction. It was evident that there are difficulties if the standard agreement we all use for property transactions is left unamended. This is especially true when NZ is at Level 4.

Settlement date

At Level 4, there was considerable uncertainty around the settlement obligations. Giving and taking possession was not always possible. This has left some parties in dispute or added costs to their transactions. We’ve seen in practice that settlements can operate for nearly all property types at Level 3. However, it could be prudent to specify a settlement date that is deferred or maintained. This would ensure certainty and avoid dispute in the (hopefully unlikely) event we return to level 4. Where there are scenarios prohibited at level 3, like a purchaser intending to move regions, then this may be better at Level 2.


We have seen agreements that go one step further, where settlement is extended if there is a return to Level 4. It’s possible to add in a right for either party to cancel if settlement is not completed by a specified date. We’d expect cancellation rights to be less usual now there is increased confidence around NZ’s ability to eliminate COVID-19. Buyers or sellers agreeing to cancellation rights need to ensure they have thought through the consequences of this clearly.

Conditional dates

Depending upon the condition of the property, there may be a need to ensure that a conditional date extends if there is a return to COVID-19 Level 3 or 4. This may be less of an issue for solicitor’s approval, for example. However, more of an issue for a building report or even finance. For example, if valuations are required.

Pre-purchase inspection

If vacant possession is offered and a purchaser has a right to inspect prior to settlement, a clause could be added to make it clear settlement is not deferred should this not be possible. The purchaser’s rights to raise any breach of warranty or other breach do not merge at settlement. That is, a purchaser is able to raise these things post-settlement.  The Disputes Tribunal may be used more frequently for this in residential agreements.

If you are planning to enter into an agreement for sale and purchase in the near future, we recommend considering additional clauses to provide more certainty. Lean on your lawyer for advice. We’ve seen the issues that arose at Levels 3 and 4 and are able to help mitigate your risk.

By <a href="" target="_self">Denise Marsden</a>

By Denise Marsden