Understanding a New Zealand Property Purchase Agreement

Post last updated:
January 31, 2023

If you are from overseas and considering purchasing real estate in New Zealand, there are a few basic agreement considerations outlined in this article that you should be aware of when purchasing and leasing commercial and residential property.

The Fundamentals of a NZ Property Purchase Agreement

A property purchase agreement, also known as a sale and purchase agreement in New Zealand, is a legally binding document that outlines the terms and conditions of a real estate transaction between a buyer and a seller. It outlines the purchase price, any contingencies or conditions which need to be satisfied, and the closing date, among other vital details. If you are a foreign citizen you may need the purchase to be conditional on consent from the New Zealand Overseas Investment Office to buy an. It is essential for any type of New Zealand property transaction to use a written sale and purchase agreement, whether for a residential home, commercial real estate property, or farmland property.

The standard agreement used in real estate transactions in New Zealand is the Agreement for Sale and Purchase of Real Estate produced by ADLS and REINZ. The template form of the agreement may be edited for negotiations between a buyer and seller and depending on the specific characteristics of the property. While the template form of the agreement represents a relatively fair bargain between a buyer and a seller, any amendments should be reviewed by an attorney to ensure the effects are not detrimental to your position and use of the property.

Purchasing Commercial Property for Leasing

If you have purchased a commercial property (i.e. a retail, office or industrial property) with the purpose of leasing it out, then it is essential to use a commercial lease agreement specifically tailored to leasing commercial property in New Zealand. The standard lease template or agreement in New Zealand is the ADLS Lease Agreement (consisting of an Agreement to Lease and a Deed of Lease). An Agreement to Lease is the first document to be drafted and will outline the essential lease terms as well as conditions to be satisfied before the lease commences (for example fit-out works by the tenant). The Deed of Lease will apply once the conditions have been satisfied and the lease term commences. The Deed of Lease will contain full details of the leasing relationship and will outline processes if there are any issues such as if a tenant defaults on its obligations to pay rent. It is essential that an Agreement to Lease and Deed of Lease be drafted and reviewed by an attorney to ensure that each parties intentions are captured and understood.

Purchasing a Property for NZ Residential Rental

If you are purchasing residential property with the purpose of renting it out to tenants this needs to be recorded in a Residential Tenancy Agreement. As a landlord of a residential home, there are a number of regulatory requirements that you have to comply with to ensure the home meets minimum standards in New Zealand (such as the Healthy Homes Standards) otherwise you may face penalties and fines from the Government. Further guidance on details such as bond lodgement can be obtained from Tenancy Services NZ.

Understanding the importance of having a comprehensive and accurate property purchase agreement when buying or selling a property in New Zealand is essential. By using a customised agreement for the type of property and consulting with professionals such as a real estate agent, attorney, or solicitor, you can ensure that your transaction proceeds smoothly and is legally binding. Furthermore , if you intend on leasing the property following the purchase, using a PDF template without advice from an attorney may be problematic.  Engaging an experienced real estate attorney such as Adam Siddall will ensure that you receive tailored input into your proposed property lease to ensure its success.

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