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Including conditions within an offer is common practice. The market recognises several 'standard' conditions that are widely used and accepted.These cover areas of due diligence and generally favour the buyer.

The ADLS and REINZ Sale and Purchase Agreement contains three standard conditions – Finance, LIM (Land Information Memorandum) and OIA (Overseas Investment Act) condition. 

Further to these conditions, PropertyDeal provides six standard conditions that can be included with an offer in the further terms of sale section.  An overview of each of the conditions that are available when making an offer using the negotiation wizard, are explained below.

 

Overview of Conditions

 
Subject to Finance

Overview

This is a standard condition included within the sale and purchase agreement and is widely used.

The condition will be invoked when the buyer fills out the relevant fields comprising the lender, the amount required and the finiance date.  No addtional wording is required further to filling out the relevant fields.

The condition is subject to clause 8.0 in the Terms and Conditions of the ADLS Sale and Purchase Agreement.

If you require a mortgage to purchase the property, and you haven’t been pre-approved by a bank/financial institution you need to fill in the relevant fields. If you are pre-approved for a mortgage, you may or may not have to fill in the fields depending on your pre-approval limit, your offer and the terms or the pre-approval i.e. if you are pre-approved for $200,000 and offer $300,000 then additional finance is a likely requirement.

Refer to clause 8.0 in the sale and purchase general terms of sale and/or consult a lawyer and your mortgage manager/personal banker for more information.
Subject to a LIM (Land Information Memorandum)

OVERVIEW

This is a standard condition included within the sale and purchase agreement.

The LIM condition is invoked when Yes is selected in the relevant field. No addtional wording is required to be included within the sale and purchase agreement further to simily selcting yes or no in the revelant field. 

LIM conditions are used when further information is sought about a property from the local council. If selected you are required to obtain a Land Information Memorandum report from the local council.

Refer to the building blocks for an explanation of a LIM. Refer to clause 8.0 in the sale and purchase general terms of sale and/or consult a lawyer and your local council for more information.
Subject to OIA (Overseas Investment Act)

OVERVIEW

OIA stands for Overseas Investment Act. The condition is invoked by selecting Yes beside the OIA condition field, and entering a date for the condition to be fulfilled.

No additional text is required other than filling out the relevant fields.

This condition is required if you are not a New Zealand resident and are purchasing a large block of land.

The building blocks for a successful sale contains more information for non-New Zealand’s wishing to purchase property in New Zealand and we advise you read this and seek professional advice before proceeding any further. Also refer to clause 8.0 in the sale and purchase general terms of sale and/or consult a lawyer and the overseas investment office.
Subject to a Satisfactory Title Search

 

OVERVIEW

This is a standard condition within the Auckland District Law Society Sale and Purchase Agreement.

This condition give the buyers lawyer a certain time-frame  to conduct a title search. A title search is completed by a lawyer to ensure there are no potential problems associated with the title. Common problems include restrictive covenants, easements over all or part of the property or a part of the improvements in-correctly delineated on the flats plan.

Should the title search prove to be unsatisfactory the buyer may re-negotiate with the seller to remedy any problems or cancel the contract.

In either case the buyer must adhere to clause 1.0 + 8.0 in the sale and purchase general terms of sale and serve notice accordingly. It is advised to always get a lawyer to search the title.
Subject to a Satisfactory Building Report

WORDING

'This agreement is conditional upon the Purchaser/s obtaining a Builders Report for the said property from a registered Builder/Building inspector which is acceptable in all respects to the Purchaser/s within (insert number of days here) working days from the date of this agreement'

 OVERVIEW

By selecting the condition when using the negotiation wizard, the wording above will be inserted into the further terms of sale section the in the Sale and Purchase agreement

This condition gives the buyer a certain time-frame (usually 5-10 working days) to get a building report.  A building report will expose any potential construction problems with the property. Reports generally range from $300-$600 and at least five working days should be allowed for the inspector to carry out the internal inspection and complete the report.

Should the report prove to be unsatisfactory the buyer may re-negotiate with the seller to remedy any problems or cancel the contract.

In either case the buyer must adhere to clause 1.0 + 8.0 in the sale and purchase general terms of sale and serve notice accordingly.
Subject to the Purchaser Selling their Property

WORDING

'This agreement is conditional upon the Purchaser/s arranging the unconditional sale of the property situated at (insert purchasers property address which is to be sold) on terms and conditions acceptable to the Purchaser within (insert number of days here) working days from the date of this agreement'

OVERVIEW

By selecting the condition when using the negotiation wizard, the wording above will be inserted into the further terms of sale section the in the Sale and Purchase agreement

This condition gives the buyer a certain time-frame (usually 30-60 days) to sell their property. The buyer must then take every reasonable step to sell their property within the specified time-frame.

If the property is not sold with this time frame the buyer may re-negotiate or cancel the contract.

In either case the buyer must adhere to clause 1.0 + 8.0 in the sale and purchase general terms of sale (LINK TO SALE AND PURCHASE AGREEMENT) and serve notice accordingly. PropertyDeal advises to consult a lawyer to fully understand the implications of this condition.
Subject to the Existing Agreement on purchasers property becoming unconditional

WORDING

'This agreement is conditional upon the existing signed agreement for the sale of the purchasers property situated at (insert purchasers property address which is to be sold) becoming unconditional on or before 4pm on (insert date)'

OVERVIEW

By selecting the condition when using the negotiation wizard, the wording above will be inserted into the further terms of sale section the in the Sale and Purchase agreement

This condition gives the buyer a certain time-frame for the existing agreement on their own property to become unconditional.

You would include this condition if you are making an offer on a property and have a conditional offer on your own property. The time frame will generally be based upon the time frame(s) imposed on the conditional offer on the buyer’s property.

If the agreement doesn’t become unconditional within this time frame the buyer may re-negotiate or cancel the contract.

In either case the buyer must adhere to clause 1.0 + 8.0 in the sale and purchase general terms of sale and serve notice accordingly.

PropertyDeal advises to consult a lawyer to fully understand the implications of this condition.
Subject to an Escape Clause

WORDING

'If at any time before the agreement becomes unconditional the Vendor/s obtains another offer which is acceptable to the Vendor/s, then the Vendor/s may deliver to the Purchaser/s or the Purchaser/s solicitor notice in writing requiring the Purchaser/s to confirm this agreement as being unconditional. The purchaser shall have until 4 pm on the third working day after delivery of such notice to advise the vendor by delivery of notice in writing to the Vendor or the Vendor’s Solicitor that this agreement is unconditional otherwise this agreement shall terminate'

OVERVIEW

By selecting the condition when using the negotiation wizard, the wording above will be inserted into the further terms of sale section the in the Sale and Purchase agreement

This condition means the seller reserves the ability to accept other offers from people who want to buy the house. If the seller accepts another offer from someone else, notice is served to the buyer that a period of time, say 3-5 working days, has been imposed to confirm the contract i.e. fulfill all conditions attached to the agreement. If you don't the contract can be cancelled.

PropertyDeal advises to consult a lawyer to fully understand the implications of this condition.
Subject to a special condition
Any special conditions can be copied and pasted into the sale and purchase agreement in the Further Terms of Sale section.
A lawyer will draft and prepare special conditions dependant on your personal circumstance.

It is important to understand the meaning of these conditions, and your responsibilities when including conditions within an offer. PropertyDeal provides a help box alongside each step of the negotiation wizard which provides a simple explanation. 

 

It is important to read this explanation in context with the relevant clauses in the Sale and Purchase agreement.  These clauses specify the rights and responsibilities of each party and provide guidance to follow through the process.

 

Trial the negotiation wizard and scroll over each of the help icons to get an understanding of each of the conditions and read the clauses referred to.  A copy of the sale and purchase agreement can be found in by clicking here, or in the Tool-Box on the Building Blocks of a Successful Sale page.

 

PropertyDeal advises that you consult a lawyer should you not understand any aspect of the sale and purchase agreement.

 

A lawyer will also be able to advise and write up special conditions to suit a particular personal requirement.  Special conditions can be copied and pasted into the Further Terms of Sale Section in the negotiation wizard. 

 

Making an offer subject to a condition(s) means you are making a conditional offer.  The offer is then subject to the conditions being fulfilled by the specified date.  If the conditions are not fulfilled by the specified date, the offer is cancelled and notification is given to each party subject to clause 1.0 Notices and 8.0 Conditions and Mortgage Terms.  Issuing a notice in the required manner is essential to avoid contractual problems arising from deviating from the specified manner in which to issue notice. 

 

Making an offer without conditions means you are making an unconditional offer.  In this case the contract becomes unconditional upon signing and there are few grounds for the buyer to escape from the contract.  The ability to make an unconditional offer places the buyer in a better position to negotiate, but you should be certain it is the property you really want as you are unlikely to be able to change your mind once the offer is accepted.