Pre-Sale Info – What to Expect
Real estate salespeople are obliged to encourage buyers to carry out full inquiry into a property they are thinking of purchasing. Indeed, any prudent buyer should satisfy themselves they are well informed about all matters relating to their prospective purchase. Vendors also have an interest in providing as much information as possible. Salespeople have a duty to disclose any relevant information they uncover or are advised of by the vendor.
But what information should the vendor provide to buyers? They must disclose any known faults. Sales agents now often provide a disclosure document. Buyers also usually want a Land Information Memorandum and there is little reason why a full or partial LIM cannot be supplied by the vendor. The cost from the local authority in Dunedin is around $300. In some countries supplying this kind of documentation is mandatory when selling.
In days gone by it was also not uncommon for a vendor to supply a building report. It’s worth noting now, however, that while a vendor can commission a building report – which is a prudent way of identifying and addressing any issues – the accredited building inspection services warn that their legal contract and liability is only with the vendor. If the report is handed over to buyers, a buyer has no legal recourse if later there is an issue with the report.
Vendors can also commission an electrical report and make it available to buyers. Again, this can alert a vendor to any potential issues and make the sale process run more smoothly if problems are addressed before marketing. Vendors should retain the electrical certificates for work and make them available to a purchaser.
For buyers, especially first home buyers, this kind of helpful information is not always supplied. Well-informed buyers must decide whether to offer, subject to reports, or pay for reports before offering so they can make a simpler offer and possibly head off the competition. Paying for reports and missing out on a property, however, can soon become quite costly. Buyers tempted to use a builder friend need to be aware that, again, they almost certainly will have no legal recourse if something goes wrong later. For further information see https://www.boinz.org.nz/
The standard building report clause in sale and purchase agreements (clause 10.3) requires building reports to be carried out by a “suitably qualified” inspector and if a buyer wants to exit a contract because of something in the building report, that report must be made available “immediately upon request” to the vendor. At this stage, vendors would be wise to seek legal advice.