Buying a house? No change of mind there either!

by Roslyn Morshead, of Rotorua’s Morshead Law   

Last month I wrote that there is no legal change of mind option after you purchase goods, and it struck me that many people may not be aware that it’s no different when signing up to buy a property.

Buying a property is probably one of the most common civil legal transactions many people get involved with in their lives. In my experience, because it’s a common transaction, people sometimes approach signing a property sale and purchase agreement with a ‘tyre-kicking’ or ‘dip one toe in the water and see what happens’ approach without appreciating they are signing a legally binding contract.

This perception means that some buyers may not take signing a contract seriously and think their lawyer has magical powers to ‘get them out of it’ if there’s a change of mind. Of course, whilst we’d like to have such magical powers, we actually don’t. All we have is the law. In short: an agreement for sale and purchase of real estate is a contract, and there’s no change of mind option.

So buyers are obliged to enter into the agreement in good faith, and work through the conditions put into their contract around finance, builder’s report, LIM, valuation and any other conditions. It’s not in good faith to not take steps toward satisfying the contractual conditions such as ordering your LIM, arranging your finance application/valuation/builders report and so on.

So think carefully about your good faith obligations when signing an offer for a property. Not acting in good faith can reflect back on you personally, and is also a waste of time and money of other professionals such as lawyers and agents. You will almost always get a bill from your lawyer for time involved, and there is also a risk in some instances that you might even be held to the contract.