PHOTO: Sunset clauses
After being caught out by a sunset clause in a Sale & Purchase Agreement to buy a new-build home, the experience of one couple highlights the importance of getting clauses checked – and following legal advice.
It comes as the Government is incentivising Kiwis to buy new-build homes in a bid to boost new housing supply. House price caps for the First Home Grant and First Home Loan are higher for new-builds than existing homes. New-builds are exempt from Loan-to-value ratio (LVR) rules and banks are offering discounted floating interest rates for new-builds for up to three years. Under proposed rules, new-builds will be exempt from phased out interest deductibility on investment property loans.
On January 9, an Auckland couple, who asked not to be named, signed a Sale & Purchase Agreement to buy a 3-bedroom new-build home, part of a six unit development in Henderson. The purchase price was $779,000, for which they paid a 5 percent deposit.
Initially contacting Newshub on August 1, the couple said the CCC and Title hadn’t yet been issued by 30 June, 2021, a condition specified by the vendor (developer) under a sunset clause in their Sale & Purchase Agreement.
In legal terms, a sunset clause is a condition included in a contract which says if a specified event hasn’t occurred by a certain date, then either one or both parties (the purchaser and/or the vendor) can cancel the contract on giving written notice to the other.
Wrapped up in the excitement of buying a new-build home, the couple said they signed the agreement with the clause in, despite their lawyer warning them not to.
“The expected completion was April/May…we were caught up in the heat of the moment, really excited about it,” the couple said.
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