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Buying property: solicitor's approval.

Mark and Joshua were looking at buying a property as an investment. They had spent most of their weekends for a couple of months going to open homes to view different properties and one weekend found what they thought was the perfect property.

On Saturday Mark and Joshua were advised that there were other interested buyers and they felt pressured to sign an agreement that day. Mark and Joshua were fairly confident with proceeding so signed an agreement but subject to a “solicitor’s approval clause” which they thought would allow them to pull out of the agreement easily.

The day after the agreement was signed, Joshua got cold feet, and he discussed his concerns with Mark during the day on Sunday. Together Mark and Joshua decided they didn’t, in fact, want to go ahead with the purchase because the property was not going to make the required rental returns.

On Monday morning Joshua phoned their solicitor and asked them to cancel their purchase agreement. Joshua was surprised when the solicitor advised they could not simply change their mind and they had to have valid legal reasons for cancelling the agreement. The solicitor’s approval clause was limited to approving the form of the contract and title to the property. The solicitor spent a bit of time trying to assist but, because the agreement was a standard form with usual terms and conditions and there were no interests registered on the property title, there was no reason the solicitor could give to validly cancel the agreement.

Mark and Joshua had no other conditions in their purchase agreement other than the solicitor’s approval clause and had no choice but to proceed with their purchase. Mark and Joshua have now settled on the purchase of a property which is not a good investment.

This scenario outlines why it is important to seek legal advice before signing an agreement to purchase a property. A solicitor’s approval clause is very narrow and is not an easy way to cancel a contract. It is important for purchasers to undertake thorough research on a property. 

A solicitor can help review the terms of an agreement to ensure it incorporates appropriate conditions for the type of property being purchased.


For further Property Law advice, get in touch with Nick and the Property Law team.
nick@davenportslaw.co.nz | 09 883 4420

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