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Caution should be taken with vendor warranties.

Brian and Mary were on the hunt for a section to build their dream home. They had visited multiple sites with agents to find the right place for their new home.

They found the perfect section which was ideal for the design they had in mind for their new home. The site was private and away from the main road. The section they were purchasing was the last section to be sold by the vendor in the area.

Brian and Mary signed an unconditional agreement to purchase the property which was accepted by the vendor. Brian and Mary settled the purchase of the section three weeks later.

Three months after settlement Brian became unwell. The plans to build their dream home were put on hold for 6 months. Unfortunately Brian health deteriorated so much so that their building plans would no longer suit their needs.

Reluctantly, Brian and Mary made the decision to sell the section. They needed somewhere closer to town and easier for Brian and Mary to manage.

They engaged a real estate agent to sell the section and within a couple of weeks had received an offer. The price was right and they signed it without delay. They had already committed themselves to a purchase a unit and needed the cash to pay down their debts.

The agreement was sent to their solicitor and preparations were underway for a quick settlement. Their solicitor had noticed that on the further terms of sale, the parties had agreed to additional vendor warranties. Brian and Mary had provided a warranty to the purchaser that power and phone would be supplied to the section. Brian and Mary had simply assumed that these services were already provided to the site when the developer had completed the subdivision. They were not concerned with providing this assurance to the purchaser.

On further inspection of the section it was discovered that phone and power services had not been supplied to the section by the developer. Brian and Mary were now committed to sell the property to the purchaser with these services connected.

Brian and Mary urgently contacted the power and phone company in the area. They obtained quotes for the service providers to have power and phone installed to the section. The providers indicated that the installation was going to cost them $20,000!

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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