When selling your property, it’s essential to understand the intricacies of what you’re offering to buyers, particularly when it comes to chattels included in the sale. To avoid last-minute surprises and potential issues during the settlement process, you need to ensure that your chattels are your “unencumbered” property. This guide provides insights into this critical aspect of property transactions.

The Role of the Vendor Warranty

In standard New Zealand agreements for sale and purchase, the ADLS agreement typically includes a vendor warranty stating:

“All electrical and other installations on the property are free of any charge whatsoever, and all chattels included in the sale are the unencumbered property of the vendor.”

This warranty is designed to ensure that chattels offered with the property are free of any charges or encumbrances, guaranteeing that they become the purchaser’s unencumbered property.

Common Traps to Avoid

Several pitfalls can catch sellers off guard:

1. Including items with outstanding hire purchase charges: Items bought through hire purchase arrangements often have associated PPSR charges. Sellers must clear these debts before the property sale to ensure the items are unencumbered for the purchaser.
2. Selling items that don’t belong to you: Occasionally, sellers may include items in the sale that belong to someone else. This can lead to complications and require the seller to find an equivalent replacement or pay the purchaser.
3. Including items subject to ongoing payment agreements: In some cases, sellers may sell items that are part of a long-term payment arrangement, such as solar panels. Without a special term in the agreement, sellers may need to pay the balance owed or negotiate with the purchaser to take over the payment arrangement.

Adding a Special Term

If both the finance company and the purchaser agree, a special term can be added to the agreement, allowing the purchaser to take over the payment arrangement for the items being sold with the property. This ensures a smoother transition during the settlement process.

Seller’s Responsibility

Before selling a property, it’s essential to determine any outstanding payments associated with items to be included in the sale. Sellers should be prepared to pay off these debts before or on the settlement date. Understanding your financial obligations and ensuring that the items offered are indeed your unencumbered property will help avoid complications.

Legal Guidance

When navigating the complexities of selling property, consulting with a legal professional can be invaluable. Your lawyer can help you search relevant registers, assess your obligations under the Agreement for Sale and Purchase, and ensure a seamless and legally compliant property sale.

Selling a property involves various considerations, one of which is the status of chattels included in the sale. Ensuring that these items are unencumbered is crucial to a successful and hassle-free property transaction. By understanding the potential challenges and seeking legal guidance, sellers can navigate the process with confidence and certainty.