INSTRUCTIONS FOR VENDOR’S LAWYER      

INTRODUCTION

A property sale via RealFuture is based on a long term settlement period of between 1 to 3 years, as distinct from typical sales that have a settlement period of 30 to 90 days.

Given the long settlement period, features of a RealFuture sale include deposit release via Section 27 of the Sale of Land Act and a formula for determining the final Price.

The Price at Settlement is determined as the Contract Value minus the Deposit.

The Contract of Sale is based on a standard REIV Contract plus Special Conditions that deal with the Deposit release, the Settlement period and the Price at Settlement.

Given the time involved in a long-term settlement, the vendor and purchaser may choose to get a Building Inspection Report by a qualified professional at the time of signing the contract of sale.

Steps to complete a RealFuture sale are detailed below.

1. Preparing the Contract of Sale, Vendor’s Statement (Section 32 statement) and Early Deposit Release Statement (Section 27 statement).
  • The Contract must be prepared by a lawyer appointed by the Vendor (not a conveyancer).
  • The Contract must be based on the most recent Contract of Sale published by the REIV and LIV.
  • The Special Conditions attached to this Instruction Sheet must be used and not amended.
  • Other Special Conditions can be used but they must not contradict the Special Conditions attached to this Instruction Sheet.
  • A Section 27 Statement must be prepared and signed by the Vendor at the same time as the Vendor’s Statement. The Section 27 Statement must include a statement from any lender if there is a mortgage or caveat on the property.
  • The Contract of Sale and Vendor’s Statement must be provided to the Vendor’s Real Estate Agent.
2. Requirements for exchange of the Contract of Sale
  • The Vendor will, with assistance from the Agent, propose the current Market Value of the property.
  • The Market Value and the Settlement Term can be negotiated and agreed between the Vendor and Purchaser.
  • The agreed Market Value of the property will be the “Market Value” for the Contract of Sale.
  • The Deposit is payable to the Agent’s Trust Account.
  • The Payment section of the Particulars of Sale must be completed as follows:
    • Price the amount calculated in accordance with Special Condition 5
    Deposit $[[Insert dollar figure equal to 10% of the Market Value.]]
    Balance the Price, less the Deposit
  • The Special Conditions must be completed as follows:
    • Special Conditions Clause 1.1 [[Insert the Market Value]]
    Special Conditions Clause 2.5 (a) (i) [[Insert the Number of months between the day of sale and the due date for settlement]]
  • Immediately upon the Contract of Sale being executed by both parties, send a copy of the Section 27 Statement to the Purchaser’s Legal Representative.
  • With regard to the Section 27 Statement, the Purchaser can do one of three things:
    • Agree to immediately release the Deposit, or
    • Not respond to the Section 27 Statement and once 28 days has passed, the Deposit can be automatically released, or
    • Object to the Deposit being released within 28 days stating their reasons for objection.
  • In the rare circumstance that a Purchaser objects to the Deposit being released, then the Vendor has the right under the Special Conditions, to terminate the Contract of Sale. This is because having access to the Deposit funds is a fundamental feature of the RealFuture sale.
  • Prior to the Agent releasing the Deposit to the Vendor, the Agent will deduct their commission and any unpaid marketing costs.
3. Preparation for Settlement
  • Ensure the Vendor appoints an Approved Valuer to carry out a valuation in accordance with Special Condition 4 and notifies the Purchaser of the appointment and the valuation at least 85 days prior to the due date for Settlement.
  • Note that the Purchaser may appoint another Approved Valuer to carry out a valuation if the Purchaser wishes to do so. Special Condition 4 explains how the final valuation is determined in that case.
  • The ‘Price’ is based on the final valuation plus or minus 50% of any increase/decrease in the property value over the settlement period.
  • Prepare the Statement of Adjustments and forward to Purchaser’s Legal Representative.

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