Understanding Conditions in Offers on Your Canterbury Property
Most offers on Canterbury properties come with conditions - obligations the buyer must satisfy before the sale becomes binding. Understanding what different conditions mean and how to manage the conditional period is essential for vendors who want their sale to proceed smoothly to settlement.
Finance Condition
The most common condition is finance - the buyer needs formal bank approval for their mortgage before they are committed. A standard Canterbury finance condition typically gives the buyer five to fifteen working days to obtain formal approval. If the buyer cannot obtain satisfactory finance within the timeframe, they can cancel the agreement without penalty and the deposit is returned. Finance conditions represent genuine risk for vendors: not all buyers who make conditional offers will get the finance they need. Your agent's qualification of buyers before they make offers reduces but does not eliminate this risk. A shorter finance condition timeframe (five working days rather than fifteen) reduces the time your property is off the market if the finance condition fails.
Building Report Condition
A buyer may make their offer conditional on obtaining a satisfactory building inspection report from a qualified building inspector. In Canterbury, where earthquake repair history is pervasive, building reports are particularly important and more complex than in other New Zealand cities. A building report condition typically gives the buyer five to ten working days. If the report reveals issues the buyer considers unsatisfactory, they can cancel the agreement - though under updated sale and purchase agreement terms, they must demonstrate a genuine attempt to satisfy the condition rather than simply cancelling on a pretext. In practice, many building report conditions result in price negotiation rather than cancellation when issues are found.
LIM Condition
A LIM (Land Information Memorandum) condition allows the buyer time to review the LIM report from the council - a document showing recorded information about the property including natural hazards, building consents, rates information, and any council notices. In Canterbury, LIMs contain TC land category information and any earthquake-related council records. A LIM condition typically gives the buyer five to ten working days. LIM conditions rarely cause cancellations unless the LIM reveals a serious undisclosed issue.
Subject to Sale
A subject to sale condition makes the purchase conditional on the buyer selling their existing property first. This is the condition most likely to cause a long delay or ultimate cancellation if the buyer's property does not sell. Subject to sale conditions typically include a cash-out clause allowing you to continue marketing and accept another unconditional offer during the conditional period. Your agent advises you on whether the specific terms of a subject to sale condition are reasonable given your circumstances.
Information from Settled.govt.nz, the Real Estate Authority, and Price My Property NZ. For general information only - always obtain independent legal advice before accepting a conditional offer.