At a property auction, when is the sale considered legally binding?

Option A: When the highest bid is accepted by the auctioneer

While the auctioneer's acceptance of the highest bid determines the successful bidder, this alone does not create a legally binding contract. The acceptance establishes who has won the auction, but New Zealand law requires property contracts to be in writing. Without the signed Agreement for Sale and Purchase, there is no enforceable legal obligation.

Option B: When the reserve price is reached

Reaching the reserve price simply means the vendor is willing to sell at that price level, but it doesn't create a binding contract. The reserve price is the minimum price the vendor will accept, and once reached, the auctioneer can sell the property. However, a legal contract still requires the successful bidder to sign the written Agreement for Sale and Purchase.

Option D: When the deposit is paid by the successful bidder

Payment of the deposit is a consequence of the contract formation, not the event that creates the binding agreement. The deposit is typically paid after signing the Agreement for Sale and Purchase as evidence of the purchaser's commitment. The legal obligation to pay the deposit arises from the signed contract, making the signing the critical moment for contract formation.