Sarah submits an offer on a property with a finance condition that must be satisfied within 10 working days. On day 8, her bank confirms loan approval. What should Sarah do to properly handle this condition?
Correct Answer
A) Promptly give the vendor written notice that the finance condition is satisfied
When a condition is satisfied, the purchaser should immediately provide written confirmation to the vendor that the condition has been met. This removes uncertainty and allows the transaction to proceed smoothly, even though the condition period hasn't expired.
Why This Is the Correct Answer
Under the standard agreement a condition is not fulfilled until notice of fulfilment is given. Once finance is confirmed, Sarah should promptly give written notice so the agreement goes unconditional.
Why the Other Options Are Wrong
Option B: Wait until day 10 to tell the vendor, since the condition runs until then
Waiting is allowed, but nothing is gained. The condition stays unfulfilled until notice is given, and the vendor cannot plan.
Option C: Ask for an extension so that all the loan documents can be completed first
An extension is unnecessary once approval is confirmed. It only adds delay and uncertainty.
Option D: Tell the vendor only if the vendor or the agent asks about the condition
The condition is not fulfilled until notice is given. Silence leaves the agreement conditional.
Deep Analysis of This Sale Purchase Question
The legal point is that a condition is not fulfilled until the benefiting party gives notice. Until Sarah does, the agreement stays conditional, even though the bank has approved her loan. Giving notice promptly moves the deal to unconditional, starts the run to settlement and lets the vendor plan. It is good professional practice rather than a statutory good-faith duty.
Background Knowledge for Sale Purchase
Under the standard TLANZ/REINZ Agreement for Sale and Purchase, a condition is not fulfilled until notice of fulfilment is served by the party it benefits, and notices must be in writing. A finance condition is usually for the purchaser's benefit. If it is not fulfilled or waived by its date, either party may cancel by notice.
Memory Technique
Remember SWIFT: Satisfied conditions require Written Immediate Formal Transmission. Just like a SWIFT bank transfer happens immediately when triggered, condition satisfaction notifications must be transmitted immediately to the vendor in writing—no delays, no waiting for deadlines.
When you see any question about satisfied conditions, think SWIFT. If the condition is met, the answer will involve immediate written notification, not waiting, extending, or being passive about communication.
Exam Tip for Sale Purchase
Look for keywords like 'satisfied,' 'confirmed,' or 'approved' in condition questions. When a condition is met, the correct answer almost always involves immediate written notification to the vendor, regardless of remaining time in the condition period.
Real World Application in Sale Purchase
A first-home buyer submits an offer with a 15-day finance condition. On day 7, their bank approves the loan. The buyer's agent immediately prepares a written notice confirming the finance condition is satisfied and delivers it to the vendor's agent. This prompt action allows the vendor to feel confident about the sale proceeding and may influence their decisions about other offers. The transaction can now move forward smoothly toward settlement, with both parties having certainty about the finance approval.
Common Mistakes to Avoid on Sale Purchase Questions
- •Waiting until the condition deadline expires before notifying
- •Providing verbal notification instead of written confirmation
- •Assuming the vendor will automatically know when conditions are satisfied
Related Topics & Key Terms
Key Terms:
More Sale Purchase Questions
A property is sold at auction for $850,000 with a 10% deposit required. The successful bidder has concerns about the LIM report after the auction. What is their legal position?
What is the primary purpose of a LIM (Land Information Memorandum) in the sale and purchase process?
What deposit is most commonly agreed in New Zealand residential sale and purchase agreements?
When does an Agreement for Sale and Purchase become unconditional?
In a property auction, when is the sale considered complete?
- → How is the settlement date set in a New Zealand residential sale and purchase?
- → What typically happens to the deposit when an unconditional sale and purchase agreement is signed?
- → During settlement, what document transfers legal ownership of the property from vendor to purchaser?
- → A property is passed in at auction for $800,000 with a reserve price of $850,000. The highest bidder approaches the vendor immediately after. Which statement is most accurate about the subsequent negotiation?
- → When does an Agreement for Sale and Purchase become unconditional if it contains a finance condition with a 10 working day timeframe?
- → What is the typical deposit amount required immediately after a successful auction bid in New Zealand?
- → Under the standard TLANZ/REINZ Agreement for Sale and Purchase, who is typically responsible for paying rates from the settlement date?
- → At an auction, the reserve is $800,000 but bidding stalls at $750,000. The vendor then negotiates with the highest bidder and they agree to sell at $780,000, signing on the auction terms with no conditions. What type of sale is this?
- → A purchaser has included a finance condition with a 10 working day deadline. On day 8, they receive loan pre-approval but final approval is pending. What should they do?
- → What happens if a purchaser fails to pay the deposit by the specified deadline in the Agreement for Sale and Purchase?
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