Andrew and Greg had been in the Auckland property investment game for some time and decided to branch out to other parts of New Zealand. Andrew came across a great deal for a property in the Bay of Plenty. The vendor wanted a relatively quick settlement which suited them fine. Andrew and Greg decided they would complete their due diligence investigation for the new property before putting an offer forward to the vendor. Andrew and Greg knew the best way to be successful in securing the Bay of Plenty property would be to make an unconditional offer.
Andrew and Greg needed to sell one of their investment properties to fund the new purchase and listed one of the properties with the local agent. They thought it would be a quick and easy sell. Andrew and Greg did not have a lot of interest in the property they were selling and were getting a bit concerned they would miss out on the Bay of Plenty property. They decided to drop the asking price and ask the agent to submit all reasonable unconditional offers for them to consider. Sure enough an unconditional offer came through with a settlement date 3 weeks away. The offer was accepted and the agreement was sent off to their solicitor.
Meanwhile Greg and Andrew had been carrying out their due diligence on the Bay of Plenty property. Greg had visited the Council and reviewed the Property File to check all was in order. Andrew had arranged a builder to look through the property. They were happy with their investigations of the property and keen to move forward on it. Now that they had secured an unconditional offer for the sale of their investment property in Auckland, they believed they were in a position to complete contemporaneous settlement of the properties. Andrew and Greg submitted an unconditional offer for the Bay of Plenty property which was accepted.
Andrew and Greg’s solicitor received both unconditional agreements and began preparing for settlement. Their solicitor discussed the terms of both agreements with them and it came to light that their property was currently tenanted, however they agreed to sell the property to the purchaser with vacant possession. Andrew was confident that the tenant would move out before the required notice period.
Andrew and Greg approached the tenant and explained that as the house had been sold with vacant possession they would be grateful if the tenant could move out earlier than the required 42 day notice period. The tenant was not interested at all in being rushed out of the property sooner than required.
Andrew contacted the purchaser and explained the situation to them and requested that settlement day be delayed by another few weeks in order to give vacant possession. Unfortunately the purchaser had already given notice to their current landlord and was going to end up with nowhere to live.
Andrew and Greg were now in a position where they could not get the tenant out and could not provide vacant possession on settlement day.