Meth testing in a property – from a vendor’s perspective

Following on from the last edition’s article on P-contamination in residential property, we take the opportunity to focus on this issue from a seller’s perspective.

It’s now common in sale and purchase agreements to include a clause which allows a purchaser to test for methamphetamine (known also as P) contamination. This clause allows the purchaser to cancel the agreement if the property shows signs of methamphetamine use or manufacture.

The Ministry of Health’s guidelines (click here to read them) state the P-contamination level that is considered unsafe.

Standards of testing vary between testing companies; many of the tests simply show a ‘present’ or ‘not present’ result. There is no way to know if those tests exceed the Ministry’s safe level or not.

Let’s think of an example: Your family holiday home is rented out a few times a year, and then you decide to sell it. The agreement is subject to a meth test. The test comes back positive, and your purchaser cancels the agreement.

It seems overly harsh in this situation to lose the sale, but this is the reality of a standard meth test clause in a contract. The meth test may not be laboratory tested by professionals working towards a set of unit standards.

If your purchaser insists on a meth test, don’t rely on a standard meth test clause. It’s better to talk with us beforehand to get a more rigorous meth test clause that must adhere to the Ministry of Health’s guidelines on contamination levels. It may help you save your sale.

Multi-offers on a property

A shortage of property for sale has resulted in the rising trend of properties only being available to purchase through a multi-offer situation. This is a confusing and stressful situation, particularly for first-home buyers.

A multi-offer sale is where more than one purchaser makes an offer to buy a property. Each potential purchaser has to prepare their offer and submit the offer by a deadline. The vendor and real estate agent will then review all the offers they have received and pick which they wish to accept or with whom to negotiate further.

A multi-offer situation is almost like a tender, except that there are no vendor’s terms and conditions of tender and the purchaser sets their own terms and conditions. A purchaser has no opportunity to negotiate initially and must put their best offer forward in relation to price, conditions and settlement date. The higher the price and fewer conditions, the more attractive the offer looks to the vendor.

The nature of the multi-offer scenario and the very tight property market often results in purchasers leaving out important conditions in the agreement (that are there for their benefit) and overstretching themselves with their offer price. This is, potentially, a risky place to be.

If you are purchasing a property that’s in a multi-offer situation, talk with us early so we can advise you of your risks and how to minimise them.

Terminating a commercial lease for unpaid rent

Prior to the Property Law Act 2007 coming into force, commercial landlords could seize a tenant’s property to recover unpaid rent. This is no longer an option. The rules in the Property Law Act must be followed if landlords wish to terminate a commercial lease if their tenant is behind in their rent payments.

The Property Law Act – in this respect – is a code, which means its rules must be followed.

Often we see situations where commercial landlords have become so frustrated with their tenant’s continued failure to pay the rent that they take matters into their own hands and revert to the previously acceptable position of taking possession of the premises and seizing chattels.

While having a tenant in your premises not paying their way can be incredibly frustrating, you can make it worse for yourself by doing this. The Property Law Act contains remedies for tenants if landlords breach the legislation.

If your tenant is behind with the rent, contact us as soon as the rent becomes overdue. We can advise you on the correct way to remedy the situation without putting yourself at risk. 

Disclaimer: All the information published in Property Speaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of this firm. Articles appearing in Property Speaking may be reproduced with prior approval from the editor and credit given to the source. Copyright NZ LAW Limited, 2017
Copyright, NZ LAW Limited, 2016. Editor - Adrienne Olsen, em.  ph. 029 286 3650 or 04 496 5513