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Lawyers believe more house sale blunders could go to court after the landmark ruling against a couple who reneged on the purchase of a lifestyle block near Whangarei.
Legal experts say people find it easier to slide out of deals when the market is rising because other buyers
can be found. But if the tide turns, more botch-ups could go to court.
A High Court judge ruled lawnmowing contractors Carol and Bill Fleming of Beachlands, southeast of Auckland, owed the Whangarei seller, Tania Mana Family Trust, $300,000 for not doing everything reasonably necessary to sell their home within the 90-day period set when they agreed to buy the 17.8ha block.
The Flemings say they could be up for a further $100,000 in legal fees after the Court of Appeal increased the initial award.
John Waymouth, a specialist property barrister, said if the housing market turned down and backup deals were harder to get and could only be secured for a lower price, more litigation could be inevitable.
The latest case was a timely reminder of the importance of contracts, he said, and people should not sign them lightly.
Disgruntled vendors might be keener to reach for their lawyer if buyers tried to wriggle out of a deal after this case, he said.
Lawyer Don Thomas of Thomas & Co in Auckland said it was rare for a house seller to take legal action against a buyer to enforce a contract and he had been involved in only two other cases.
But he is discussing action against a buyer who had shown little appetite to complete a contract with one of his clients.
"The buyers have done nothing and we're saying to our clients that taking action is an option," Mr Thomas said. But the housing market was so strong lately that this type of action was rare, he said.
"Nine times even out of 10 - even 10 out of 10 - people should be able to get another sale for at least as good a price as the previous one," Mr Thomas said.
Mr Waymouth agreed, saying vendors had often not been worried if deals did not go ahead in the past few years because other buyers were usually waiting in the wings with another offer.
It was rare for vendors to litigate in an attempt to enforce a contract because this route was so expensive, he said. But this could all change if the second-best deal was for considerably less.
Mr Waymouth said the court decision highlighted the point that people who entered conditional agreements must make reasonable efforts to ensure that any condition was met.
The Auckland District Law Society contract, used for most property deals, has 14 clauses and some of those had more than 30 sub-clauses. These all aimed to enforce a deal once it was signed, he said.
Hamilton lawyer Shiree Blackwell said this week that methods such as advertising a home only on the web might not meet these conditions.
Peter Hammond of commission-free private property sales specialist Green Door said his business used far more than just the web to sell real estate.
Green Door offered a full package of services, he said. It was one of a rising number of no-commission businesses that was challenging traditional agents' market and Mr Hammond said his firm was selling 1200 to 1500 properties a year.
Trade Me was one of the biggest web-based marketing tools for real estate, he said.
Alister Helm, chief executive of the Real Estate Institute's website realestate.co.nz, said advertising a property on the web was only part of the solution to selling a property.
The site, launched last August, had 74,000 listings from licensed real estate agents and was becoming increasingly popular.
"But there's a story a day about how people get taken for a ride on the internet. You've got to be aware of its limitations and it's not the answer to everything," he said.
Bill Fleming said he would use some of the proceeds from a Whangarei property he sold for $465,000, plus an inheritance.
