Bryan Easton Grimshaw & Co www.grimshaw.co.nz

Two recent high court judgments highlight the need for buyers of residential property to be cautious when purchasing 'off the plans'.

Both judgments concerned the recently-built apartment buildings at Mount Maunganui known as 'Eleven'.

The defendants in each case had entered into agreements to purchase apartments on the basis of outline plans and a schedule of finishes given to them.

Before the defendants had to settle their purchase of the apartments, they became concerned about differences between what was depicted on the outline plans and what was actually built.

The purchasers' concerns included a reduction in the size of the decks, the presence of structural columns in the interior of the apartments and changes to the fire-safe paths. The purchasers asserted these changes amounted to breaches of their sale and purchase agreements that gave them the right to cancel those agreements. Their solicitors wrote to the vendor's solicitor giving notice of cancellation.

The vendor did not accept that the defendant purchasers had the right to cancel the agreements and issued proceedings seeking orders that they complete their purchases of the apartments.

The vendor was successful in both cases. The Court was not required to finally determine if there had been breaches of the sale and purchase agreements. It was only required to consider whether, if the breaches were proven, they would give rise to a right to cancel the agreements.

The Court held that even if there had been breaches of the agreements, the terms breached were not essential to the parties and any breaches did not substantially reduce the benefit of the agreements to the purchasers. The defendants were therefore ordered to complete their purchases.

Developers commonly reserve their rights to make amendments to the proposed design of a building and to substitute materials referred to in specifications. People considering buying dwellings 'off the plans' need to be aware of this and should have their solicitor review the contents of any sale and purchase agreement before signing it. They otherwise run the risk of ending up with a property that does not meet their expectations.

Bryan Easton is an associate at law firm Grimshaw & Co where he specialises in building defect disputes including leaky building claims.

Email: bryan.easton@grimshaw.co.nz

Website: www.grimshaw.co.nz