What is a solicitor approval condition?

A solicitor approval condition is a clause inserted into a sale and purchase agreement that allows your lawyer to review the conveyancing aspects of the agreement. However, it is limited in scope and generally only covers matters such as the legal description of the property and due dates - it does not allow you to back out of a contract simply because you have changed your mind.

Why is a due diligence condition better than a solicitor approval condition?

A well-drafted due diligence condition can cover all matters including a change of heart about the property. Unlike a solicitor approval condition, it gives you more flexibility to cancel the agreement without needing to provide a specific reason or evidence to the vendor.

Can a solicitor approval condition let me cancel a property contract?

Generally, no. A solicitor approval clause only allows your lawyer to check limited conveyancing aspects. It does not protect you from having to proceed with the purchase or allow you to insist on more favourable conditions.

Legal Toolkit: Expert Tips for First Home Buyers Part 1

The team at Schnauer and Co. have put together a resource toolkit to highlight some of the common misconceptions that some first home buyers have and provide you with tips on how to avoid some easy mistakes when buying your first home.

Solicitor Approval Condition

When first home buyers are looking at putting a conditional offer on what will potentially become their biggest asset, Real Estate Agents often suggest that a solicitor approval condition is inserted into the further terms of the agreement for sale and purchase, in addition to a finance and a builders report condition.

Our Recommendation: We always recommend that you seek legal advice from your own solicitor, conveyancer or other registered professional such as a legal executive in advance of signing any offer. In reality though, this does not always happen, due in part largely to wanting to get the offer in as quickly as possible to "beat" any other potential purchaser of that property.

The Problem With Solicitor Approval Conditions

The problem is that most solicitor approval conditions are actually pretty futile and, depending on how the clause is worded, lawyers have limited discretion when it comes to what they can do with that condition. Generally, the wording in the solicitor approval conditions provided by an Agent limits the scope and how that condition can be used but small changes to the wording of any condition can make a big difference to your rights.

Common Misconception:

Some Agents give Purchasers the wrong impression that a solicitor approval condition will protect them by allowing them to "get out of the contract" if the terms are exceptionally unfair in some way. Generally speaking, a solicitor approval clause does not allow you to back out of the contract or to insist on the insertion of further conditions that are more favourable for you.

What it does allow your lawyer to do is check the conveyancing aspects of the agreement (which is limited to checking matters such as correct referencing of the legal description of the property and that the due dates in the agreement work for your circumstances). Conveyancing matters are extremely limited in scope, so there are very limited scenarios where your lawyer could actually cancel an agreement in reliance of this condition.

A Better Option: Due Diligence Condition

Better Protection: A well drafted due diligence condition can cover you for all matters and even a "change of heart" in relation to the property. Obviously, Vendors are usually not very keen on these sorts of conditions but with the change in the current property market, Vendor's may be more open to these types of conditions, especially if there is a short satisfaction time-frame.

The next part of this series will discuss the non-satisfaction of the standard conditions which appear on the front page of the Auckland District Law Society (ADLS) agreement for sale and purchase of real estate.