What does unconditional mean?

How an agreement gets there

An offer becomes a contract when you sign it and that acceptance is communicated to the buyer. Most offers arrive with conditions attached: finance, a builder's report, a LIM, due diligence, or the sale of the buyer's own house.

Each condition is there to protect one party, and each has a date. By that date it has to be satisfied or waived, in writing. When the last one is dealt with, the agreement is unconditional.

An auction works the other way around. A buyer who wins at auction is committed on the fall of the hammer, signs on the spot, and cannot withdraw. There is no general cooling off period for a buyer of residential property in New Zealand.

One thing that is often confused with cooling off

Section 130 of the Real Estate Agents Act 2008 gives a seller a right to cancel an agency agreement in certain circumstances. That is the agreement with the agency about marketing and selling your house. It is not a right to cancel a sale, and it has nothing to do with the buyer.

What happens next

The deposit is paid under the terms of the agreement. It is held in the agency trust account and cannot be paid out for ten working days after it is received, and the rest of it is covered in what happens to the deposit when your house sells.

From there the lawyers work toward settlement on the date in the agreement. The balance of the price is paid then, and that is when the property changes hands.

Between unconditional and settlement the house has not changed hands yet. Which party carries the risk, who insures, and the condition the property has to be in on settlement day are all set by the agreement, so read those clauses with your lawyer rather than assuming them.

What it means for you

Unconditional is the point at which you can plan around the sale: confirm your own purchase, book movers, give notice, tell the people who have been waiting to hear.

It is also the point the paperwork turns on. The agency agreement you signed says when the agency fee becomes payable, and that clause is worth reading before you get here rather than after. If you are buying as well, this is when your own dates can be locked to a sale rather than to a hope.

Until the last condition is dealt with, none of that is safe to assume. A conditional agreement can still end, and every date in it is a date that has to be met rather than a formality.