Selling your apartment? Vendor beware. In a Hight Court decision earlier this year, a vendor was ordered to pay the sum of $926,806.48 to a purchaser. See the case, Sole v Hutton [2025] NZHC 430 (7 March 2025) at the below link: https://www.nzlii.org/nz/cases/NZHC/2025/430.html
In 2018 the purchasers (the Soles) signed an agreement to purchase an apartment in Mount Maunganui from the vendors (the Huttons). Weathertightness problems were documented in the Body Corporate meeting minutes back in 2014, which is information the purchasers could have seen during their due diligence. The vendors signed the agreement which included a warranty that the vendor has no knowledge or notice of any fact which might give rise to the purchaser incurring any other liability under any provision of the Unit Titles Act 1972 or any proceedings being instituted by or against the body corporate.
The vendors had actually attended a Body Corporate meeting where these defects came up for discussion. However, they claimed they “forgot” about them. The Court rejected this excuse, finding that they did know about the building’s defects, and their non-disclosure amounted to misrepresentation and breach of contract.
In 2018 the purchasers (the Soles) signed an agreement to purchase an apartment in Mount Maunganui from the vendors (the Huttons). Weathertightness problems were documented in the Body Corporate meeting minutes back in 2014, which is information the purchasers could have seen during their due diligence. The vendors signed the agreement which included a warranty that the vendor has no knowledge or notice of any fact which might give rise to the purchaser incurring any other liability under any provision of the Unit Titles Act 1972 or any proceedings being instituted by or against the body corporate. The vendors had actually attended a Body Corporate meeting where these defects came up for discussion. However, they claimed they “forgot” about them. The Court rejected this excuse, finding that they did know about the building’s defects, and their non-disclosure amounted to misrepresentation and breach of contract.
Further, the vendors signed an agency contract which contained a warranty that to the best of their knowledge and belief the property is free from any hidden or underlying defects. The Court found it very improbable that the vendors would have forgotten the reports and as such, the misrepresentation claim was successful.
Vendor warranties are important and not to be glossed over.
This case has shown that the consequences of breach of warranty and misrepresentation can be significant.
Please contact our property team for assistance if you’re placing your property on the market.
