Real Consequences for Breach
Defaulting on a sale and purchase agreement — failing to settle, failing to pay the deposit, or otherwise breaching its terms — carries real financial consequences. If a buyer defaults, the vendor generally has the option to seek a court order for specific performance forcing the sale to complete, or to cancel the agreement, retain the deposit (up to 10% of the purchase price), and sue for any further damages.
New Zealand courts have interpreted damages broadly, covering losses that arise naturally from the breach — this can include costs like a shortfall on resale, holding costs, and legal fees, not just the immediate deposit shortfall.
Specific Performance
Cancel and Retain Deposit
Courts have interpreted damages for default broadly — covering losses arising naturally from the breach, not just the immediate deposit shortfall.
If You're Facing a Possible Default
Steps to take as early as possible.
Get legal advice immediately
The earlier a lawyer is involved, the more options remain available to limit your exposure.
Understand your deposit exposure
As a buyer, know that up to 10% of the purchase price may be at risk on default.
Communicate early with the other party
An early conversation can sometimes lead to a negotiated extension rather than a formal default.
Quick Summary
- Buyer default: vendor can seek specific performance, or cancel and retain the deposit plus damages.
- Damages can extend well beyond the deposit — covering losses arising naturally from the breach.
- Get legal advice early if a default looks likely on either side.