COMMENT: Let the buyer beware! But what about the seller?

The concept of "caveat emptor" (let the buyer beware) is frequently quoted in the context of the purchase of real estate – but less so, the concept of "caveat venditor" (let the seller beware).  However, it is both buyer and seller who should be fully aware of their rights and obligations when buying and selling real estate.

It is a relatively common occurrence in New Zealand for people to enter into contractual obligations to sell and buy properties on the same day.  Typically, this involves a house owner relying to some extent on applying the proceeds of sale from their existing house to help fund the purchase of the replacement.  By and large, this arrangement works well in practice – so what's the issue?

What people may not be aware of is that they are walking a tightrope during the period of time between the "unconditional date", the date when all conditions in the contract have been confirmed so that both buyer and seller are contractually obliged to complete the deal and "settlement", the point in time when buyer and seller discharge their contractual obligations to each other. 

Let's say Sarah was selling her existing house to Matthew and buying a replacement house from Kate, with both transactions settling on the same date.  Where would Sarah, Matthew and Kate stand from a contractual point of view if Sarah's existing house was damaged (say by fire that occurred the day before settlement) and she was unable to repair that damage before the settlement date?