Loan Purchase Agreement for New Zealand

Loan Purchase Agreement Template for New Zealand

A Loan Purchase Agreement governed by New Zealand law is a legally binding contract that facilitates the transfer of loans from one party (the seller) to another party (the purchaser). The agreement details the terms and conditions of the purchase, including the purchase price, representations and warranties, conditions precedent, and completion mechanics. It ensures compliance with New Zealand financial regulations, including the Financial Markets Conduct Act 2013 and the Credit Contracts and Consumer Finance Act 2003, while addressing privacy considerations under the Privacy Act 2020 and securities requirements under the Personal Property Securities Act 1999.

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What is a Loan Purchase Agreement?

The Loan Purchase Agreement is utilized when a financial institution wishes to sell part or all of its loan portfolio to another institution, typically for portfolio management, regulatory compliance, or strategic purposes. This document is essential in New Zealand's financial services sector, particularly when transferring rights and obligations under existing loan arrangements. The agreement must comply with New Zealand's robust financial services regulatory framework, including requirements under the Financial Markets Conduct Act 2013 and the Credit Contracts and Consumer Finance Act 2003. The Loan Purchase Agreement typically includes detailed provisions about the loans being transferred, purchase price calculations, representations about the loan quality, and mechanisms for the transfer of associated security interests and collateral.

What sections should be included in a Loan Purchase Agreement?

1. Parties: Identifies and defines the seller and purchaser of the loans

2. Background: Sets out the context of the transaction, including the existence of the loans and the seller's right to sell them

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation rules

4. Sale and Purchase: Core transaction terms including identification of loans being sold and purchase mechanism

5. Purchase Price and Payment: Specifies the purchase price, calculation method, and payment terms

6. Conditions Precedent: Lists conditions that must be satisfied before completion of the purchase

7. Completion: Details the completion process, timing, and deliverables

8. Representations and Warranties: Seller's and purchaser's representations regarding the loans and their authority to enter the transaction

9. Seller's Undertakings: Ongoing obligations of the seller regarding the loans and related matters

10. Assignment and Transfer: Mechanics for transferring the loans and related rights

11. Confidentiality: Obligations regarding confidential information and personal data protection

12. Tax: Allocation of tax liabilities and responsibilities

13. Notices: Process for giving formal notices under the agreement

14. General Provisions: Standard boilerplate provisions including governing law, amendments, and severability

What sections are optional to include in a Loan Purchase Agreement?

1. Security Arrangements: Required when the loans being purchased are secured and security interests need to be transferred

2. Servicer Provisions: Needed when a third-party servicer will continue to service the loans post-purchase

3. Buy-Back Obligations: Include when the seller may be required to repurchase loans under certain circumstances

4. Guarantee: Required when there is a guarantor for the seller's obligations

5. Step-in Rights: Include when purchaser needs rights to step into seller's position in certain circumstances

6. Data Protection: Detailed section required when significant personal data is involved in the transaction

7. Transitional Services: Needed when seller will provide temporary services post-completion

8. regulatory compliance: Detailed section required when loans are subject to specific regulatory requirements

What schedules should be included in a Loan Purchase Agreement?

1. Schedule 1 - Loan Schedule: Detailed list and information about each loan being purchased

2. Schedule 2 - Form of Transfer Documents: Templates for documents required to effect the transfer of loans

3. Schedule 3 - Seller's Power of Attorney: Form of power of attorney granted by seller to purchaser

4. Schedule 4 - Completion Checklist: List of all documents and actions required for completion

5. Schedule 5 - Loan Documents: List of all relevant loan documentation for each loan

6. Schedule 6 - Purchase Price Calculation: Methodology and formula for calculating the purchase price

7. Appendix A - Notice to Borrowers: Form of notice to be sent to borrowers regarding the change of lender

8. Appendix B - Security Transfer Forms: Forms required for transferring any security interests

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

New Zealand

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Banking

Financial Services

Investment Management

Asset Management

Private Equity

Debt Collection

Insurance

Real Estate Finance

Consumer Finance

Commercial Lending

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit

Portfolio Management

Operations

Settlement

Due Diligence

Documentation

Deal Advisory

Relevant Roles

Chief Financial Officer

Treasury Manager

Portfolio Manager

Investment Director

Legal Counsel

Compliance Officer

Risk Manager

Credit Manager

Transaction Manager

Due Diligence Officer

Finance Director

Commercial Director

Loan Operations Manager

Settlement Officer

Documentation Specialist

Industries
Contract and Commercial Law Act 2017: This is the primary legislation governing contract formation, enforcement, and remedies in New Zealand. It provides the fundamental legal framework for creating valid and enforceable agreements.
Financial Markets Conduct Act 2013: Regulates financial markets and financial products, including the trading of loan instruments and securities. Important for ensuring compliance with financial market regulations.
Credit Contracts and Consumer Finance Act 2003: Governs consumer credit contracts and provides protection for consumers in financial transactions. Relevant when the underlying loans being purchased involve consumer credit.
Personal Property Securities Act 1999: Crucial for understanding security interests in personal property, including loans and receivables. Important for registering and protecting security interests in the purchased loans.
Anti-Money Laundering and Countering Financing of Terrorism Act 2009: Establishes requirements for due diligence and verification of parties involved in financial transactions to prevent money laundering and terrorism financing.
Privacy Act 2020: Governs the collection, use, and disclosure of personal information. Relevant as loan documentation often contains personal information of borrowers.
Income Tax Act 2007: Contains provisions relevant to the tax treatment of loan purchases and assignments, including potential income tax implications for both parties.
Property Law Act 2007: Contains provisions relevant to property rights and securities, which may be relevant if the loans are secured against real property.
Fair Trading Act 1986: Provides consumer protection and prohibits misleading and deceptive conduct in trade. Relevant for representations made in the loan purchase transaction.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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