Agreement for Sale and Purchase of Real Estate 11th edition
After months of work, Auckland District Law Society (ADLS) and the Real Estate Institute of New Zealand(REINZ) have released the new 11th Edition of standard Agreement for Sale and Purchase of Real Estate that is used by the legal profession and the real estate industry for the purchase and sale of residential and commercial homes/properties.
There has been a general overhaul in the formatting of agreement, including the tenancy schedules, warning and disclaimer schedules and increased room for vendor and purchaser names, property addresses and legal descriptions and terms of payment (i.e., the purchase price and deposit).
The agents’ details box has been moved to the back page where the details of the lawyers acting has always been located. As conveyancing has become increasingly complex in recent years, clear warnings are now contained immediately above the signing boxes for both purchasers and vendors. Removal of references to the use of bank cheques which were abandoned by the Banks in early 2020.
The inclusion of “conveyancing practitioners”, who are non-lawyers working in the property and conveyancing arena, but who are now included in the definition of ‘party’s lawyer’, while remaining subject to the consumer protections encapsulated in the Lawyers & Conveyancers Act 2006 and the Rules of Client Care and Conduct. Their inclusion in the definition also overcome various earlier issues surrounding conveyancing practitioners’ undertakings.
The purchase price allocation (PPA) clauses under sections GC20 and GC21 of the Income Tax Act 2007. The PPA clauses are now formalised in an addendum to the agreement rather than being a standard term, and property owners must always be alert to the potential for tax implications in property transactions (i.e., GST, Brightline and now PPA). As the PPA most likely only applies where there is a sale of residential land over $7.5million, it is most likely to be triggered for commercial property, farm sales, and other transactions. So where triggered the parties should agree on the allocation before the Agreement is signed and obtain accounting advice in order to minimise costly tax implications.
A new set of Covid-19 clauses which allows for condition and settlement dates to be deferred for certain timeframes should the government impose a restriction on the personal movement in regions where the property is situated. Their inclusion removes the risks associated to date with the wildly inconsistent drafting of Covid clauses by agents and lawyers.
New signing provisions, but core warnings remain that all parties should always obtain legal advice before signing any agreement.
An amended limitation of liability clause that aligns with the enactment of the Trusts Act 2019 for independent trustees.
Revision of the claim for compensation clauses which have become increasingly used by parties in the Covid pandemic era. The changes include: purchasers must act reasonably in claiming compensation, time is of the essence to bring a claim, there can only be one claim, the vendor may dispute the purchaser has a valid claim, an expert may be appointed by ADLS, there is no right to discovery and the purchaser must be ready, willing and able to settle but for the claim for compensation, due to concerns about the “manufacturing” of claims in order to defer settlements.
ADLS is presently revising the auction and tender agreements but these are expected to be released soon for use by agents and lawyers. Further revisions of the 11th Edition agreement can be expected as and when legislation, Court cases or legal practice dictates.
This article was written by Gina Jansen, Managing Director of Gina Jansen Lawyers Ltd, and was reproduced in the West Auckland publication “Window on Swanson” in February 2022. Disclaimer: the content is not to be reprinted without the express permission of the author, nor is it intended to be relied upon or quoted as legal advice. Contact Gina Jansen Lawyers for legal advice.