August 07 2012
Changes have recently been made to the ADLS/REINZ Agreement for Sale & Purchase; this is the standard form of Agreement used in almost all New Zealand property transactions. Not all of the changes are of significance, but if you are buying or selling property in New Zealand here is a brief note on some of the changes you should know about.
A standard building report clause has been added. The standard builder’s report condition has limitations as it must be prepared in good faith by a suitably qualified building inspector in accordance with accepted principles and methods.
If the purchaser cancels the Agreement because of an unsatisfactory report then the vendor can insist they are given a copy. To preserve greater flexibility, purchasers should have their own broad due diligence clauses drafted.
The insurance provisions have also been amended so where there is partial damage, the purchaser can deduct for the reduction in value as compensation. The vendor’s warranties have been changed; where chattels are sold with a property, they are delivered to the purchaser in reasonable working order. This will cover disappointing cases where, for example, an oven does not work and the purchaser did not know about it. Note however that ‘fair wear and tear’ is preserved so the amendment is not excessively onerous on vendors. There are also other changes reflective of the new unit titles legislation and other technical amendments to the standard Agreement. This new Agreement will continue to be a work in progress, and no doubt will be subject to a number of changes over time – and court challenges too. You should consult with us before entering into any Agreement for Sale & Purchase to understand those changes and, importantly, the terms of the Agreement you are about to complete.