In late 2019 the Auckland Law Society and Real Estate Institute of New Zealand updated the standard Agreement for Sale and Purchase. This 10th edition of the agreement is the document the majority of people will sign if they buy or sell property.
The main change to this agreement surrounds the finance condition. Before this change, if a finance condition was inserted into a sale and purchase agreement, and the purchaser couldn’t obtain finance, then their word was usually enough to get out of the contract. The change to this clause now requires a purchaser to provide evidence that they cannot receive finance. This evidence may include a letter from the purchaser’s bank confirming that finance has been declined.
It is very important purchasers, and even vendors, understand what they are signing up for. If the purchaser cannot provide evidence that finance was unable to be raised then the purchaser could be forced to proceed with the purchase, or worse yet, be subject to legal action.
In addition to the finance clause the following changes were also made:
- an optional toxicology report condition is included on the front page and in the general terms
- a detailed process to resolve compensation disputes between vendors and purchasers has been added
- 'Fixtures' and ‘chattels’ have been removed and replaced with new definitions and warranties
- the GST clauses have been revised
- the timeframe in which deposits may be released has been clarified
- references to fax machines have been removed
- tenancy documents to be provided by the vendor on the settlement date
- various other changes to language and formatting.
Contracts and legislation are always changing so it pays to get your lawyer and accountant involved early on to review them before you sign.
Craig is an expert in reviewing and analysing client’s financial statements and tax returns and provides specialist taxation advice, you can always expect Craig to have his finger on the taxation pulse.