The Auckland District Law Society (ADLS) produces the standard Agreement for Sale & Purchase of property used in New Zealand. If you have ever bought or sold property in New Zealand you will most likely have signed one at some point. ADLS have made some subtle but wide ranging changes to the latest edition and this article highlights some of the more important changes to be aware of.
The Auckland District Law Society (ADLS) have recently released new editions of their sale and purchase agreements. ADLS agreements are the most frequently used contract documents for the sale and purchase of real estate in New Zealand and as such any amendments attract a good deal of interest.
The changes in the latest agreements are subtle but deceptively wide ranging. We summarise below what we believe are the most important changes for you to turn your minds to when entering into an agreement.
Notable changes that you need to be aware of:
The new agreement contains additional vendor warranties. Vendors will now be required to ensure that all equipment and systems (including heating) are in reasonable working order on settlement or they may be liable for compensation. If any item is not in reasonable working order then this will need to be specifically disclosed in the agreement.
Vendors are now explicitly required to provide electronic door openers to all doors that are opened electronically. We accordingly suggest that it would be prudent to check what you will be able to pass over on settlement. If there are no electronic door openers or if some are missing or inoperative then it will be best to clarify this in the agreement.
If the property is a unit title, then by signing the agreement you, as vendor, will be warranting that a pre-contract disclosure statement has been provided, and that the information contained in that statement was complete and correct. You may be liable for compensation if it later transpires that the pre-contract disclosure statement was misleading in any way so it is important to get this right. We suggest that you arrange for a pre-contract disclosure statement to be prepared well ahead of entering into any agreement. We are always happy to help with preparing statements if there is no established body corporate in place to prepare the required documentation.
There is a notable focus in the agreement on tax and tax collecting. Historically the GST information in Schedule 2 at the rear of the agreement was frequently left blank by the parties when completing the agreement. It will now be even more important that Schedule 2 of the agreement is completed by both the vendor and the purchaser at the time the agreement is signed. We suggest that if you are unsure about the GST aspects of the agreement (i.e. whether the property is used partly or fully as a principal place of residence or otherwise) that you seek specific advice from your accountant as tax consequences flow from the statements that are made.
If you have any queries about any of the issues raised in this article we are more than happy to discuss this with you.
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