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REINZ Form of Agreement for Sale & Purchase of Real Estate
The Real Estate Institute of New Zealand (REINZ) has issued a new form of Agreement for Sale and Purchase of Real Estate in an attempt to introduce a "plain English" agreement that is easily understood by both parties.
While the layout, and some of the wording, of the REINZ form is more "reader friendly", it is not necessarily easier to understand. It also introduces several quite significant changes to the process that buyers, sellers, agents and conveyancers have become used to over the 20 or more years that the Auckland District Law Society Agreement for Sale and Purchase of Real Estate (8th Edition) (ADLS form) has been in circulation.
In certain circumstances - for instance where a code compliance certificate is not available on settlement - the settlement date under the REINZ Agreement may be pushed out, which has the potential to affect back to back transactions.
Another significant difference is how the special conditions operate. The ADLS form allows a purchaser to withdraw from the contract when a condition is not fulfilled, without necessarily having to justify their reasoning. However, whenever a purchaser using the REINZ form is not satisfied with the builder's report, title, LIM or tenancy agreement, they are required to issue a "refusal notice" setting out what they do not approve of, and what they require to be rectified. A seller who receives such a notice then has the option to rectify the matters raised or cancel the contract without further negotiation. Unlike the ADLS form, the purchaser using the REINZ form does not get a chance to withdraw their refusal notice.
As ever, if you are contemplating buying or selling a property it is in your best interests to get legal advice prior to signing any Agreement, whether you are presented with an ADLS form or an REINZ Agreement. We recommend, however, that you continue to use the ADLS form, due to the fact that it will provide greater certainty as to the process and outcome.
If you have any questions regarding the sale or purchase of property please contact one of our Property Law Team.
