real estate, contruction

7 things to check in your property contract

February 2016

Authors: Kathryn Hickling and Kylie Evans

Late last year, some welcome changes to the standard form contract used when buying or selling residential property came into effect. This contract is the one used by most real estate agents and is often referred to as the ADLS Form (Auckland District Law Society).

The revised ADLS Form:

  • Imposes additional risk (vendor chattel warranty)
  • Provides for late settlement compensation for vendor
  • Requires additional tax information for NZ Inland Revenue
  • Defines changes to deadlines (especially extension of LIM condition date to 15 January)

7 main changes:

 

 Old form (Ninth Edition 2012 (2)) New form (Ninth Edition 2012 (3))
No vendor warranty for Unit Title properties in relation to the information in the pre-contract disclosure statement.

 

The vendor warrants for Unit Title properties that the information in the pre-contract disclosure statement… was complete and correct.

 

Vendor warrants that chattels are delivered in reasonable working order.

 

Vendor warrants that chattels and all plant, equipment, systems or devices which provide any services or amenities to the property  including… security, heating, cooling or air conditioning are delivered in reasonable working order.

 

No tax information needed.

 

Land Transfer Tax Statements required for vendor and purchaser. Requires  IRD numbers, offshore tax information, and information regarding whether family will be using any residence.  Certain exemptions apply.
Late settlement (purchaser default):  Vendor can claim for additional expenses and damages.  Often not agreed by settlement. No requirement for purchaser to pay additional funds at settlement.  Often hard to recover once settled and purchaser in possession.

 

Late settlement (purchaser default):  Mechanism provided for an interim amount to be paid by the purchaser to a stakeholder at settlement, pending determination on additional vendor expenses and damages.

 

Christmas shut down period 24 Dec – 5 Jan not Working Days. Christmas shut down period extended to 15 Jan in relation to LIM condition dates (to take into account council shut down periods).

 

Mondayised public holidays not dealt with in definition of Working Days. Mondayised public holidays excluded from Working Days.

 

Purchaser notices of claims relating to errors or misdescriptions of the property or title must be made before settlement.

 

Purchaser notices of claims relating to errors or misdescriptions of the property or title must be made on or before the last working day prior t

Attached doc highlighting changes

To help you identify revisions to the ADLS form, a copy of the sample document (provided by the ADLS) which highlights the changes.

 

What do you need to do?

If you are buying or selling property, we recommend you either ask us to prepare the agreement on the new form, or require your agent use it.  You should always seek legal advice before signing.

If you have any queries about the new agreement, the land tax information requirements or anything else, please contact us.

[email protected]

[email protected]

 

 

Lowndes is an award winning corporate and commercial law firm with offices in the heart of Auckland and Wellington. The firm serves local and international companies and investors doing business in New Zealand.

 We are recognised for our technical expertise and exceptional client service including high levels of responsiveness and reliability, accessibility of our lawyers, and an unwavering focus on what matters – our clients’ commercial outcomes.