This is a “must read” for all investors. While there is no obligation to use any particular edition of a standard sale and purchase agreement form it is most likely that this version will prevail from now on.
Changes to sale and purchase agreements
From Alexander Dorrington lawyers Auckland
We have set out below a short summary of the changes in the new 9th edition. There are some changes specific to unit titles and commercial transactions, which we cover separately. The first section is potentially relevant to all agreements. There is a lot to take in. Some of the changes assist vendors, and some purchasers, so the agreement remains appropriately balanced between the interests of the parties. Vendors should carefully consider the change to the warranty as regards chattels; purchasers whether the new building report condition protects them sufficiently. Have a look at my comments below.
What follows assumes you are broadly familiar with the current 8th edition. If you are looking at entering into a new agreement for sale and purchase of real estate, whether as vendor or purchaser, it is always best to check with your lawyer first, regardless which edition applies.
FOR ALL TRANSACTIONS:
Building report condition
A standard building report condition is introduced. Purchasers will select whether to include this building report condition. If selected, the purchaser must consider whether the report is satisfactory (being objective). They will have 10 working days. The report must be prepared in good faith by a suitably qualified building inspector in accordance with accepted principles and methods. If the purchaser avoids the agreement (because they are not satisfied with the report) then the vendor can insist they are given a copy. Purchasers may wish to consider writing their own condition, giving them more flexibility.
The vendor now warrants that the chattels are delivered to the purchaser in reasonable working order, where applicable, but in all other respects in their state of repair as at the date of the agreement, fair wear and tear accepted. This amendment is problematic. Vendors might want to delete the new wording. Otherwise arguments at settlement around chattels will be common place.
The warranty the vendor gives concerning building work they have done at the property has been slightly narrowed. The warranty that the works were completed in compliance with permits and consents has been narrowed “to the vendor’s knowledge”.
Read the rest here: