The tenth edition of the ADLS/REINZ Agreement for Sale and Purchase of Real Estate has finally been released, and as contract law enthusiasts, we are possibly unreasonably excited.
One part that we, as lawyers, are very pleased about is the removal of the requirement to fax notices to other law firms. Most of our clients have a wee giggle when we mention that we’ll have to fax the other side, so it’s a relief that this relic of the 20th century will soon be gone from our lives. The notices will now need to be emailed to an ‘Email Address for Service of Notices’ recorded on the last page of the Agreement, below the lawyer’s details. We’ve set up an ‘[email protected]’ email address that goes to all of us which we’ll use for this address, so you know that your notice won’t be missed.
There’s a new inbuilt ‘Toxicology report condition’ that a purchaser can select if they want a meth test. We will be interested to see how often this condition is used as we’ve found most of the hype around meth testing has been and gone. More importantly, there have been changes to the standard finance condition. If the purchaser cancels on finance, the vendor can now request an explanation and evidence that the purchaser actually did attempt and fail to get satisfactory finance. This is inline with a recent High Court case, and may discourage purchasers from using a finance condition as a ‘Get Out of Jail Free’ card when they change their mind about a property. It’s important to be aware of this change and to make sure that your buyers use conditions that are appropriate for the checks they still need to complete when offering on a property. Other changes to the inbuilt conditions section of the Agreement is the number of days for confirmation of the Builder’s Report condition has been extended from 10 working days to 15 working days. The report also must be in writing.
The warranties around different types of chattels and fixtures included in the sale have also been clarified. There are now two Schedules for different types of items – one for items with an ‘operational function’ – generally electrical or mechanical items such as ovens and heat pumps, and one for items without an operational function, such as blinds, floor coverings and other furniture. Those items with an operational function need to be in reasonable working order, whereas those without an operational function are sold as is, where is. You’ll probably need to take a minute to decide which Schedule each item should be in.
Finally, a change very relevant to agents is the Agency clause. This is another change due to a recent court case. It won’t change Agents practices much, but it makes it clear that all offers and counter-offers still need to be accepted by the vendor personally before it’s legally binding.
Our staff have completed an ADLS training session on the new Agreement, so please feel free to contact us with any questions you have! At this stage, the new Agreement is only in the standard form. The changes to the Auction and Tender version of the Agreement will be coming out early in 2020.