As promised, here is more detailed information about the newly updated standard Agreement for Sale and Purchase (the ‘Ninth Edition 2012 (3)’).  We advised you about this in our December 2015 edition of Agent Care. 

It is important that you are aware of the changes to the Agreement and their implications. 

The key changes include: (please see below for more information on each)

  • Tax information requirements are included (Clauses 3.6 and 3.7).
  • Vendor warranties and undertakings protect more than just chattels (Clause 6.2(1)).
  • Pre-contract disclosure statement changes (Clause 8.2(1)).
  • The spaces for the Vendors and Purchasers to sign the Agreement have been reversed.  Therefore Purchasers sign first.
  • Purchasers will have to claim compensation on or before the last working day prior to settlement (Clauses 7.1 and 7.2).

Other important changes include:

  • ‘Working days’ has a new definition (Clause 1.1(30)).
  • Keys that lock exterior doors and open doors electronically must be provided to the Purchaser on the settlement date (Clause 3.4).
  • Changes to the OIA (Overseas Investment Act) consent condition on the front page of the Agreement (Clause 9.4).
  • Inclusion of authority to provide statistical data to REINZ (Clause 12.2).
  • The ability for Purchasers to state whether part of the property is being used as the principal place of residence for GST purposes.  

1. Tax information

As you are probably aware, tax changes came into force in October 2015.  It is intended that these changes will improve compliance with tax laws by requiring the collection of information, particularly about those people that buy and sell for profit.

The Agreement has been changed to reflect this new legislation.  The terms “tax information” and “tax statement” have been defined.  Furthermore clauses 3.6 and 3.7 provide that tax information will be collected by way of a tax statement and such information will be lodged at the time registration is completed.

2. Vendor warranties and undertakings

A Vendor now warrants and undertakes that at settlement, the chattels and all plant, equipment, systems or devices which provide any services or amenities to the property, including security, heating, cooling, or air-conditioning will be delivered to the Purchaser in reasonable working order, except where otherwise stated in their state of repair as at the date of the Agreement. This allows for fair wear and tear.

Previously, the Vendor warranty and undertaking only covered chattels. The obligations on Vendors have been extended, and any failure to comply will create a right for the Purchaser to seek compensation from the Vendor.

3. Pre-contract disclosure statement changes

An acknowledgement has been reinstated into the Agreement, above where the parties sign, that in the situation of a sale of a unit title property the Purchaser has received the pre-contract disclosure statement. 

This will serve to highlight to the parties the need for a pre-contract disclosure statement to be made before a binding Agreement is entered into.

A new clause 8.2(1) has also been inserted, comprising a warranty by the Vendor that the information in the pre-contract disclosure statement provided to the Purchaser was complete and correct.  This warranty has been inserted to provide a remedy to a Purchaser where the pre-contract disclosure statement provided is either incomplete or inaccurate.

4. Signature section

The signature section has now been reversed so that a Purchaser is required to sign the Agreement before the Vendor.  This is a practical change as the Purchaser is the one who signs the Agreement first.

5. GST schedule

The GST schedule (which is to be completed by the Purchaser if the Vendor is registered for GST) has now been updated to include a new question which asks a Purchaser to state whether part of the property is being used as a principal place of residence at the date of the Agreement e.g. the main farmhouse or the apartment above the shop.

If the Purchaser answers “Yes” to this question, then that part of the property will be treated separately for GST purposes.

6. Working days

First, the new Agreement provides for the “Mondayisation” of Waitangi Day and Anzac Day. This means that if the public holiday falls on a Saturday or Sunday, the following Monday will be excluded from being a working day.

Second, the period of non-working days in the Christmas holiday period has been extended in clause 9.2(2) in relation to the LIM condition.  This has been extended from 24 December - 5 January (both days inclusive) to 24 December - 15 January (both days inclusive).  The reason for this change is to bring it in line with Local Council legislation and what is defined as a ‘working day’ for territorial authorities.

7. Keys to exterior doors

Under the previous version of the Agreement, a Vendor was required to make available to the Purchaser keys to all exterior doors, electronic door openers, and the keys and/or security codes to any alarms. This clause has now been amended to make it clear that ‘keys’ relates to all keys that lock exterior doors, and all electronic door openers that open all doors electronically. This revision removes any confusion about whether a Vendor is obliged to supply keys to an exterior door, even if it was not actually locked by key.

8. Claims for compensation

The new Agreement has clarified that if a Purchaser wants to make a claim for compensation, they must serve notice on the Vendor on or before the last working day prior to settlement. 
Purchasers will now be obligated to complete their pre-settlement inspection at least two working days prior to settlement.

9. OIA (Overseas Investment Act) consent

Clause 9.4 of the Agreement has now been re-worded to make it clear that if the Purchaser has indicated on the front page of the Agreement that Overseas Investment Act 2005 (“OIA”) consent is required then the Agreement is conditional upon the OIA consent being obtained by the date shown on the front page. 

If the Purchaser has indicated that OIA consent is not required or fails to indicate whether it is required, then the Purchaser warrants that they do not require OIA consent.

In the event that a Purchaser does not indicate that OIA consent is required when it is, the Purchaser will be liable to the Vendor for any losses suffered as a result of the breach of their warranty.

10. Authority to provide statistical data to REINZ

A new clause 12.2 has been included in the Agreement authorising the agent to provide REINZ with statistical data relating to the sale.

 

We hope that this article is of assistance. If you have any questions please do not hesitate to contact us.

For more information on the above changes please contact Laurie Pallett at lpallett@raineycollins.co.nz or on (04) 473 6850.