A New edition of the standard Agreement for Sale and Purchase of Real Estate has now been produced by the Auckland District Law Society and the Real Estate Institute of New Zealand Incorporated.
The most significant change to the Agreement is contained in clause 7 which deals with claims for compensation by a Purchaser when there has been damage, or other issues, which reduce the value and/or benefit of the property to the Purchaser.
A recent case, Property Ventures V Regalwood Holdings, created some confusion as to whether a Purchaser could refuse to settle the transaction unless, prior to settlement, the parties had agreed to an appropriate level of compensation or at least a retention of the sale proceeds to be held in trust pending the compensation issues being resolved.
Clause 7 now makes it clear a Purchaser can insist an appropriate proportion of the purchase price be deducted at settlement and paid to a stakeholder who shall hold the sum in trust pending resolution of the issues. Clause 7 also provides a code as to how the parties are to proceed if they cannot agree between themselves as to an appropriate amount of compensation or who is to hold the retention money.
The new edition of the Agreement for Sale and Purchase of Real Estate also contains a number of other additions and alterations.
We would of course be happy to answer any queries our clients may have in relation to the new form of the Agreement.
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Published: Wed, Sep 15th, 2010