If you have ever made an offer on a property, then you will be familiar with what many Kiwis refer to as a “standard agreement” – i.e. the ADLS/REINZ Agreement for Sale & Purchase of Real Estate (“ADLS Agreement”).
There have been numerous versions of the ADLS Agreement over the years. The most recent of these, the Eleventh Edition 2022, was released on 8 February 2022 (“New Agreement”). This revised version contains a variety of substantive amendments, as well as some formatting changes.
The key changes include:
Changes in wording to account for the fact that bank cheques no longer exist – i.e. all money transfers are now electronic.
Provisions which address recent legislative changes to the rules concerning tax purchase price allocation. This means if a tax obligation attaches to a portion of the property that is being sold, then the Vendor and Purchaser must agree as to the size/value of that portion. Furthermore, the parties’ respective (subsequent) tax returns must mirror such agreement. To assist vendors and purchasers with this issue, a supplementary document has been created, to accompany the New Agreement in applicable circumstances. The document is succinctly entitled the Addendum To Agreement For Sale And Purchase Of Real Estate Further Terms Of Sale And Schedule – Tax Purchase Price Allocation.
Clarifications have been added to Clauses 10 and 11 for situations where one of the parties makes a claim against the other.
The limitation of liability clause (Clause 16) has been amended in view of the recent Trusts Act 2019. Section 40 of the Trusts Act 2019 states that “The terms of a trust must not limit or exclude a trustee’s liability for any breach of trust arising from the trustee’s dishonesty, willful misconduct, or gross negligence.” The New Agreement clarifies the fact that in circumstances where an independent trustee has been stripped of their indemnification – presumably by the Court – the trustee shall be personally liable, but their liability shall be limited to the amount for which they would have been indemnified……if they had not lost their indemnification.
A series of new Covid-19 and pandemic clauses have been included. The sudden onset of the first lockdown in 2020 left Purchasers, Vendors and their lawyers scrambling. Since then, a variety of different “Covid clauses” have been in circulation. The New Agreement contains standardised default clauses that provide certainty for all parties in circumstances where their physical ability to fulfil conditions and/or complete settlement is prevented as a result of Government restrictions in response to Covid or some other pandemic.
The warnings and disclaimers have been scaled back and moved from the back page to the signing page.
The acknowledgement and warnings on the signing page have been updated.
Following the release of the Eleventh Edition 2022, the previous edition of the ADLS Agreement – i.e. the Tenth Edition 2019 (2) – has been rendered obsolete.
If you have questions regarding these changes please contact us or call (03) 477 8080