Like lawyers elsewhere, local legal eagles are frowning at a new sales and purchase agreement.
Maurice Maxwell of Berry and Co. advises clients not to use the new contract and Alan Harper of AWS Legal warns people – whether buying or selling – not to sign it without legal advice.
Another prominent Queenstown lawyer, John Troon of MacTodd, says the new agreement particularly carries risks for sellers.
What’s causing legal brows to furrow is a new agreement recently put out by the Real Estate Institute of New Zealand.
The new REINZ form is vastly different from the previous standard agreement jointly produced by REINZ and the Auckland District Law Society – known as the “ADLS form” – which remains in use.
The new form is in plain English and REINZ has said it’s “designed to do away with ambiguity and complexity”.
Harper doesn’t agree. “There are pitfalls in it,” he says.
“The desire to write it in plain English is admirable…[but] you don’t want to go away from something that’s working very well unless you’re going to a form of agreement that’s a lot better than the existing one – and [the new REINZ agreement] is not.”
Despite REINZ representing real estate agents, who in turn represent sellers rather than buyers, Troon says “there seem to be fewer protective provisions in the REINZ [agreement] for vendors – surprisingly – than for purchasers”.
He finds it “quite strange that [the REINZ] document should demonstrably favour purchasers over vendors”.
Troon also echoes national legal mumblings about the REINZ document being unproven in law and therefore requiring test cases before it becomes embedded.
“There’s a huge amount of scope for reinterpretation [in REINZ’s document].
“And there’s little reason why we should subject ourselves to that when we have developed a body of case law [with the ADLS agreement] over many years which provides the certainty [lawyers] look for when advising people.”
So – what do you do when a sale and purchase agreement is poked under your nose?
Ideally, Troon says, whichever agreement it is, don’t sign without your lawyer first vetting it – particularly sellers being asked to sign the REINZ agreement.
Harper too clearly favours the tried and trusted ADLS document.
“Until the new [REINZ] form has evolved and the cracks in it have been got rid of, my advice would be to stick to the old [ADLS] agreement.”
As for getting legal advice first, if push came to shove Harper would be comfortable with clients signing the ADLS document.
“Yes, absolutely, and that’s what’s happened for a long, long time.
“I think the [ADLS agreement] has worked very effectively,” Harper says.
But if the new REINZ document is put under your nose, don’t sign it before your lawyer sees it? “That’s correct.”