Changes to the Standard Agreement for Sale and Purchase - Release of the 11th edition

2 March 2022

The standard Agreement used for the sale and purchase of real estate in NZ was updated on 8 February 2022 with the release of the 11th edition of the Agreement. This latest edition has several changes. Below are five of the most significant changes:

  1. Design overhaul

    The front and back page have had a design overhaul with significantly more space to record purchaser and vendor details as well as purchase price particulars and agent contact information.

  2. Tax information

    As the result of a tax change in 2021, a “Purchase Price Allocation” box has been included on the front page. The box can be completed as an option recording it is relevant to allocate values to items included in the sale (such as buildings, chattels, plant and equipment) for income tax and/or GST purposes. There is a separate addendum to include in the Agreement stating the relevant details of the purchase price allocation.

  3. Deduction on settlement (the “compensation clause”)

    In some circumstances the purchaser is entitled to make a deduction from the purchase price before settlement – for instance, when the vendor has not undertaken something they have agreed to do, or has made a misrepresentation to the purchaser. This is called a “claim for compensation” and is dealt with under clause 10 of the Agreement. The Agreement now provides that the purchaser may only serve one notice making a claim for compensation. However, the notice may include multiple claims. It is preferable for the purchaser to give the vendor an indication of a claim as soon as possible, but the purchaser should bear in mind that raising a claim too early would prevent further claims later. It is also advisable for a purchaser to complete the pre-settlement inspection before serving notice of a claim to ensure all claims are “captured” in the one notice.

  4. Trustees’ limitation of liability

    Clause 16 has expanded the previous limitation of liability clause. The clause records that independent trustees are not personally liable. (An “independent trustee” is a trustee who is not also a beneficiary of the Trust.) However, if an independent trustee acts wrongly and loses his or her right under the law to be compensated from the trust assets, then the independent trustee would be personally liable to the extent they have lost the right to be compensated.

  5. Covid-19 / Pandemic provision

    The 11th edition has included a much-needed clause for the deferment of conditions and or settlement if restrictions on personal movement are imposed because of a pandemic. The clause does not refer to the alert level or traffic light systems. If personal movement restrictions are in place during a conditional period, the timeframe for the completion of the condition will stop running. Once the restriction is removed the condition will start again but will be due on the date which is 10 working days after the restriction is removed. The same will apply for the deferment of the settlement date unless the Agreement states otherwise and there are no restrictions in place on that date.

These are the most significant changes to the Agreement. Although the changes will not materially affect most transactions, they are important and should be considered by all stakeholders - such as vendors, purchasers, real estate agents, lawyers and banks.

Talk to us today about how these changes may affect your next property transaction.

Bailey Robertson is part of our Private Client team at Norris Ward McKinnon.