By: Annabel Sheppard
The new edition of the Auckland District Law Society Agreement for Sale and Purchase of Real Estate (ADLS Agreement) has been released. 

The ADLS Agreement is the most widely used sale and purchase agreement in New Zealand. 

The new edition aims takes into account changes in technology, legislation case law and conveyancing practice.
The major changes that vendors and purchasers need to be aware of include:

Possession Date deleted

The possession date is now deemed to be the settlement date.  Therefore, if the possession date is to be different from the settlement date this will need to be recorded as a further term in the agreement.

Building Report Condition

The option of a building report condition now appears on the front page of the agreement.  This addition reflects the usual practice of purchasers to include a building report condition in this post leaky-homes and earthquake environment.

Unit Title properties

As with the previous edition of the agreement, the obligations of a vendor under the Unit Titles Act 2010 are recorded in clause 8.0 of the agreement. However, there has been a change to the way the deposit is held when a  property is a unit title.

The deposit must now be held by a stakeholder until the expiry of the requisition procedure and until all rights under the Unit titles Act 2012 have been exhausted.

This means that it will be more important than ever to ensure that all disclosure statements are provided to the purchaser on time. The agreement still sets out the Unit Titles Act disclosure requirements but also goes further to clarify where notices under the Unit titles act are to be delivered and that the cost of any additional disclosure statement is to be paid on settlement.

However,  the Unit Titles Act does not provide a time limit on when the purchaser must give notice to postpone settlement or cancel the agreement.  Arguably, the stakeholder must therefore hold the deposit until settlement.

This may not be practical in many situations as purchasers will often use the deposit from their sale to pay the deposit for their purchase.

Risk and insurance

If before settlement, the property is damaged but not to the extent that it is "untenantable" the agreement now provides that the purchase price will be reduced by the same amount as that which it would cost to repair or reinstate the damage.

The word "untenantable" remains undefined.  This means that the meaning of the word may vary in each circumstance depending on the facts.

This clause acknowledges that fact that the cost of repair or reinstatement will often be in excess of the diminution of value.

There is also now a procedure in place if the parties cannot agree to the cost of repairs or reinstatement or a diminution value.

Vendors warranties and undertakings

This section has been amended to include a warranty by the vendor that the chattels will be delivered on settlement "in reasonable working order".

Chattels do not include fixtures such as dishwashers and air conditioning units.

This places an obligation on the vendor's to check chattels to ensure they are working before they sign an agreement. 

The warranty that all building works comply with permits and compliances has been somewhat watered down to only include those works which the vendor has actual knowledge of.

The drafters of the latest agreement thought it was unfair to impose an obligation on a vendor to warrant works that they have no knowledge of and to expect every vendor to have the technical knowledge to determine whether those requirements have been met.

Finance and Insurance in Christchurch and Earthquake Issues

Some insurance companies are now requiring deeds of assignment of claim to be signed by the vendor, purchaser and themselves before agreeing to assign an insurance policy to a purchaser. 

These deeds have been drafted by the insurers and usually state that if the property is deemed a rebuild the insurer can choose to pay the market value of the property to the new owner rather than the cost to actually rebuild.

These deeds are under review at the moment by the Property Law Section. In the meantime, we recommend that these deeds are put before your lawyer to review before signing.

Financiers are also looking closer at the technical category of a home before agreeing to lend.  As the technical category of a home may impact on the value of the building financiers are taking into  account a home's classification when determining lending to equity ratios.  It is therefore important to include a wide finance condition in any purchase agreement and to keep your financier informed as to the location of the house you are looking to purchase.


If you are buying or selling a property we recommend that any agreement be reviewed by your solicitor before signing.  This will ensure that the agreement accurately reflects the transaction.  If you have any queries about property issues please contact our Private Client Team.
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