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Get advice before signing on the dotted line

Get advice before signing on the dotted line

There’s nothing like spending a day buried in a 70-page contract. It’s one of my favourite jobs – but I digress. Whatever the contract, my colleague Richard Anstice and I always hope that our clients have sent it to us before they have signed on the dotted line. Otherwise, our first contact with the deal can involve a bit (or a lot) of damage control.

You will have seen one well-known and understood contract if you have bought or sold a house – the Auckland District Law Society/Real Estate Institute of New Zealand (REINZ) standard form for buying and selling domestic real estate. It has been widely used for years and is now in its eighth edition.

The ADLS form has been examined by the Courts for decades and is well understood. So your lawyer doesn’t have to spend a lot of time (which translates to your money) checking the agreement before giving you advice. It’s very efficient.

However, if you are going to buy or sell a house in the near future, be aware that there is a new sale and purchase contract form for the sale and purchase of domestic real estate, published by the REINZ.

Of course, the words are different, meaning that lawyers and the Courts will have to interpret much of the wording from scratch.

I am not a conveyancing lawyer. I don’t want to critique the nuts and bolts details of the new form.

Having said that, I do want to tell you that legal experts have described the form as potentially flawed, and legally unsound (you can read a solid opinion on www.adls.org.nz). They say that this form would create problems for both parties, but mostly for sellers. This is odd when you think that the real estate agent usually acts for the seller.

Another major problem I can see with the new REINZ form arises from the shape of the new documents – two of them. There is a six or seven-page form where the parties write in all of the details of the parties and the property, plus there is a 21-page booklet of terms and conditions which are allegedly in plain English.

This split format means that one real estate agent’s assistant’s mistake in not handing out the 21-page booklet to the buyer and to the seller could be the beginning of a costly, unnecessary court case.

A bigger problem for real estate agents is that the new form doesn’t have important warnings for non-lawyers that the old form had. Such as “Get independent legal advice before you sign this document”. This could well impact on agents’ obligations under the Consumer Guarantees Act.

But, who needs the hassle? Until this new REINZ form is interpreted by the Courts, I see no joy in using it. Your lawyer is likely to recommend that you insist on using the tried and tested ADLS/REINZ eighth-edition form. It is likely to give you more certain, lower cost results – and who wants to be paying for the first test case on interpretation?

And as with any contract, when you come to buy or sell your home, always talk to your lawyer before you sign on the dotted line. In many cases, seeking preliminary advice can be as easy as a quick phone call to your lawyer about the special clauses… provided you are using the right form.

Rae Nield is a solicitor specialising in marketing law. This article is intended for general information, and should not be relied on as specific legal advice. You should consult a lawyer for advice relating to your own specific legal problems. Rae Nield can be contacted at raenield@marketinglaw.co.nz.


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