Summer 2012/2013 Newsletter

New Auckland District Law Society (ADLS) forms

The Auckland District Law Society periodically updates its legal forms to keep them current and reflect new laws or practices. The legal forms provided by ADLS are used as standard forms throughout New Zealand This year has seen the introduction of a new edition for both the agreement for sale and purchase of real estate and the deed of lease.

ADLS Agreement for the Sale and Purchase of Real Estate

This Agreement is the most common contract used for the sale and purchase of real estate throughout New Zealand.

Building Report Clause

Amendments included the introduction of a pre-prepared clause for the purchaser’s use when making the Agreement conditional upon a satisfactory builder’s report. This clause is included by indicating ‘yes’ on the front page of the Agreement, similar to a LIM report condition.
Previously, specific building report clauses were frequently prepared and inserted by the agent or purchaser’s solicitor. These were contractual terms recommended to a purchaser to benefit them and protect their interests

The New Clause

The details of the building report condition are in clause 9.3 of the Agreement. It records that the Agreement is conditional on the purchaser obtaining a satisfactory building inspection report, with the purchaser to advise within 10 working days if the building report is unsatisfactory. Crucially, the clause contains the requirement that this report be “prepared in good faith by a suitably-qualified building inspector in accordance with accepted principles and methods”.

‘Suitably Qualified’?

The meaning of “suitably qualified building inspector” is vague, with a builder or at least someone experienced

in the building industry envisaged. The ADLS have indicated that in principle this can include an ordinary builder, provided the builder has experience in the particular type of building that is being inspected.

It is in the purchaser’s best interest to obtain a thorough inspection and report from a builder or specialised building inspection company that is experienced in inspecting properties and has appropriate liability insurance in place. A purchaser cancelling the agreement based upon a building report must, if requested, immediately provide a copy of the report.
It is possible that purchasers who attempt to avoid agreements may find themselves being challenged by vendors, as the clause requires an objective assessment of the property. As yet it has not yet been established what issues will be too insignificant to justify cancellation. Regardless of the provisions of the clause, it may still be possible for parties to co-operate and agree for any issues raised in a builders report to be remedied prior to settlement.
The new clause may not always meet your needs. A vendor of a building with identified issues may want the option of undertaking the works prior to settlement, to prevent the sale being cancelled once an inspection has been obtained. It is always prudent to seek legal advice before signing an Agreement, to explore alternative or additional provisions as necessary.

Vendor’s Warranties

The new Agreement also includes a change in the wording to the vendor’s warranties regarding works completed on the property by the vendor.
Clause 6.2 (5) now provides that “to the vendor’s knowledge, the works were completed in compliance with (those) permits or consents”. (the phrase “to the vendor’s knowledge” has been added). This is intended to reduce the liability of a vendor in circumstances where (for example):

Electronic Settlement

Settlement of the sale electronically by same day cleared payment (an electronic secure system administered by the banks) is now required by the Property Law Section guidelines and the Agreement except in specific circumstances when it is not possible. This reflects existing procedure.

For advice on the best way of selling or buying your property, before you sign, contact Graeme McLelland (407 0179) or Sarah Jury (407 0176).

Deed of Lease

“Christchurch” Amendments

The earthquake in Christchurch has highlighted several problems with previous versions of the deed of lease. The new deed of lease includes several amendments to address these problems, including:

Access for works:

New clause 15.1 allows the landlord access to the premises to inspect and carry out repairs (on reasonable notice unless it is an emergency). This clause has been drafted with building strengthening works in mind, but will apply in other circumstances.

New clause 15.2 provides for the abatement of a fair proportion of rent and outgoings if the tenant’s business use is materially disrupted due to the landlord’s works under clause 15.1

New clause 15.3 allows the landlord to require the tenant to vacate the whole premises if reasonably required to complete the repairs under clause 15.1

New clause 15.4 requires the landlord to act in good faith and have regard to the nature, extent and urgency of the works when exercising the landlord’s right of access or possession under these clauses.

Please note this is only a brief look at the changes and updates to these forms as we do not have room to cover all of the changes.

For advice on commercial leases please contact Louise Smith (407 0175) or Sarah Jury (407 0176).

Snippets

Merry Christmas in Legal Terms

Please accept without obligation, express or implied, these best wishes for an environmentally safe, socially responsible, low stress, non addictive, and gender neutral celebration of the winter solstice holiday as practised within the most enjoyable traditions of the religious persuasion of your choice (but with respect for the religious or secular persuasions and/or traditions of others, or for their choice not to practise religious or secular traditions at all) and further for a fiscally successful, personally fulfilling, and medically uncomplicated onset of the generally accepted calendar year (including, but not limited to, the Christian calendar, but not without due respect for the calendars of choice of other cultures). The preceding wishes are extended without regard to the race, creed, colour, age, physical ability, religious faith, choice of computer platform, or sexual preference of the wishee(s).

A surgeon, an architect and a lawyer are having a heated barroom discussion concerning which of their professions is actually the oldest profession. The surgeon says: “Surgery IS the oldest profession. God took a rib from Adam to create Eve and you can’t go back further than that.”

The architect says: “Hold on! In fact, God was the first architect when he created the world out of chaos in 7 days, and you can’t go back any further than THAT!”

The lawyer smiles and says: “Gentlemen, Gentlemen…who do you think created the CHAOS??!!”

As the lawyer woke up after surgery, he said” “Why are all the blinds drawn?” The doctor answered: “There’s a big fire across the street, and we didn’t want you to think the operation was a failure.”

Eftpos, Master Card and Visa are now available at our office.

All information in this newsletter is to the best of the authors’ knowledge true and accurate. No liability is assumed by the authors, or publishers for any losses suffered by any person relying directly or indirectly upon this newsletter. It is recommended that clients should consult a senior representative of the firm before acting upon this information.

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