The Real Estate Institute of New Zealand says changes to finance condition clauses in the 10th edition of the REINZ/ADLS Inc Agreement for Sale and Purchase mean purchasers will be required to provide evidence if they can't raise finance.
REINZ says under the previous edition, if a finance condition is inserted into a sale and purchase agreement and the purchaser cannot obtain finance, their word is generally good enough for an individual to pull out of a contract.
However, REINZ says, under the changes to the finance condition purchasers will now be required to provide evidence if they can’t raise finance. Evidence might include a letter or email from the purchaser’s bank confirming that finance has been declined.
"This is a significant change to the sale and purchase agreement and it’s imperative that consumers understand the implications as if they can’t provide evidence they can’t raise the finance, they could be forced to proceed with the purchase or face other legal action by the vendor," says REINZ Chief Executive Bindi Norwell.
"It’s also essential that anyone looking to purchase a property takes legal advice and talks to their financial provider so that they understand exactly what they’re signing or else the implications are pretty significant."
Other changes in 10th edition
It is seven years since major changes were made to the agreement for sale and purchase. REINZ says other changes made to the 10th edition include:
- An optional toxicology report condition is included on the front page and in the general terms
- A detailed process to resolve compensation disputes between vendors and purchasers has been added
- 'Fixtures' and ‘chattels’ have been removed and replaced with new definitions and warranties
- The GST clauses have been revised
- The timeframe in which deposits may be released has been clarified
- References to fax machines have been removed
- Tenancy documents to be provided by the vendor on the settlement date
- Various other changes to language and formatting.