The Property Law Section has released updated Property Transactions and E-dealing Practice Guidelines.
The updated guidelines took effect on 13 April and replace those released in July 2012. The guidelines can be accessed by all NZLS members and associate members at my.lawsociety.org.nz/property-law-section/property-law-information.
The guidelines have been updated to correct various inconsistencies and numbering issues. More substantive changes (using numbering that corresponds with the updated guidelines) are:
Part 1 Property Transactions Practice Guidelines
Section 3 – Acting for the purchaser
A subclause has been included in guideline 3.8 (how the purchaser will pay for the property) to refer to KiwiSaver funds, including some initial enquiries which should be made of the purchaser.
A guideline has been added at 3.13 concerning matters which should be discussed with the purchaser.
Guideline 3.23 (conditions the purchaser requires) has been extended to include reference to KiwiSaver funds, survey or title issues and includes a catch all provision referring to any other specific reports indicated by the client’s concerns or priorities. This guideline was never intended to be an exhaustive list. In some circumstances, consideration may need to be given to other tests, such as for methamphetamine contamination.
Guidelines 3.29, 3.32, 3.37, 3.38, 3.41, 3.45, and 3.49 have been updated or inserted to provide further guidance on transactions involving KiwiSaver funds.
Section 5 – Undertakings
This section has been amended to expand on undertakings given by employees.
The guidelines now note that “member” as defined in the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008 (RCCC) is restricted to lawyers. Accordingly, RCCC 10.3 (“A lawyer must honour all undertakings…”) suggests that an undertaking should be given by a lawyer rather than an employee non-lawyer.
The guidelines further note that employees can, in some circumstances, give an undertaking that binds a law firm, and it is at the discretion of the recipient lawyer whether to accept an undertaking given by a non-lawyer employed by a law firm. It is desirable each firm should have in place a clear arrangement as to who may give undertakings.
Section 6 – Settlement and payment of the purchase price
Guideline 6.5 (payment by bank cheque) has been amended to account for the fact that payment by bank cheque may be made in one of two ways:
- by depositing the funds into the vendor’s lawyer’s trust account; and
- where the bank cheque is delivered in person to the vendor’s lawyer.
The undertaking in Guideline 6.6(d)(iii) has been amended in various ways, including introducing a new undertaking to address the possibility of the instruments in the e-dealing being rejected or requisitioned.
Guideline 6.9(g) relates to the communication method for transmitting undertakings. The guideline now states that undertakings must be in writing and be sent by an agreed method of communication. The default method is by email, while previously it was by fax.
Part 6 of the guidelines now includes guidelines (A6.6-A6.9) for use in transactions where a third party is separately represented.
Transactions where a third party may be separately represented include a prior transfer, discharge of mortgage, transmission, withdrawal of caveat, withdrawal of charging order and an easement instrument.
Part 2 E-dealing Guidelines
Section 8 – Specific e-dealing guidelines
Minor changes have been made to the guidelines in part 8. The guidelines concerning identity verification have been linked more closely to the LINZ Standard.
The purpose of the A&I form is to provide the necessary authority for the lawyer to make the s 164A Land Transfer Act certifications. A&Is are not Law Society forms. The A&I forms in the appendices of the guidelines are intended to be identical with the A&I forms generated by Landonline.
As such, the A&I forms in the appendices have been updated to reflect changes to the Landonline generated forms which came about as a result of Landonline updates during 2014. The A&I forms in the appendices include a forthcoming change to the Landonline generated form to include “or nominee”.