A new Real Estate Institute agreement for buying and selling property is being slammed by lawyers as unsound and unsafe to use.
The agreement will cause more litigation and much higher conveyancing costs, according to a legal opinion by barrister Rod Thomas to the Auckland District Law Society.
"It's like
a car that needs a product recall because it's unsafe for the road," Thomas said.
The agreement favours the buyer over the seller "to a very marked extent" by creating additional rights that generate "almost unlimited" risk for the seller, said Thomas.
Under the new agreement, if a buyer thinks a seller has misrepresented something about the property, the seller will be liable for up to six years after the deal.
Thomas said the agreement also "clearly creates more risk of a real estate agent being sued".
REINZ president Mike Elford defended the agreement as a "plain English" document, more easily understandable to agents and consumers.
"There have been some issues with the agreement - understandably, it's a new form," Elford said.
He said the Auckland District Law Society has a "vested interest" - up till now, the form used was one jointly owned by REINZ and the Auckland District Law Society.
Auckland District Law Society president Anna Fitzgibbon denied the society has a vested interest. She said it sells its form to lawyers not real estate agents, so cannot increase its market share.
"This is a consumer protection issue," Fitzgibbon said.
