Once you've signed, you've signed. Cold feet are not grounds for getting out of the deal. All sale and purchase agreements are the same, right? Wrong. Lawyers shake their heads in horror when buyers sign a sale and purchase agreement without taking legal advice first.
More often than not you'll be presented with an Auckland District Law Society (ADLS)/Real Estate Institute of New Zealand (REINZ) standard agreement for sale and purchase.
The form includes information such as the type of title, chattels, price and the conditions the buyer wants fulfilled before the contract is agreed.
More than 80 per cent of residential properties are sold using this form, says property lawyer Tony Steindle of Steindle Williams. The form covers most of the legal issues of buying or selling a property.
It is not a legal requirement to use the ADLS form. But it has market acceptance from all in the property industry, says Joanna Pidgeon, ADLS vice-president.
Beware, however. There is no guarantee the form buyers receive from the seller/real estate agent is this standard one. A total fool could write up their own agreement on the back of an envelope. Or a very tricky lawyer could draft one from scratch for a client.
From time to time, says Steindle, a non-standard agreement comes across his desk -- usually for one of two reasons:
• Reason one is that the deal may involve land only or be an off-the-plan purchase. Both are square pegs in the round hole of an ADLS form.
• It's a private sale and the parties have got their hands on an older version of the ADLS agreement or have copied one from someone else.
"You used to be able to buy sale and purchase agreements from Whitcoulls," says Steindle. It's not a good idea to use non-standard agreements because the law has become more complex.
In the second example, says Steindle, the seller and buyer may have done a deal between themselves privately and may not realise the importance of using a standard agreement.
Until 2012 there wasn't, for example, a standard building report condition. But since the leaky building era it has become common to include this condition.
The building report condition on the ADLS standard form is a yes-no tick box, as are other special conditions such as finance and the requirement for a land information memorandum (Lim) report.
Steindle has seen non-standard agreements that don't include a warranty against notices by the council. If, for example, the buyer found out after signing the form that there was a demolition order on the property, it would be too late to back out without this clause.
Even the standard agreement can also be tweaked by sellers' or buyers' solicitors. It is also customisable through the addition of further terms of sale, says ADLS's Pidgeon.
Those further terms of sale changes may be simple, but important. A common example in the current hot property market is a shortening of the Lim and building conditions to five and 10 working days respectively.
Not all tweaks are insubstantial. A seller can delete an entire standard clause and ask their lawyer to draft a new clause.
However, the technology used to prepare the agreements means that this shows up as marked changes in the standard agreement, says Steindle.
One of the things that sellers and buyers have to look out for -- even with the standard agreement -- is for the terms and conditions related to GST-registered properties.
These may be properties used as commercial premises, such as an old suburban shop, sold for residential use only, or a serviced apartment that is bought by an owner-occupier.
In those cases, the seller has to repay the GST to the Inland Revenue Department, which can be a real shock for them.
"I see about half a dozen of these a year," says Steindle.
"They (sellers) don't realise the implication of the yes/no tick box and leave them blank."
Getting a legal opinion is essential. Once you've signed, you've signed. Cold feet are not grounds for getting out of the deal. The Real Estate Agents' Authority has a guide to sale and purchase agreements at: tinyurl.com/SaleAndPurchase.
BUYING AND SELLING
• The standard ADLS/Reinz form has been tried and tested for more than 30 years, and is reviewed and upgraded regularly, using input from lawyers, real estate agents and court decisions.
• It is seen as a balanced and fair document for buyers and sellers.
• People using it save money as property lawyers know the form so only have to look at amendments rather than charge their clients to review a new agreement from beginning to end, says Joanna Pidgeon of the Auckland District Law Society.
• It is designed to ensure issues are resolved with mechanisms for dealing with disputes so that they do not derail the transaction, she adds.
• Tender, auction and mortgagee sale variations of the agreement are available to cater to various types of sale