Buying a property is one of the biggest financial commitments most people will make. In New Zealand, many buyers assume that if they are using the standard ADLS/ Real Estate Institute of New Zealand (REINZ) approved Agreement for Sale and Purchase of Real Estate, they do not need legal advice before signing. However, failing to consult a lawyer before signing can lead to costly mistakes and legal complications.
Please note that although the ADLS has changed its name to “The Law Association”, the standard agreement continues to be referred to as the ADLS/REINZ Agreement for Sale and Purchase of Real Estate.
Understanding Your Legal Obligations
Even though the ADLS/REINZ agreement is widely used and designed to be fair, it is still a legally binding contract. Once signed, you are committed to the terms unless the agreement includes conditions allowing you to withdraw. A lawyer can help ensure the agreement protects your interests, rather than just being a standard document that may not consider your specific needs.
Ensuring Key Conditions Are Included
Many property transactions require conditions to protect the buyer, such as:
- Finance Condition – If you need a mortgage to complete the purchase, you must ensure the agreement is conditional on finance approval. Without this, you may be legally required to complete the purchase even if the bank declines your loan.
- Building Inspection – A lawyer can help ensure that a satisfactory building report is a condition of the purchase, protecting you from buying a property with hidden defects.
- Title Checks and LIM reports – A lawyer will review the title, to identify potential issues, such as easements or restrictive covenants affecting the property, and will commonly review the property’s Land Information Memorandum (LIM) especially regarding unconsented work and zoning restrictions.
Obligations with respect to conditions
Even with conditions, there may be obligations regarding their satisfaction that you may not otherwise expect, and it’s important to have your lawyer check over the wording and explain the obligations you are incurring.
Understanding the Fine Print
Even standard agreements may contain clauses that can have significant consequences. For example, sunset clauses for properties in development, deposit requirements and penalty clauses for delayed settlement can create unexpected financial risks. A lawyer can explain these clauses and negotiate changes if needed.
Avoiding Costly Mistakes
Real estate agents act in the interest of the seller and are not legally responsible for ensuring a contract protects the buyer. Misunderstanding your obligations could result in financial loss or legal disputes. A lawyer will ensure the agreement aligns with your needs and that you fully understand what you are committing to.
Protecting Your Investment
Property transactions are complex, and no two deals are the same. Legal oversight can prevent costly mistakes and give you confidence that your rights are protected. By consulting a lawyer before signing, you can enter the purchase with certainty, knowing that you are making an informed decision.
Before signing any property agreement, even a standard ADLS/REINZ form, always seek legal advice to safeguard your investment and avoid unnecessary costly risks.
