The Real Estate Institute of New Zealand (REINZ) has warned consumers that they can no longer use finance clause to pull out of a property purchase.
With the recent launch of the 10th edition of the REINZ/ADLS Agreement for Sale and Purchase, consumers are now required to provide evidence if they can’t raise finance – which could 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,” said Bindi Norwell, chief executive at REINZ.
“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.”
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Other changes made to sale and purchase include addition of detailed process to resolve compensation disputes between vendors and purchases, replacing “fixtures” and “chattels” with new definitions and warranties, inclusion of optional toxicology report condition on the front page and in the general terms, revision of GST clauses, and clarification on timeframe in which deposits may be released.
References to fax machines have also been removed, while tenancy documents will be provided by the vendor on the settlement date.
“The last time changes of this scale were made to the sale and purchase agreement was seven years ago so it’s a really important that anyone looking to buy a house understands the elements of these changes that impact consumers directly,” Norwell concluded.