Have you heard of the proposed Real Estate Institute of New Zealand agreements for selling and buying property? This agreement is expected to be put in place soon and it may affect the business activities of property investors.
Current Regulations
In the past two decades, a standard agreement has been used for recording the purchase and selling of real estate in New Zealand. This agreement was a joint production of REINZ and the Auckland District Law Society and has undergone eight changes over the years to improve and fine tune its terms.
The current 8th edition includes provisions proven to be time-tested and transparent as well as easily understood by all parties involved in a real estate transaction. It has long been touted as containing no surprises, alleviating adjudication due to misunderstandings.
The New Agreement
If you are familiar with the current buying and selling provisions, the new agreement from REINZ will require a learning curve to understand its concepts and rules. How these rules will be interpreted by legal entities is yet to be determined and could change much of the way real estate transactions are performed in the future.
One of the differences between the 8th edition ADLS/REINZ agreement and this new proposal is the wording of the text. The current agreement utilises legal terms where the new agreement is written in plain English. This may make it easier for the layperson to understand, but could cause problems in interpretation. This might be especially problematic because it is so new. Expect that judicial interpretation will change much of the way the agreement is used to buy and sell property.
Until such time as it becomes required to use the new REINZ agreement, it is best to write a real estate contract with the 8th edition agreement that is more familiar and has already gone through legal interpretation. All agents in the business of buying and selling properties have access to both versions so reverting to the 8th edition agreement will not delay the transaction.
Do be aware that the new REINZ agreement could go into effect any time. It is prudent for property investors to investigate the changes and plan their business concerns with the expectation that future transactions could be subject to further legal interpretation that may or may not be beneficial to their concerns.
This is something to be aware of going into the new year.
Author Resource:
Paul Easton is working with Gilligan Rowe & Associates are New Zealand Accountants and are a specialist Accountant firm and experts in property and family trusts.
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