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Changes To The Agreement For Sale And Purchase Of Real Estate

March 2020

A revised edition of the ADLS Agreement for Sale and Purchase of Real Estate is now being used by lawyers and real estate agents. This new edition (the 10th edition) contains some significant changes which both vendors and purchasers need to be aware of. 

Changes to existing conditions

Changes have been made to existing conditions to tighten up the purchaser’s ability to cancel an agreement for non-satisfaction of the conditions, including:

  • Finance condition –  If you are a purchaser and your agreement is subject to a finance condition and you cancel the agreement because you are unable to arrange the finance, if the vendor asks, you will be required to provide evidence that proves you have been unable to arrange finance – e.g. a letter from the bank.
  • Building Report condition – If you are purchasing a property and the agreement is conditional on obtaining a building report, this report must now be in writing. The time period for satisfaction of this condition has been extended to 15 working days to bring it in line with the LIM condition period.
  • Overseas Investment Act condition – this condition has changed to require that the consent must be on terms and conditions that are satisfactory to the purchaser, acting reasonably. 

New Toxicology Condition

To address the issue of “P” contamination, if you are purchasing a property you can include a condition that requires a toxicology report is obtained in respect of the property. The purpose of this report is to detect whether the property has been contaminated by the preparation, manufacture or use of drugs, including methamphetamine. The report is to be prepared by a suitably qualified inspector in accordance with the relevant New Zealand standard and if the purchaser cancels the agreement because this condition cannot be satisfied, the purchaser is required to provide the vendor, upon request, with a copy of the inspector’s report. 

Vendor Warranties

If you are selling a property, there are changes to the warranties you will be giving to the purchaser, including:

  • Threatened or actual legal proceedings – You will now be warranting that as at the date of the agreement, you have no knowledge or notice of any fact which might result in proceedings being instigated by or against the vendor or the purchaser in respect of the property. This could relate to non-compliance with the Building Act 1991 or health and safety issues.
  • Chattels Warranties – The warranties you will be giving for any chattels which are being sold with the property have changed. Chattels now fall into 2 separate categories (and there is a schedule attached to the agreement to list each type) and the warranties you give for them depends which category they fall into. For instance; if the chattels do not have an operational function such as blinds, curtains and fixed floor coverings, you will be warranting that these that these items will be delivered in the same state of repair as at the date of the agreement (fair wear and tear excepted). If the chattels have an operational function, for instance; a stove, dishwasher and heat pumps, you will be warranting that these items will be delivered to the purchaser in reasonable working order.
  • Targeted Rates – If your property is subject to targeted rates that are imposed to repay a loan subsidy or other financial assistance provided by Council, you will be warranting that you have paid the amount required to remove that targeted rate.

Changes to the GST provisions

If the agreement states that GST is to be charged at zero percent but between the date of the agreement and settlement GST is no longer chargeable at that amount then the purchase price shall be plus GST (if any) even if it has been expressed as being inclusive of GST (if any). If the vendor has already had to account to the IRD for the GST and it is on the basis that the GST would be zero percent, the purchaser is to pay the GST and any default GST to the vendor immediately upon demand. Where GST is likely to be an issue, the purchaser should obtain tax advice on the impact of this clause for them. Changes to the standard clause maybe required in certain situations.

Other changes

  • Tenanted properties – If a property is sold tenanted, the vendor must provide the purchaser with all of the leases/tenancy agreements, and a copy of the notice from the vendor to each tenant advising them of the sale of the property and directing them to pay the purchaser as landlord all rent and other amounts due under the leases.
  • Use of Information – There is a provision in the agreement which allows the agent to provide certain information relating to the sale to the Real Estate Institute of New Zealand Inc. This information is password protected and will not include the parties’ names or personal information under the Privacy Act and is collected for statistical purposes.
  • Fax machines – the ability to serve notices by fax has been removed. Changes that have been made provide that notices sent by email are deemed delivered when sent to the email address provided in the agreement (or subsequently notified) and to allow for notices via secure web document exchange.


The form of the Agreement is regularly updated to reflect changing circumstances, difficulties that have arisen in practice and recent Court decisions relating to the wording of the Agreement. This inevitably makes the Agreement longer and more complicated. As always, we recommend you seek advice from us at the earliest possible stage, so that the Agreement reflects your intentions, and you are fully aware of the terms of the contract you are signing.

This is an abridged version of the full article, which can be viewed on our website.