What do I need to know about sale and purchase agreements?

Use the latest version

It’s essential to use the most up-to-date version of the sale and purchase agreement from your supplier. Laws, regulations and expectations are continually changing, and the latest versions will take account of these changes.

REA congratulates REINZ and the Auckland District Law Society for releasing a new 10th edition of their sale and purchase agreement.

The new agreement includes additional protection for consumers:

• If a buyer inserts a finance clause, they must now, if required, provide evidence if they can’t raise finance, or they could be forced to proceed with the sale or face legal action.
• There’s a new, optional toxicology report condition which is similar to the building report condition. REA’s guidance about residual methamphetamine is located here.
• The new agreement includes a process to resolve compensation where the vendor disputes the purchaser's right to make a claim. The process allows settlement to proceed despite the dispute. 
• The GST clauses have been revised, in particular, the zero-rating clause and are now clearer and offer better protection for vendors.

Make sure all the important things are included

Has the vendor agreed to do some work before settlement? Is the buyer able to access the property early? Has the vendor decided to leave behind their antique wardrobe?

Make sure everything the parties have agreed to is documented in the agreement. Rule 9.9 requires all ‘material particulars’ to be in the agreement before you submit it to be signed. 

Allow time for legal advice

Rule 9.7 [PDF, 208 KB] says you must recommend that people take legal advice before signing documents. This is especially important with the sale and purchase agreement. The buyer and vendor are about to commit to a transaction worth hundreds of thousands of dollars. They must understand what they’re agreeing to.

It’s a common issue in complaints – the buyer or vendor wasn’t given an appropriate opportunity to take legal advice. What process does your agency have in place to ensure the party has time to take legal advice? How does your agency record that the party has been given this opportunity?

Give the REA guide

Remember you must give a copy of the REA New Zealand Residential Property Sale and Purchase Agreement Guide to both the vendor and buyer before they sign a sale and purchase agreement for residential property, and you must obtain written confirmation that they have received it.

This is another common issue in the complaints we receive – the complainant didn’t receive a copy of the guide before they signed an agreement. It helps us resolve complaints quickly through our early resolution process if you can give us clear documentation that shows the complainant received the guide.

You can download or purchase the guide here.

Give parties a copy as soon as you can

It’s important to give parties a copy of the agreement they’ve signed as soon as you can. You may have permission or instructions to email the agreement to the buyer's or vendor’s lawyer – we recommend you include the buyer or seller in the email so they have a copy of the agreement.

If you don’t provide a copy of the agreement as soon as you can, you risk breaching section 132 of the Real Estate Agents Act 2008(external link).

Keep a copy for your records

Key reasons to keep a copy of the sale and purchase agreement include:

• Rule 10.12 requires you to keep a copy of all written offers submitted for 12 months.
• If the transaction is successful, the sale and purchase agreement may be part of the agency’s trust account records, which must be kept for 7 years.
• Part 2, subpart 3 of the Anti-Money Laundering and Countering Finance of Terrorism Act 2009 requires transaction records to be kept for at least 5 years.

Full records can also be helpful if REA receives a complaint, particularly if we are trying to determine whether the complaint should be referred to our early resolution process. Sale and purchase agreements are often a key document in complaints.

You can read more about sale and purchase agreements here.

If you have questions about your agency’s processes or the version of the sale and purchase agreement your agency is using, speak to your supervisor. If you have any questions about your obligations, call our enquiries team on 0800 367 732.