The Auckland District Law Society (ADLS) has published a legal opinion from barrister Rod Thomas on the Real Estate Institute of New Zealand's (REINZ) plain English agreement.
Thomas says that the REINZ form is "unsound and unsafe to use". The key point, he says, is that the new agreement makes a number of "run-of-the-mill" terms - such as failure to issue a settlement statement within the timeframe set out in the agreement - into "essential terms", which then allow people to cancel the agreement where there's a breach.
Although there is a clause requiring a "default" notice before cancellation, the clause is so badly worded it is self-defeating, says Thomas. This means that the agreement can be cancelled without further notice for inconsequential breaches.
Thomas also argues that the new agreement favours the purchaser over the vendor and will also cost more in conveyancing for both parties. And he believes real estate agents have a greater risk of being sued if they use it.
Mike Elford, REINZ National President, told us he had referred the opinion to his organisation's panel of legal experts. He continued to back the agreement, which was drafted by lawyers.
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