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MTIANZ regard ADLS Sale and purchase agreement

MTIANZ welcomes the release of the jointly endorsed Auckland District Law Society and REINZ standard sale and purchase Agreement (10th Edition 2019). The inclusion of a toxicology condition clause (9.5), and new wording for vendor warranties (7.2), establishes certainty and protection for potential purchasers who choose to include a toxicology condition, or if the vendor fails to disclose historical information that may not comply with the New Zealand Standard NZS8510:2017.

The standard toxicology condition applies to contamination resulting from both USE and MANUFACTURE of methamphetamine, and requires a potential purchaser to acknowledge whether or not a toxicology report is a condition of the agreement. This is to be included or excluded under the conditions of the contract on the first page. The standard terms of the toxicology report are outlined under section 9.5 which reads as follows:

9.5 Toxicology report condition
1) If the purchaser has indicated on the front page of this agreement that a toxicology report is required, this agreement is conditional upon the purchaser obtaining at the purchaser’s cost on or before the fifteenth working day after the date of this agreement, a toxicology report on the property that is satisfactory to the purchaser, on the basis of an objective assessment.
2) The purpose of the toxicology report shall be to detect whether the property has been contaminated by the preparation, manufacture or use of drugs including, but not limited to, methamphetamine.
3) The report must be prepared in good faith by a suitablyqualified inspector using accepted principles and methods (and where the testing is in relation to methamphetamine, in accordance with the New Zealand Standard 8510:2017) and it must be in writing.
4) Subject to the rights of any tenants of the property, the vendor shall allow the inspector to inspect the property at all reasonable times upon reasonable notice for the purposes of carrying out the testing and preparation of the report.
5) The inspector may not carry out any invasive testing in the course of the inspection without the vendor’s prior written consent.
6) If the purchaser cancels this agreement for nonfulfilment of this condition pursuant to subclause 9.10(5), the purchaser must provide the vendor immediately upon request with a copy of the inspectors report.
MTIANZ recommend licenced agents and vendors understand the importance of the wording within section 9.5(3) states “a suitably qualified inspector.” For NZS8510:2017 compliant methamphetamine testing by a suitably qualified inspector is defined under Section 7 which states that screening assessments Shall be conducted by an NZQA Certified Sampler. This means they must hold the NZQA unit standards 30892,30893 and 30894.

The MTIANZ board are urging those providing services within the Methamphetamine Testing Industry, to get compliant or make it very clear to their clients that their services are not compliant with NZS8510:2017. Operators should heed this warning, or some may find themselves in breach of the Fair Trading Act 1986, and subsequently be liable for misrepresentations.

The MTIANZ Executive Board has raised a formal complaint with the REA involving agent disclosure obligations in regards to Methamphetamine contamination. The REA Website states the following:

Methamphetamine contamination of 15 micrograms (g) per 100 square centimetres (cm2) or above is considered a property defect that must be disclosed to potential buyers (rule 10.7 of the Code of Conduct).
You do not have to disclose test results below 15g per 100cm2 unless specifically asked by a prospective buyer or where a prospective buyer has clearly shown an interest in methamphetamine contamination (rule 6.4 of the Code of Conduct).
Disclosure is not required where:
methamphetamine has only been used at the property and the property has been successfully remediated back to below 15g per 100cm2.
methamphetamine has been produced or manufactured at the property and the property has been successfully remediated back to below 1.5g per 100cm2.
MTIANZ believe these statements are in direct conflict with the Auckland District Law Society (ADLS) Standard Sale and Purchase Agreement (10th Edition 2019. There now appears to be a breach of agent obligations under Real Estate Agents Act (Professional Conduct and Client Care) Rules 2012. This places agents and consumers in serious jeopardy. The MTIANZ hope this will be addressed by the REA with some urgency.

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