The committee is advising property lawyers with conveyancing matters afoot to check with their banks well before settlement to ensure, if required, bank cheques are still available, in case the purchaser’s lawyer needs to make a formal tender of settlement in accordance with Guideline 5.10 of the PLS Guidelines of July 2020.
That guideline states:
5.10 Where a purchaser’s lawyer, acting professionally, considers it is necessary or desirable to demonstrate that the purchaser is ready, willing and able to settle, the purchaser’s lawyer may do so (in addition to any other valid form of tender) by tendering a bank cheque accompanied by the undertaking referred to in Guideline 5.9.
Many banks are discontinuing bank cheques; KiwiBank stopped issuing them on 28 February 2020 and BNZ on 12 December 2020. The ADLS Documents &Precedents Committee is reviewing the ADLS/REINZ Agreement for Sale and Purchase of Real Estate 10th Edition 2019(2) to address this. Pending release of the new version, lawyers dealing with banks that no longer make bank cheques available should make provision for an agreed process to follow well before settlement.
For example, the parties might agree to a variation of the agreement with the insertion of a clause 3.11 along the following lines:
3.11 Where the purchaser considers it is necessary or desirable to tender settlement, this may be effected (in addition to any other valid form of tender) by the purchaser’s lawyer providing to the vendor’s lawyer a written undertaking that:
(a) The purchaser is ready, willing and able to settle;
(b) The purchaser’s lawyer has certified and signed the transfer instrument and any other instruments in the Landonline Workspace for the transaction that must be signed on behalf of the purchaser; and
(c) The purchaser’s lawyer holds in their trust account in cleared funds the amount that the purchaser must pay on settlement in accordance with subclause 3.8(1) (which amount the purchaser’s lawyer must specify and, where necessary, particularise).
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