Buying a Property in New ZealandWhat You Need to Know

Buying a home or investment property can be exciting - but it is also one of the largest financial commitments most people will ever make.

Between finding the right property, arranging finance and negotiating a price, the legal side of the purchase can sometimes feel like something to deal with later.

But some of the most important legal questions arise before you sign the Sale and Purchase Agreement, not just before settlement.

Understanding what needs to be checked - and finding the right property lawyer early enough - can help you make a more informed decision about the property you're buying.

Why it matters

A property purchase involves much more than transferring money and changing the name on a title.

The Sale and Purchase Agreement is a legally binding contract, and its conditions, deadlines and wording can have significant consequences for both buyer and seller.

There may also be questions involving the property's title, LIM report, building work, finance, insurance, easements, covenants, body corporate arrangements or other matters depending on the property.

This is why many buyers involve a property lawyer or conveyancing lawyer before signing an agreement, rather than waiting until an offer has already been accepted.

Should you speak to a lawyer before signing a Sale and Purchase Agreement?

One of the most important things for buyers to understand is that signing an offer isn't simply expressing an interest in buying the property.

Once an agreement becomes binding, both parties can have legal obligations under it.

A Sale and Purchase Agreement may contain conditions relating to matters such as:

• •Finance
• •LIM reports
• •Building inspections
• •Title review
• •Due diligence
• •Sale of another property
• •Insurance
• •Other conditions specific to the transaction

The wording and timing of these conditions can matter.

A property lawyer can review the proposed agreement, explain its legal effect and identify issues that may need to be considered before the buyer commits to the purchase.

What does the title actually tell you?

A property's Record of Title contains important information about the legal ownership of the land and interests registered against it.

Depending on the property, the title may reveal matters such as easements, covenants, consent notices or other registered interests.

These can potentially affect how a property is used.

For example, there may be rights affecting access, shared driveways, services or restrictions connected with the land.

A lawyer can review the title and explain the significance of matters relevant to the particular property.

What about the LIM report?

A Land Information Memorandum (LIM) is provided by the local council and can contain information about the property held by the council.

Depending on what information is available, this can include matters relating to rates, consents, drainage, hazards and other council records.

A LIM and a building inspection perform different functions, and neither necessarily replaces the other.

For buyers, understanding what information is available - and what it means - can be an important part of assessing a property before becoming committed to the purchase.

First-home buyer? KiwiSaver may be part of the process

For eligible first-home buyers, KiwiSaver funds may be available towards a property purchase.

There are processes and timing requirements involved, so buyers intending to use KiwiSaver will generally need to make sure this is dealt with as part of the legal and financial preparation for settlement.

A property lawyer can assist with the legal aspects of the withdrawal process as part of the transaction.

Buying at auction is different

Buying a property at auction can involve a very different level of commitment from making a conditional offer.

An auction purchase will generally become unconditional when the hammer falls, which means buyers commonly arrange their legal, financial and property checks before bidding.

This can make obtaining appropriate information and advice before auction day particularly important.

Buying an apartment or unit?

Apartments and other unit title properties can involve additional considerations.

There may be body corporate rules, levies, meeting minutes, long-term maintenance plans, insurance arrangements and other documentation relating to the development.

These documents can contain important information about both the property and the financial obligations associated with owning it.

A lawyer experienced with unit title purchases can help explain the legal documentation relevant to the transaction.

Buying a lifestyle or rural property?

Lifestyle blocks and rural properties can involve issues that may not arise with a typical suburban home.

Depending on the property, questions can arise around access, easements, water supply, wastewater systems, boundaries, covenants and land-use restrictions.

That makes it particularly useful to find a lawyer with experience relevant to the type of property being purchased.

What happens between signing and settlement?

Once an agreement is in place, there are still a number of legal and practical steps before ownership transfers.

Depending on the transaction, these can include satisfying contractual conditions, arranging finance, dealing with title documentation, preparing for settlement and completing the transfer of ownership.

Your lawyer or conveyancer plays an important role in coordinating the legal side of this process.

Questions property buyers often ask

• •Should a lawyer review the agreement before I sign it?
• •What does "conditional" or "unconditional" mean?
• •What should I know about the property's title?
• •Do I need a LIM report?
• •What happens if I'm buying at auction?
• •Can I use KiwiSaver for my purchase?
• •What should I check when buying an apartment?
• •Are lifestyle properties legally different to buy?
• •What happens on settlement day?
• •What's the difference between a property lawyer and a conveyancer?

Why finding the right property lawyer matters

Not every property transaction is the same.

A straightforward residential purchase may require a different level of expertise from an apartment purchase, lifestyle property, investment property, complex title or transaction involving unusual contractual conditions.

And timing matters.

Finding a lawyer before you become legally committed can give them the opportunity to review the relevant documents and explain any legal issues while there may still be options available.

A good property lawyer should make the transaction easier to understand, explain the legal process clearly and help you know what is happening at each stage.