Buying

The information included here is simply a guide.  It contains general information on open homes, the roles of those usually involved in buying a home, the type of checks you should make and the processes you are likely to follow when purchasing a home.  The information is for guidance only and you should not rely on it for legal advice.

The purchase of a home is likely to be the biggest investment you will make so you need to take into consideration your current and future lifestyle when reflecting upon the following:   

What size of property do you require?  How many bedrooms, bathrooms, parking or garaging do you need?  Are you looking for a house or apartment and is the land area important?
Where would you like to live?  Do you need to be close to work, relatives, schools, parks, shopping centres, recreation centres, railway station or healthcare facilities?
What features would you prefer the property have eg: gas, built-in wardrobes, ensuite, swimming pool?
Once you have an idea of the type of property you are looking for and the area, your house hunting can begin.  Generally homes are advertised for sale through local real estate agencies, on the internet under the real estate agency’s website, general real estate websites or Trade Me.

Below we have set out the general process you will follow.

Open Homes

When visiting a number of properties it is often difficult to remember every detail.  The HOBANZ Home Buyer’s Checklist lists areas you should focus on when viewing a potential property and will highlight any areas which may need further investigation.  By using a checklist such as this and making notes on each home you visit, you will also be able to compare properties.

The HOBANZ Red Flag Checklist details potential areas of concern.  

The Real Estate Agent

The HOBANZ  The Real Estate Agent brochure gives a full explanation of their responsibilities. 

Under the 2008 Real Estate Agents Act, real estate agents and salespeople are governed by a strict code of conduct.  The Real Estate Agents Authority has a comprehensive website which contains a public register of all licensed real estate agents, branch managers and salespeople.

Visiting open homes gives you the opportunity to ask the real estate salesperson questions regarding the property and the seller’s expectations; however any advice should always be verified in writing.  Questions you may like to ask include:

• How long has the property been on the market?
• Has there been much interest in the property? 
• What are the vendor’s expectations of price?  
• Have any offers been presented to the vendor?  
• If so, what was the price and conditions?
• Why is the vendor selling?  
• How motivated is the vendor to sell? 
• Does the property require any urgent repairs?  
• Are there any weathertightness issues?

The real estate agent acts for the seller but must treat the buyer fairly.  They are responsible for presenting any offers and assisting with any negotiations around the sale of the property. 

The Conveyance Lawyer

A sale and purchase agreement is a legally binding contract and as such when purchasing a property it is important to engage a suitably qualified conveyance lawyer.  Conveyance lawyers specialise in property transactions.  They are responsible for providing independent advice and acting to protect your interests.

A conveyance lawyer understands the purchasing and selling process and is experienced in negotiating for buyers and sellers.  They will advise you on the checks you will need to undertake prior to purchasing a property and can assist in completing the appropriate loan documentation. 

Before signing any sales and purchase agreement, or indeed negotiating any terms, we would recommend you obtain legal advice so as to avoid any potential pitfalls.  See the New Zealand Law Society’s Property Law Section for further information and a list of conveyance lawyers.  Alternatively download the Law Society’s Buying or Selling Property brochure (pdf 240kb).

The Checks

To ensure the property you are interested in purchasing is what it appears it is important that you carry out a certain amount of due diligence – or checks.  The following are key checks that you should make:

• Obtain a title search to ensure there are no problems with the title and that the person selling the property is the legal owner.  Generally your conveyancing lawyer will carry out this check as part of the conveyance work.
• Obtain a Land Information Memorandum (LIM) report.  This is a report that details among other things information on the land, structural requirements, water and sewage plans, and consent and notices relating to the property and its neighbouring properties.  Again your conveyancing lawyer is able to obtain this report on your behalf.
• Obtain a valuation for the property to ensure the price is realistic.  A registered valuation provides an estimated market value of the property at that present point in time.  The value is determined by assessing the property and reviewing recent sales of similar properties within the area.  Valuations can be obtained from a registered valuer (see your local Yellow Pages) or Quotable Value New Zealand.  It is likely that your bank or lending institute will require a valuation of the property as part of the lending criteria.
• Obtain a building inspection of the property.  A building inspection, also known as a pre-purchase building inspection or building survey, is a non-invasive examination of a property.  There are no formal or legal restrictions to become a building inspector, nor is there any formal code of practice or standard.  Consequently building inspections differ greatly and we would urge you to look at our building inspection page to understand why you should ensure a building inspection is carried out and what to expect from it.

While not a requirement, we would recommend you obtain a copy of the Property File from your local council.  This file will detail all the information relating to the specific property, including the initial site plan, specifications of the building materials used and all building consent documents.  

The information contained in the Property File will highlight any work that has not been approved and which will need to be addressed before purchase.  You are able to view the Property File at the council’s offices or, for a fee, you are able to purchase a copy of the Property File – contact your local council for further information.

Sale & Purchase Agreement

An offer is presented in the form of a sales and purchase agreement. This agreement details the seller’s name and the purchaser’s, the property details, purchase price, including deposit amount, and conditions.  Generally the real estate agent will assist in completing the following details, however we strongly recommend that you speak to a lawyer before your offer is presented, to ensure that all necessary clauses are included (remember, Real Estate Agent's act for the seller): 

• The name of the seller (vendor) and purchaser (note: a seller or purchaser can be a trust or a company)
• Correct address of the property
• Type of title – freehold, leasehold, unit title, cross-lease, etc
• What chattels are included in the sale of the property, eg, whiteware, curtains, etc
• Price
• The deposit, ie, the amount that must be paid by the purchaser on acceptance of the offer
• Any conditions that must be complied with, eg, finance approval, LIM report, building condition report, valuation, sale of purchaser’s house
• The date the agreement will become unconditional, ie, all conditions have been satisfied 
• Settlement date - the date that the purchaser pays the outstanding balance of the sale price.  This is generally the day that the purchaser can move into the property.

The most commonly used sale and purchase agreement is the ADSL/REINZ Agreement for Sale and Purchase of Real Estate and is available from your lawyer or local Real Estate Agent.

We would always recommend that you have your lawyer review the sale and purchase agreement before you sign as any suggested amendments can be made then.  Once you have signed the agreement it becomes a legally binding contract. 

Once your offer has been prepared and approved by your lawyer, it is then given to the seller who will accept, reject or counter-offer.   A counter-offer is a way of negotiating, ie, the seller returns the original offer with new terms.  You are also able to counter-offer any offer made by the seller.  These negotiations are generally handled by the real estate agent.

The real estate agent must present all offers to the seller regardless of price or condition.

When a counter-offer is presented, the original offer is legally regarded as rejected and the new offer must be agreed by the other party.  It is only when both the buyer and seller have signed the agreement that the contract is formed.

Once the Contract is Signed

Once signed, copies of the sale and purchase agreement are sent to both the purchaser and the seller’s lawyer.

If there are conditions in the contract, then you should start to complete these, ie, if the contract is subject to finance approval, you should take steps to gain this.

Once your lawyer is satisfied that all the conditions in the sale and purchase agreement have been met, your lawyer will notify the seller’s lawyer that the contract is unconditional.  If a condition is not satisfied your lawyer will advise the seller’s lawyer and the contract is deemed to have ended.

Transfer of Title

Your lawyer will be responsible for arranging the transfer of title from the seller to you.  This includes:

• executing Authority and Instruction forms (A&I’s)
• checking that rates and other costs relating to the property are paid and up-to-date
• obtaining a guaranteed search of the title to ensure no-one has a claim over the property
• arranging with you and your bank for the balance of the sale price to be paid

If you are obtaining finance for the purchase, your lawyer will prepare security documents, arrange with Landonline (the New Zealand Land Information organisation) for details of the mortgage to be added to the title, and complete a certificate for drawdown of the loan.

It is important that you arrange insurance cover for the property from the date of settlement.

Pre-Settlement Inspection

We would recommend that, prior to settlement, you arrange with the real estate agent to carry out a pre-settlement inspection to ensure that the property is in the same condition that it was when you signed the contract and to avoid any nasty surprises such as missing light fittings or broken windows etc. 

If there is damage to the property you are entitled to request the problem be fixed or to ask for compensation. 

Settlement

On the settlement date you, through your lawyer, pay the balance of the sale price.  If you have arranged a mortgage, the loan monies are received by your lawyer and the full settlement figure paid to the seller.  This must be completed before 4pm on the day of settlement.  You are only entitled to the keys to the property once the moneys have been paid.

The property title is immediately updated to show the discharge of any existing mortgage, the transfer of title to you, the new owner, and the registration of the new mortgage, if any.  Your lawyer will provide you with a copy of this title and advise the relevant local council and Quotable Value that you are now the legal new owner of the property.