Frequently Asked Questions & Answers
Need help understanding commonly used terms in property transactions?
Below is a list of the terms you are likely to come across when using our service – whether you are buying, selling or refinancing a property:
Conveyancing is the term used to describe the legal work required for completion of a property transaction – usually a sale or a purchase. There is a misconception that conveyancing is a paper shuffling exercise, but in reality the range of tasks involved is often complex and difficult.
Many sale and purchase agreements contain conditions that may need to be fulfilled before the transaction can proceed. It is important that these contractual conditions are expressed clearly. Examples of common conditions in sale and purchase agreements are:
- the purchaser securing suitable finance to complete the purchase
- receipt of a satisfactory building report or valuer’s report on the property
- receipt of a Land Information Memorandum (LIM) from the local authority
- the purchaser’s lawyer searching and approving the title.
Your property lawyer can advise on the wording of these conditions to ensure that they meet your requirements and can also help carry out work to determine whether the conditions are met.
Where there is more than one purchaser, your property lawyer can advise on joint ownership issues, including the implications of ownership as joint tenants or as tenants in common.
If de facto partners are buying a property it is particularly important that they seek advice from their property lawyer as to the issues which may arise under the Property (Relationships) Act.
One of the advantages of engaging a property lawyer is that they are qualified to advise in all aspects of the law which may need to be dealt with as part of the overall transaction – for example making a will, setting up a trust and taxation implications.
Yes they do, and many risk their savings by failing to get proper legal advice from the beginning.
Seeing a lawyer before you sign any documentation is the best way to ensure that your interests are protected, now and in the future.
If things go wrong, having your lawyer involved at the outset means that the right action can be taken quickly to avoid incurring legal liability and to ensure that the matter doesn’t proceed to litigation, unless absolutely necessary.
There are legal and practical implications for a vendor or purchaser who fails to settle, even if settlement is delayed through what appears to be no fault of the person concerned. For example, notices could be registered against the title by a third party, or the vendor or purchaser may be in default through complications with their mortgage and unable to settle on time.
Do the right thing, and see a lawyer at the outset.
Property lawyers provide a valuable service for a very reasonable fee. Lawyers’ fees compare very favourably with the fees charged by other professionals and institutions such as real estate agents and mortgage lenders, government charges and local authority fees for the issue of Land Information Memoranda (LIMs).
Property lawyers offer a high quality service. They are equipped with comprehensive legal skills to advise on all aspects of your property transaction and are backed by stringent safeguards administered by the New Zealand Law Society.
A LIM is a report on the property provided by the local authority from their records. It will, among other things, give information on the zoning of the property and will identify whether the proper building consents have been obtained for any additions and alterations.
If a client is purchasing a property with a multi fuel burner or similar device it is particularly important to ensure that the burner has the necessary building consent. Lack of such a building consent could result in insurance being invalidated in the event of a burner causing a fire in the property.
A valuation report from a registered valuer will allow you to assess the proper market value of the property and may also provide other useful information. A lender will require a valuation report if you are borrowing significantly for the purchase.
A building consultant’s report and/or an engineer’s report may also be appropriate.
If you have any doubts as to the condition of the property, structural building issues or concerns about the land generally, you should talk to your property lawyer about arranging for a qualified builder or engineer to inspect the property and report fully on its condition. Your lawyer will ensure that a condition is inserted into the contract making the purchase subject to the purchaser being satisfied with the results of that report. If the report identifies problems your lawyer will advise you on your options and if you still want to proceed can negotiate to have the problems fixed at the vendor’s cost before settlement or seek a reduction in the purchase price.
Without a condition in the contract, or with a badly worded one you might have to complete the purchase and take on any problems yourself.
The title documents, held by Land Information New Zealand (LINZ), record who owns the property and any mortgages or other restrictions that apply to the property, which might prevent you from enjoying the use of the land, such as covenants or easements.
The most common form of title is a freehold one, but cross leases and unit titles are becoming more common. These have special features and involve rights and obligations on which the property lawyer is qualified to advise.
The title may be subject to or have the benefit of easements such as rights of way and drainage rights.
The property lawyer will search the terms and conditions of these easements. For example, with a right of way, an intending purchaser will want to know how many property owners have the right to use this and what obligations users have to maintain it.
An offer to buy can be unconditional – that means once you sign it you are bound to proceed with the deal on the agreed date at the agreed price, no matter what. You should never consider entering into such an agreement without taking legal advice. You would need to ensure that you not only wanted to buy the property but that you already had all required finance confirmed.
A conditional offer is one that hinges on certain things happening. Such an offer is also a binding contract once all your conditions are satisfied and you are bound to proceed with the purchase. Conditions may relate to securing finance, search and approval of title, receipt of a satisfactory builder’s report, or the unconditional sale of the purchaser’s property.
The property lawyer can advise on the wording of the conditions to ensure they meet your requirements and can assist in carrying out the work to determine if the conditions are met.
This legislation applies to couples who are married or have lived in a de facto relationship for three or more years. De facto relationship is defined widely to include relationships between people of the same sex.
This is a particularly important issue for people in de facto relationships and for people entering into second relationships or marriages. In the latter case each person might bring their own property to the relationship and may wish to ensure that on separation or death their share goes to their children rather than their partner.
The Act has far reaching implications and your property lawyer is qualified to advise you on all aspects of this. In many cases a written agreement will be required to record the parties’ intentions. Any agreement must be certified and witnessed by a separate lawyer for each party before it is valid.
You will need to seek separate legal advice to arrange the terms of the loan and to ensure that these are adequately recorded, and protect your interests. In this case, your interests are quite separate from those of your child. The Property (Relationships) Act could have implications for you, should your child be in a relationship that breaks down after three or more years. You will want to ensure that the loan is formally recorded.
If you have a valid and up to date will you don’t need to make a new one if you purchase property. However, it’s a good idea to check your will and revise its provisions if your circumstances have changed. If you do not have a will you should see a lawyer about this. Your lawyer will explain the implications of the Property Relationships legislation, which can affect the provisions of your will.
Family trusts are set up for a number of purposes but their main purpose is to rearrange asset ownership in order to protect the assets owned by the trust.
Assets can be added to the trust at any time.
Trusts need to be properly administered and to comply with legal requirements. There are also legal provisions, which can defeat the very purpose for which the trust was set up in the first place. A lawyer can advise you if a trust is going to achieve the outcome you want. There may be better ways to protect your property.
Where there is more than one purchaser you should seek advice about joint ownership issues, including the implications of ownership as joint tenants or as tenants in common.
With a joint tenancy, if one of you dies, the other gets full ownership of the property in which you both have a joint interest. With a tenancy in common, you will each own a separate interest in the property. This means if you die you can decide who will inherit that share. The Property (Relationships) Act will have implications for you in this case and you should seek legal advice about this.
If de facto couples are buying property it is particularly important that they seek advice from their property lawyer as to the issues that arise under the Property (Relationships) Act.
No information on this website shall be construed as legal advice and information is offered for information purposes only. You should always seek advice from an appropriately qualified solicitor on any specific legal enquiry. Calls to or from our legal helpline may be recorded for training and monitoring purposes. External links are provided for your convenience, but they are beyond the control of Convey Law and no representation is made as to their content. Use or reliance on any external links and the content thereon provided is at your own risk.