September 2024

For many people, buying a property is one of the biggest investments they make in their lifetime. There are many potential risks when purchasing a property which can be mitigated as follows:

Step 1: Have your lawyer review the Agreement for Sale and Purchase before signing

Your lawyer can ensure the Agreement reflects your intentions and has been drafted in a way that is most favourable to you.

Step 2: Have your lawyer review the Record of Title(s) for the property

This is important because any easements, land covenants or consent notices etc, running with the land can be identified so that you know what your rights and obligations are.

Examples include right of way easements for the benefit of yourself and/or your neighbours or restrictive covenants relating to building materials and design for properties which are part of a subdivision.

Step 3: Signing an Agreement for Sale and Purchase which is subject to the approval of conditions by you

These conditions may include:

Approving the property’s LIM report

A LIM report is a summary of the information the local council holds on file in relation to a property and can include matters such as flood risk, zoning information, resource consents and code of compliance certificates (or lack of them) and building and drainage plans. Your lawyer can review the LIM report and provide you with a summary of the information.

Obtaining a satisfactory toxicology report testing for the presence of methamphetamine

If methamphetamine is detected in the property your lawyer can guide you as to the best course of action.

Obtaining satisfactory finance to complete the purchase

The bank may want to see copies of the reports above before it will finance your purchase. Once this finance condition has been approved, your lawyer will liaise with the bank on your behalf in relation to loan documentation and the drawdown of funds for settlement.

Obtaining a satisfactory builder’s report

A builder can complete an inspection of the property and provide a report regarding its present condition. Problems noticed by the builder may be able to be negotiated between the parties by your lawyer, if required.

Obtaining property insurance

It is prudent to be sure the property is insurable before committing to the purchase. Cyclone Gabrielle, the Canterbury Earthquakes and rising sea levels, among other factors, have affected how insurance companies conduct insurance risk assessments. Increasingly, insurance companies are refusing to insure properties in flood prone areas and insurance is becoming more difficult and costly to obtain.

Obtaining Overseas Investment Office (OIO) consent to purchase the property (if applicable)

‘Overseas people’ as defined in the Overseas Investment Act 2005 need consent to invest in some sensitive New Zealand assets. Your lawyer can provide further guidance here if required.

If you require assistance with purchasing a property, please contact your lawyer.