We have compiled a checklist for home buyers, of some of the legal documents you should be aware of, with links to more information about them.
Buying a new home is probably the biggest legal and financial commitment you will ever make. It's not something to leap into lightly.
AGENTS ARE WORKING FOR THE VENDOR, NOT YOU
Remember, the real estate agent is working for the vendor, not you, so do not rely on them to guard your best interests.
If buying privately, without the use of a real estate agent and their expertise, you will be on your own with the vendor. You will need to be on your toes, but beware, it's not a job for the faint-hearted, and the consequences of making mistakes can be dire - with little come back.
Licensed real estate agents are trained to acquire the correct legal reports and documents from the right sources at the right part of the process. Under the Real Estate Agents Act 2008, they are also required to disclose any information to a buyer that may affect your decision to purchase.
Along with that, you also have the added protection of the Real Estate Authority if need be.
However, having a property lawyer to help you through the sale will help ensure you don't miss anything.
As a buyer, you have a right to request reports to back up the integrity of the sale. Verbal reports will not do.
Structural integrity and other potential problems
Getting an inspection of the structural integrity of a building is one of the most common conditions included in a Sale and Purchase Agreement.
If you are buying a home, make sure the property you are considering has passed an inspection.
For peace of mind, it's good to know that members of the New Zealand Institute of Professional Building Inspectors are trained especially for the job of checking structural integrity.
By clicking on your area, you can find a property inspector near you.
Make sure you download, print out and check off this House Inspection check list produced by Consumer NZ.
Use the list to make sure everything is signed off, consented, legal and completed.
It also has a list of non legal things to check off to make sure you are buying the right house for you - things like how close it is to schools and bus stops.
For information about weather tightness, asbestos, methamphetamine or engineering, you can find this along with other comprehensive advice at Hobanz (Home Owners and Buyers Association of NZ). Don't omit this.
Fortunately, a recent report by the prime minister’s chief science advisor, Professor Sir Peter Gluckman said there is little reason to test a property for methamphetamine contamination unless there is a strong suspicion that it has been used to house methamphetamine production or there had been very heavy drug use there.
Don't ignore any areas of concern in your eagerness to get a leg on the property ladder, or snap up the house of the moment.
Be prepared to walk away if things don't stack up.
List of Real Estate Documents
General information about the property
- LIM – A Land Information Memorandum held by your local authority tells you about the property so you can understand any risks.
- PIM – Project Information Memoranda. The Government's Ministry of Business, Innovation and Employment provides comprehensive information about getting a PIM and although written for building industry professionals, it provides thorough information about what's involved.
- Survey Plans (Title) show legal boundaries, area and dimensions, including covenants and easements.
- Property Conveyance reports are explained on the Property Law Section of the NZ Law Society website
Reputable sources for checking building integrity
- A Code of Compliance (COC) is needed for any unfinished renovations, or extensions and repairs. You should request to see these.
- An Electrical Code of Compliance is required for any new electrical work installed into a home.
- To get house insurance, Electrical Inspections Certificates are often required for properties built pre-1938. If your buyer can't get insurance, they are likely to pull the pin. Best to get it done first.
- Moisture Reports can be sought to satisfy any doubts about the cladding or moisture issues and the Building Officials Institute of NZ has qualified surveyors trained specifically to inspect building cladding and moisture in a property. Why use an Accredited Building Inspector?
- Methamphetamine testing reports are now being requested by buyers (we are finding out more about this).
Buying an apartment or townhouse
Most townhouses and apartments are unit titles governed by a body corporate. Every owner of a unit title automatically belongs to the body corporate when they buy a unit.
The following links go into the nitty gritty of what you need to know about unit or apartment buying - a different beast to buying a free standing property.
- Cross lease titles and Unit Titles are explained here for buyers and sellers to better understand the difference.
- If buying a unit in a unit title, Tenancy Services provides buyers with advice and expectations for buying this type of property.
- Hobanz also has guides on Unit Titles for buyers, explaining bodies corporate, and the Real Estate Authority has a good PDF on this matter.
The Sales and Purchase Agreement and other need-to-knows about buying a house
Architectural drawings or other proof is needed if a house is being marketed as ‘architecturally designed’. If the house you are looking at has not been designed by a registered architect, it has not been architecturally designed.
- Make sure you understand the Sale and Purchase Agreement - the Real Estate Authority has a good explanation. Get any conditions or clauses signed off by your lawyer.
- If you are selling and buying property, download the Sell Smarter Kit for Inexperienced Sellers, available from Agent Finder NZ, an award winning free service that specialises in vetting real estate agents for sellers.
- 11-point due diligence checklist before signing a sales and purchase agreement in New Zealand - a must-read
- If you're buying residential property, make sure you know what your tax obligations will be when you come to sell the property.
- Pre-settlement Inspections of the property are done just prior to settlement to ensure all matters are attended to as per the Sale and Purchase Agreement clauses. This includes the chattels.
- Independent Property Valuation Reports and/or Council Valuation (CV) reports, these are also knowns as RVs.
Understand legal documents before signing anything
Buying real estate is a legal process and it is important to understand legal documentation and other reports, especially before you sign anything.
In real estate, the consequences can be far reaching if things go wrong, so we advise you to seek the advice of a property lawyer, even if you are dealing with a trained and licensed real estate agent.
Remember, the real estate agent is working for the vendor, so buyers need to keep their own counsel.