Sarah and Andrew had been going to open homes for months.  Finally they found a property which they instantly fell in love with.  They had been looking for so long, and were worried that someone else would buy it, so they put in an unconditional offer on the spot.  Unfortunately the property had been renovated by a prior owner who had not obtained the required building consent for the addition of an en-suite to the master bedroom.  This work involved plumbing, electrical work for the fan and heater and construction of the en-suite itself.

If only Sarah and Andrew had been more careful and had the property thoroughly checked out before signing an unconditional agreement, they would likely have discovered the missing building consent.  That way they may have been able to make their offer conditional on the Seller taking the necessary steps to remedy the situation before being bound to settle.

Because they didn’t sign a conditional agreement, Sarah and Andrew’s options to require the Seller to fix things up were limited and they are now incurring that expense themselves.

there are many ways you can check a property before you are locked into a purchase.  The following are “5 golden rules” for checking a property prior to signing the agreement.

Where appropriate you should seriously consider including these as conditions in your Agreement for Sale and Purchase to ensure you are not bound to purchase until you are completely satisfied with the property:

1.  Builders Report

These come in all varieties, but most commonly involve a suitably qualified builder going through the property to check its structural integrity and the quality of construction.

These reports can also cover wiring, internal moisture levels (i.e. is it leaky?), plumbing and roofing.

2.  Obtain a Land Information Memorandum (LIM) Report from the Council

You can order a LIM report from your local council.  A LIM is a report for the property from the Council compiled from the Council records.

This will tell you whether consents have been granted for any building work and also whether that work was signed off with final compliance. 

It will also provide useful information as to where the underground services are located, an aerial photograph of the property and details as to any historical hazards that may have affected the property in the past i.e. flooding or subsidence.

3.  Have Your Lawyer Search the Title to the Property

The lawyer acting for you will search the title and advise on any matters that you need to know about.  What they are looking for are things like restrictions and other impediments (called encumbrances) on the title.  Of particular importance are the contents of rights called easements where there are shared services and rights of way for access.

4.  Obtain a Valuation

You may wish to make your purchase conditional on receiving a satisfactory market valuation report.  It is better to know the value of what you intend to buy before being contractually bound.  These are carried out by a registered valuer and use comparative values of surrounding properties to find the market value.  If you are borrowing funds for the purchase, the lender will often require this report as a condition of approving finance.

5.  Make Sure You Have Arranged Finance to Buy the Property

No matter how perfect the property is, in most situations you will most likely not be able to follow through with the purchase without some borrowing.  You can shop around and find the lender that best suits your needs, or get a mortgage broker to do this for you.

Following these golden rules will help prevent nasty surprises before you are contractually bound to purchase.

The current law dating back to 1972 covers unit titled properties (e.g. apartments and some freestanding houses).  Parliament is set to update the legislation to make unit title developments more flexible and fix some of the shortcomings.  The new Unit Titles Bill has now had its second reading in Parliament. 

The Select Committee recommended changes to the Bill after receiving 101 written and 36 oral submissions. The changes adopted on the second reading include:

• Making the long term maintenance scheme more flexible;
• Changing financial monitoring and reporting provisions to lower compliance costs; and
• An amendment to allow car parks to be treated as principal units. 

We have previously reported on the key changes to the Act proposed by the new Bill including:

• Changes to how common property is owned;
• Changes to who is responsible for repairing and maintaining building elements that affect more than one unit (e.g. leaks);
• The ability to have ‘layered developments’ within one building for multiple use buildings (e.g. car-parking buildings, shops, residential);
• Removal of the requirement for unanimous decision of the body corporate in some circumstances; and
• Imposing greater disclosure requirements on Vendors selling Unit Titled properties.

We will keep you posted on further progress as this Bill makes its way into law.

The Judge spoke about the appropriateness of damages for non economic losses in the employment context and in particular damages for hurt and humiliation suffered.  He gave a history of various levels of awards and recent Court decisions of the Employment Court and Court of Appeal.  This was followed by questions and debate on these and other current issues.  The support by the Judiciary for Institute functions such as this is much appreciated by the Institute members and the event was well attended by local lawyers and employment advocates.

The Attorney General was reported as stating that he expects to take a “blueprint” for the replacement of the Act in a series of national hui in March 2010.

Minister Heatley announced that the Crown will be stepping in as guarantor for qualifying home loans.

The partnership provides an opportunity for Maori to build, purchase or relocate a house on multiply-owned Maori land.

Kiwibank is the sole lender for the product and will approve and provide home loans which will be insured by Housing New Zealand.

The scheme, called Kainga Whenua, will mean that Kiwibank will lend 100% of the house building costs with a purchase price for the house being up to $200,000 as long as the borrower has the right to occupy the land, a valuation from a registered valuer and a satisfactory building contract.  No deposit is required for a loan below $200,000.

The house must be:

• Built on wooden piles;
• One storey of at least 70 square metres;
• Located on mainland North and South Islands; and
• Have reasonable road access.

This will allow for houses to be relocated.

The Kainga Whenua scheme is available to first time buyers or people who have previously owned a home and are in a similar financial position as a first home buyer.

The borrower, to be eligible can earn up to $85,000.  Multiple borrowers can earn up to a combined $120,000 to qualify.

Housing New Zealand is also partnering with iwi to do larger developments on papakainga lands.

Further information will be available on the Housing New Zealand website www.hnzc.co.nz.

The Crown sought a revised Deed of Settlement which would simplify co-governance arrangements over the Waikato River.  The revised Deed of Settlement now provides for the creation of a single co-governance entity (the Waikato River Authority), which will monitor the implementation of the direction setting document, the ‘Vision and Strategy’ or Te Ture Whaimana.

In addition, Waikato-Tainui will receive $310 million over a 30 year period as a contribution to the restoration and maintenance of the Waikato River.

Alan’s last talkback of the year will be on Sunday 20 December again at 10:10am.  Listen in and then call with your questions.

To view the article click here.

Alan spoke at the AGM of the efforts the New Zealand Chapter has been making over the last year to enhance services to members and others in the field with a series of seminars in Auckland, Wellington and Christchurch.  Alan was also recently re elected as President of the New Zealand Chapter at its AGM in Wellington.

The Association brings together lawyers, academics, teachers, principals, government officials and others involved in the education field and in New Zealand members can join by contacting Susannah Higgins at Rainey Collins.  Membership is $75 for individuals and $100 for organisations.

The business expo show cased a number of Maori and Pacific businesses and brought together a number of Maori and Pacific business leaders. 

The expo also provided an opportunity for members and their guests to network through the newly launched Biz Connector Card’s and guests were also entertained by ex NZ Idol champion Rosita Vai and Ria Hall.

The event was well supported with over 100 business owners and their guests in attendance.