A retired couple had purchased a property many years ago as an investment.  They had not obtained a LIM report at the time that they bought the property.  They went to sell the property and the agent involved suggested they get a LIM report to be able to provide to potential purchasers. 

They did so and were shocked to see that there was an outstanding building consent in relation to some works undertaken to the kitchen in the years before they purchased the property.  This work should have had a Code Compliance Certificate issued from the Council.

This caused them to take the property off the market while they worked with Council to obtain a Certificate of Acceptance for the works.  Without this, many purchasers would not have been able to purchase the property as their banks would likely have put in place lending restrictions in relation to the absence of a Code Compliance Certificate.  Purchasers may have also had difficulty insuring the property.  This would have had an effect on price.

Below are some key things that Vendors should consider doing prior to putting their house on the market to help to avoid expensive losses and delays:

  • LIM report – Vendors may wish to consider whether they obtain a LIM report (as above) to check whether all building permits/consents and Code Compliance Certificates have been obtained from the Council since the property was built.  It is better to be aware of any issues in order that they can address these before they put their house on the market.
  • Builder’s report – likewise, Vendors may wish to consider whether they obtain a builder’s report prior to selling.  Again, if the builder informs them of any issues, this will give them a chance to remedy these before they put their house on the market.
  • Keys/security codes – under the Agreement for Sale and Purchase, on settlement Vendors must make available keys to all exterior doors that are locked by key, electronic door openers to all doors opened electronically, and keys/security codes to any alarms.  They should ensure that they have these available and in working order.
  • Chattels – Vendors should consider what chattels they expect to be sold with the property.  They should ensure they are in good working order and are not subject to any security interests (for example heat pumps or house alarms). 
  • GST – is the Vendor registered for GST?  If so, they should check with their accountant or legal advisor regarding the differing outcomes of selling to a GST registered or non-registered party, to work out what their price expectations should be.
  • Warranties – when Vendors sign an Agreement for Sale and Purchase they give a number of warranties and undertakings.  Have they received any notice or information about the property that they should be disclosing to the purchaser?  Have they carried out any works on the property since they purchased the property and if so, did they obtain the necessary building consent and Code Compliance Certificates (as above).  If they are unsure, they should check with their legal advisor or the Council.  
  • Mortgage - is there a mortgage over their property?  If so, they should check with their Bank to see if there will be any additional break costs that they will be required to repay on settlement.
  • Insurance/EQC claims – has the Vendor made any insurance or EQC claims?  Even if they have been closed they should be disclosed to prospective purchasers.
  • Bright-line/main home exemptions – bright-line legislation is now in place which means, depending on when the Vendor bought their property, they could be required to pay taxes on sale.  There are some circumstances where bright-line may not apply (for example if the property is the Vendor’s main home and they have not claimed two main home exemptions in any two year period) however we would recommend that Vendors seek legal advice before putting their house on the market, so they know what their obligations are in this regard.
  • Apartment – if a Vendor is selling a unit titled apartment, they will need to provide a pre-contract disclosure statement to any purchasers.  They should liaise with their Body Corporate Manager or committee in arranging this and make sure they pay any outstanding levies.
  • Tenant - do they have a tenant in the property?  If so they should check their obligations as a landlord in respect of notice periods they have to give to the tenant.