Articles: Conveyancing Articles
"Guide for Residential Property Buyers" - by Miles Agmen-Smith
© Copyright ASCO Legal 2013
There are now many more pitfalls than there used to be when buying a property. We have prepared this Guide to help you if you are going to buy a home. The Guide is general in nature and every transaction is different but we hope that you will find the information handy, helpful and it may answer a few questions for you. It may also save you some costs and possibly from some expensive mistakes. It is not a substitute for proper legal advice. It answers a few frequently asked questions, but there are many more which may need to be answered for most transactions: Do let us know if you would like to find out more.
Check before you sign
Because there are so many things which now need to be checked and because we are often finding clients signing agreements which contain wording which is against their interests, we recommend that all clients have their agreements checked before they sign them. We can look them over very quickly, and can usually be contacted out of hours, if it is urgent. We also have a selection of standard clauses to protect your interests as purchasers so you can properly check what you are really buying.
Unit Titles, Leaky Homes and other Issues
There are new laws about unit titles and we can explain to you what is required. There can also be major issues if a property is what is technically classed as a “leaky home”. The problem is not about the leaks, it is about the consequences of the kind of materials it is made of and the excessive damage which water leaks can cause, in many cases, requiring major rebuilding of the home. Please ask for a copy of our guide “What is a leaky home”, if you would like some more information. There can also be other types of issue to be provided for. Examples include if the property is on a unit title, geology issues (where the land is not stable or has drainage issues) where there are tenants, or the title is leasehold. In many of these situations you as purchaser may need properly drafted, purchaser-friendly extra terms to be included in the agreement to give you the rights you need and which work for you as purchaser.
If you are arranging mortgage finance, it is important to ensure that the lenders have the correct details about the transaction and supply us with instructions well before settlement date. This will enable us to comply with their requirements and provide them with the documents, which they usually require at least two business days before settlement, so that the funds can be drawn down on the due date. If mortgage instructions are received at the last minute, this can cause delay and extra expense for you, especially if changes are required.
Land Information Memorandum (LIM) Report
All agreements refer to these: we recommend to our clients that they obtain a LIM (and an up to date LIM at that) in almost every case. A LIM report covers all matters relating to the property which are held on council records. This will include matters such as zoning, building consents, requisitions and matters which may concern you as an owner of the property. It also provides a check that the Vendor has complied with the warranties and undertakings given by them in the agreement on matters such as whether the property and all buildings comply with council requirements.
Location of the Property
The title (we will send you a copy) needs to be checked carefully to be sure that, it is the right property (and sometimes we find that it isn’t), what the boundaries are, including those for exclusive use areas or unit title areas as well as for the other items the title may show.
It is the buyer’s responsibility to arrange property insurance and if you are raising a mortgage, insurance cover must be on the terms required by the lender. Full details of the insurance need to be held by us somewhat before settlement. Important details to note are that, the policy must be in the names of all owners, not just one, or the other and lenders also require that, before their loan monies are uplifted, we have supplied to them a certificate and a copy of the insurance policy details issued by the insurance company itself (not a broker) and showing that their interest as lenders has been correctly noted on it.
In the standard Agreement you are entitled, after giving reasonable notice in writing, to enter the property on one occasion before the settlement date for the purpose of examining the property and chattels which are included in the sale and checking that everything is there and their state of repair. We suggest that this be arranged for a day or two before settlement. These arrangements are usually made through the real estate agent.
Keys and Moving In
Unless the Vendor agrees otherwise, the keys will not be released for you to uplift them (often, from the real estate agent) until your purchase has been settled. The timing of the purchase settlement will very often depend on other parties and outside factors such as settlement of one or more prior sales or release of all bank funds (your own and loan monies), all of which will need to happen correctly first. Removal vehicles should therefore best not be arranged for any time earlier than the afternoon of the settlement day or, if possible, the following day.
The water meter will be read as close as possible to settlement date and the account paid by the Vendor. Water rates from after that date will be your responsibility as the new owner. General rates will be apportioned in the settlement statement so that you will only pay your fair share from settlement onwards. Future instalment notices will be sent to you direct.
Gas, Electricity, Telephone etc
You should make arrangements direct with your preferred supplier for connection of these.
Unit Titles and Leasehold Property
You are now entitled to receive a disclosure document before signing a contract for the purchase of a Unit Title property. For these and leasehold properties there are various special issues to review. Payment for your share of Body Corporate levies, and if the property is leasehold or has tenants, the rent and other payments, are normally calculated and apportioned in the settlement statement.
As part of settlement, we will register the transfer into your name. When the title changes have been registered we will send a copy to you, and if mortgaged, a copy will also be sent to the lender.
Please contact us at any time if you have any questions or would like advice or more information on these or any other matters.
We have prepared this guide to and for our clients. It is not a substitute for detailed advice as every individual situation differs, and also government policies, laws and general conditions constantly change. We are happy to assist anyone who wishes to obtain more detailed advice or information on these or other matters.
This publication may not, in whole or in part, be lent, copied, photocopied, reproduced, translated or reduced to any electronic medium or such other form without the express permission of ASCO Legal except complete copies may be made if fully attributed.