Frequently asked questions

What is conveyancing?

Conveyancing is a term used to describe the legal work required for completion of a property transaction — usually a sale or a purchase.

There is a misconception that conveyancing is a paper shuffling exercise, but in reality the range of tasks involved is often complex and difficult.

Many sale and purchase agreements contain conditions that may need to be fulfilled before the transaction can proceed. It is important that these contractual conditions are expressed clearly. Examples of common conditions in sale and purchase agreements are:

  • the purchaser securing suitable finance to complete the purchase
  • the receipt of a satisfactory building report or valuer’s report on the property
  • receipt of a Land Information Memorandum (LIM) from the local authority
  • the purchaser’s lawyer searching and approving the title

Your property lawyer can advise on the wording of these conditions to ensure that they meet your requirements.

Where there is more than one purchaser, your property lawyer can advise on joint ownership issues, including the implications of owning a property as joint tenants or as tenants in common.

If you are in a de facto relationship it is particularly important that you seek advice from your property lawyer regarding the issues which may arise under the Property (Relationships) Act.

One of the advantages of engaging a property lawyer is that they are qualified to advise in all aspects of the law which may need to be dealt with as part of the overall property transaction — for example making or updating your will, setting up a trust and any taxation implications.

What is a conditional agreement? Can I ‘back out’ of a conditional purchase agreement?

An offer to buy can be unconditional — that means once you sign it you are legally bound to purchase the property on the agreed date at the agreed price, no matter what. You should never enter into such an agreement without taking legal advice.

A conditional offer is one that is dependent on certain things happening. A conditional offer becomes a binding contract once all the conditions are satisfied. You are then legally bound to proceed with the purchase.

Conditions in an agreement may relate to securing finance, search and approval of title, receipt of a satisfactory builder’s report, or the unconditional sale of the purchaser’s property.

Your property lawyer can advise you on the wording of the conditions to ensure they meet your requirements.

Is is possible to enter into property agreements without legal advice?

Yes it is, but it is a major risk if you fail to get proper legal advice from the beginning.

Seeing a lawyer before you sign any documentation is the best way to ensure that your interests are protected, both at the time of sale or purchase, and in the future.

If things go wrong, having your lawyer involved from the outset means that the right action can be taken quickly to avoid incurring legal liability and to ensure that the matter doesn’t proceed to litigation, unless absolutely necessary.

There are legal and practical implications for a vendor or purchaser who fails to settle, even if settlement is delayed through what appears to be no fault of the person concerned. For example, notices could be registered against the title by a third party, or the vendor or purchaser may be in default through complications with their mortgage and unable to settle on time. Do the right thing, and see a lawyer at the outset.

What does conveyancing cost?

Property lawyers offer a high quality expert service. They are equipped with comprehensive legal skills to advise on all aspects of your property transaction and are backed by stringent safeguards administered by the New Zealand Law Society.

There is no “standard fee” for a lawyer’s services, although any fees charged must be “fair and reasonable” under lawyers’ Rules of Conduct and Client Care.  It is perfectly acceptable to ring or email different lawyers or firms for fee quotes, as they do vary. Some law firms fix a portion of their conveyancing services, for instance. You need to be aware there will always be some variance depending on what issues are encountered through the conveyancing process, and what level of service is agreed between you and the property lawyer (the terms of engagement).

What other research should be done before I commit to a property purchase?

A valuation report from a registered valuer will allow you to assess the current market value of the property and may also provide other useful information. A lender will probably require a registered valuation if you are borrowing for the purchase.

A building consultant’s report and/or an engineer’s report may also be appropriate. If you have any doubts as to the condition of the property, for example structural building issues or concerns about the land generally, you should talk to your property lawyer about arranging for a suitably qualified builder or engineer to inspect the property and report fully on its condition. Your lawyer will ensure that a condition is inserted into the sale and purchase agreement contract making the purchase subject to you being satisfied with the results of that report. If the report identifies problems your lawyer will advise you on your options and, if you still want to proceed, can negotiate to have the problems fixed  before settlement or seek a reduction in the purchase price.

Without appropriate conditions in the sale and purchase agreement contract (or with badly worded conditions), you may end up in a situation where you are legally obliged to complete the purchase and take on any problems with the property yourself.

Why is it important to check the title?

The title documents, held by Land Information New Zealand (LINZ), record who legally owns the property and whether there are any mortgages or other restrictions that apply to the property which might prevent you from enjoying the use of the land, such as covenants or easements.

The most common form of title is a freehold title. Other forms of ownership involve cross leases and unit titles are becoming more common. These have special features and involve rights and obligations on which the property lawyer is qualified to advise.

The title to a property may be subject to, or have the benefit of, easements such as rights of way and drainage rights. Your property lawyer will search the terms and conditions of these easements. For example, with a right of way, you will want to know how many property owners have the right to use it and what obligations you may have to maintain it.

How does the Property (Relationships) Act affect my partner and me?

This legislation applies to couples who are married or have lived in a de facto relationship for three or more years. There is a legal test for whether a relationship is deemed to be a de facto relationship.

There are important implications for people in de facto relationships and for people entering into second or subsequent relationships or marriages. For instance, each partner might bring their own property to the relationship and may wish to ensure that on separation or death, their share goes to their own children rather than their partner.

Your property lawyer is qualified to advise you on all aspects of property ownership in a de facto or subsequent marriage or partnership. In many cases a written agreement will be required to record each parties’ intentions at the time of entering a property agreement. Any agreement must be certified and witnessed, and independent legal advice must be taken by each party before it is valid.

If I want to lend my child some money to purchase a property, how can I protect my interests?

You and your child will need to seek separate legal advice to arrange the terms of the loan and to ensure that these are adequately recorded to protect both of your interests. In this case, your interests are quite separate from those of your child. It may be that the Property (Relationships) Act could have implications for you, if your child is in a relationship that breaks down after three or more years. You will want to ensure that the loan is formally recorded.

Do I need a new will?

It is always a good idea to check your will and revise its provisions if your circumstances have changed, such as when you buy or sell a property. If you do not have a will you should see a lawyer about this. Your lawyer will explain the implications of the Property (Relationships) Act, which can affect the provisions of your will.

How useful is a trust and when should this be formed — before or after a property purchase?

Family trusts are set up for a number of purposes but their main purpose is to rearrange the legal ownership of assets in order to protect the assets owned by the trust. Assets can be added to the trust at any time, by sale or gift.

Trusts need to be properly administered and must comply with legal requirements, including tax requirements. There are also legal provisions which can defeat the purpose of setting up the trust. A lawyer can advise you if setting up a trust will achieve the outcome you want. There may be better ways to protect your property.

Which is the best form of ownership for me and my partner if we purchase a property together?

Where there is more than one purchaser you should seek advice about joint ownership issues, including the implications of ownership as joint tenants or as tenants in common.

With a joint tenancy, when one of you dies, the other gets full ownership of the property. With a tenancy in common, you will each own a separate interest in the property. This means you can decided who will inherit your share from you. The Property (Relationships) Act will have implications for you and you should seek legal advice about this.

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