ARTICLES
Key questions you should ask Lawyers before you engage them when buying, selling and refinancing your home.
1. Do you have staff who specialise in buying and selling property, and refinancing a mortgage?
2. What experience do you have in negotiating sale and purchase agreements, the listing of properties for sale, tenders and auctions?
3. Are these staff qualified and experienced in these areas?
4. Will I require additional advice from other advisors such as mortgage brokers, accountants and valuers?
5. Can you recommend a provider for other services?
6. Are there additional disbursements for which I will be billed?
7. Am I required to pay GST on the property purchase price?
8. When will I be required to pay these costs?
Other questions I may have when buying and selling a property.
Q: When and why should I first consult with a lawyer about the property transaction?
A: 1. If possible you should consult with a lawyer before you sign any documents including an agreement for the sale and purchase of the property.
2. A lawyer can help you with the terms of an agreement, to negotiate a price and to explain financing options.
Q: How do I decide on a settlement date?
A: If you are buying a property you should try to allow at least 4 weeks between signing an agreement for sale and purchase, but possibly longer if a LIM or builders report is required, or the settlement period spans public holidays.
If you are selling and the property is tenanted then time must be allowed for the tenant to move out.
Q: How much deposit will I have to pay on signing an agreement to purchase a property?
A: Historically a deposit of 10% is regarded as normal but deposits lower than that are not uncommon.
Q: How do I decide which financial institution I should borrow money from?
A: Your lawyer can advise you as to reputable mortgage brokers, can advise you how to approach a bank directly and (if you have more then one loan offer) advise you which offer is the best for you.
Q: Do I need a builders report or LIM (Land Information Memorandum) from the council when purchasing a property?
A: Normally we would strongly recommend that you obtain a LIM report.
Whether you need a builders report will depend on the age and type of the building, and your own experience. Building reports are becoming more common.
Q: Can I inspect the property before settlement?
A: Yes it is a standard clause under the agreement for sale and purchase (unless that clause has been deleted).
Q: How do I know if the property boundaries are correctly identified?
A: The only sure way is to have a survey. If the property is just a section you can ask for the property to be pegged before the settlement date.
Q: How can I be sure that council has properly approved any alterations to the property?
A: This is where the LIM report can be invaluable.
Q: Is it necessary to arrange insurance on the property buildings?
A: If you take out a mortgage on the property when you purchase it, then it will be a requirement of the mortgage that the property is insured. If you have no mortgage, we would still strongly recommend that you have the property insured.
Q: Who is responsible for the power and phone when buying and selling a property?
A: It is the buyer’s responsibility to contact your local power utility and telephone company to arrange for connection of power and telephone respectively. It is the seller’s responsibility to arrange for a final reading on power and gas, and disconnection of telephones.
Q: Do I have to notify my bank/financier that I have sold my property and how do I repay the mortgage?
A: You should tell your lawyer that you have a mortgage on your property and he/she will assist you and notify your bank accordingly of the sale. Your lawyer will be required, as part of the settlement process, to repay the mortgage to the bank or finance institution.
Q: How do I obtain the keys of my new property?
A: Once settlement has been completed your lawyer will in most cases notify the real estate agent of the fact, who will then pass the keys onto the buyer. You should make arrangements with the estate agent concerning collection of the keys.
Q: What else can your lawyer do for you?
A: Buying a property is one of the biggest decisions any person makes in their lifetime. Many problems occur because buyers take ‘short cuts’.
Over the past 10 years there have been significant improvements in the rapid registration of properties into the name of the purchaser immediately after settlement. On the other hand however, titles themselves have become more complex with many new subdivisions having land covenants (ie. what you can and cannot do on the property), resource consent conditions (ie. what the council has imposed on the property), as well as caveats, and property relationship claims.
There are also a series of different types of land titles, which include fee simple (the simplest, and generally, the most desirable land ownership), cross leases (which do have some advantages) and unit title (which have a body corporate structure).
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