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Buying a home is one of the biggest financial decisions you'll ever make. It's exciting, but it can also be overwhelming – especially if you're a first-time buyer. A person buying or selling property must have sound legal advice to help protect their interests and avoid costly mistakes. Here are the key things you need to know before you buy.
Have you got a LIM report?
A Land Information Memorandum (LIM) from the local council is essential reading before you commit to buying. The LIM tells you important information about the property, including:
- Building and resource consents
- Rates and any outstanding charges
- Flooding, erosion, or land stability issues
- Contaminated land records
- Council correspondence about the property
LIM reports cost a few hundred dollars, but they can save you from expensive surprises. Issues flagged in a LIM might affect your ability to get insurance, develop the property, or even live in it safely.
What does the title tell you?
- The property title, which you can get from Land Information New Zealand (LINZ), shows who legally owns the property and what restrictions or interests might affect it. Look out for:
- Easements (rights for others to use part of the property, like for access or utilities)
- Covenants (restrictions on what you can do with the property)
- Mortgages or other charges
- Any caveats or other interests
Some easements and covenants are minor, but others can significantly restrict your use of the property. For example, you might not be able to build a garage where you planned, or you might have to maintain a shared driveway. Understanding these before you buy helps you make an informed decision.
Are all the building consents in order?
If the property has been renovated, extended, or had any structural work done, check that proper building consents were obtained and that code compliance certificates (CCCs) were issued. Missing consents or CCCs can be a major problem.
Without proper consents, you might:
- Struggle to get insurance
- Have difficulty selling the property in the future
- Be required by the council to fix or even remove the work
- Face reduced property value
Your lawyer should check the council property file as part of their due diligence. If there are consent issues, you can either negotiate with the seller to fix them, adjust the price, or walk away.
Should you get a building inspection?
Unless you're buying a brand-new property with builder's warranties, getting a professional building inspection is highly recommended. An inspector can identify issues that might not be obvious to you, such as:
- Weathertightness problems
- Structural defects
- Moisture or water damage
- Electrical or plumbing issues
- Pest infestations
Most sale and purchase agreements include a "due diligence" clause that gives you time to arrange inspections and review reports before the agreement becomes unconditional.
What's actually included in the sale?
The sale and purchase agreement should clearly list all chattels (movable items) that are included, such as appliances, light fittings, curtains, and outdoor furniture. If there’s something specific that caught your eye during the viewing, check whether it's listed as included.
Make sure the chattels list is detailed and accurate before you sign anything – it's much harder to argue about these things after the contract is signed.
What about finance?
Most buyers need a mortgage to purchase a home. Make sure you have pre-approval from your bank before you start making offers – this tells you how much you can borrow and makes your offer more attractive to sellers.
Your sale and purchase agreement should include a finance clause that makes the contract conditional on you obtaining finance. This protects you if your bank won't lend you the full amount or if your circumstances change.
Remember to factor in all the costs, not just the purchase price:
- Deposit (usually 20% to avoid low equity premiums)
- Legal fees
- LIM and building inspection costs
- Insurance (both home and contents)
- Rates and body corporate fees (if applicable)
- Moving costs
Are there any existing tenancies?
If you're buying a rental property, check whether there are existing tenants. Under the Residential Tenancies Act 1986, tenancies usually continue even after the property is sold, so you'll become the new landlord.
If you're planning to live in the property yourself, the tenancy will need to be properly terminated before settlement. Make sure the agreement addresses this and that the seller has given proper notice to the tenants.
Is the property in a flood zone or earthquake-prone area?
New Zealand's unique geography means some properties face higher risks from natural hazards. The LIM report should flag flooding, erosion, earthquake, or other natural hazard risks.
These risks can affect:
- Your insurance costs (or ability to get insurance at all)
- The property's future value
- Your ability to obtain finance
If the property is in a high-risk area, talk to insurance companies before you commit to buying. You don't want to discover after purchase that insurance is unaffordable or unavailable.
What are the zoning and development rules?
Check the council's district plan to understand how the property is zoned and what rules apply. This matters if you're planning to:
- Build or renovate
- Run a business from home
- Subdivide the land
- Have flatmates or boarders
Zoning rules can significantly affect what you can do with your property. Understanding them upfront prevents disappointment and costly mistakes later.
Buying a home is a complex legal transaction. Our experienced property team can guide you through every step of the process, from reviewing agreements to conducting searches and ensuring a smooth settlement.
Don't take risks with your biggest purchase – get in touch with us today to discuss your property purchase and ensure you're fully protected.