We sit down with Dave Creswell, a qualified property lawyer at Lane Neave with over ten years' experience working in the industry. In this video, Dave sheds light on some of our frequently asked questions and covers the basic steps required to successfully purchase a property, with valuable insights as to how you can best protect yourself when investigating properties to buy – either as a main home or for investment purposes.
What are the most important things to consider before signing a sale and purchase agreement?
Before signing any agreement, there are a few important steps to take. First, inspect the property in person to ensure it meets your expectations. Second, conduct some research on the developer—check out their past projects and look into their reputation. Third, speak with a property lawyer; many offer a free initial consultation and can highlight key considerations.
It’s common for developers and agents to rush buyers into signing, so it’s wise to include a due diligence condition in the agreement. This gives you time after signing to thoroughly assess the property and review all relevant documentation. The condition should be worded broad enough to cover anything you consider relevant and allow sufficient time for both you and your lawyer to do proper due diligence.
Are there scenarios where you wouldn't recommend a due diligence clause?
If you’re under time pressure or competing with other buyers, you can request time to undertake a pre-contract due diligence review – the timeframe is usually a little shorter, but a good lawyer can turn it around in a few days. Keep in mind that more conditions there are in an agreement means a vendor might be less willing to enter into that agreement (especially where there are multiple offers), but they are important for reducing risk. It’s also strongly recommended you include a finance condition to ensure you have time to confirm funding for the purchase. Always work with a broker or trusted financial adviser, as they’re more likely to secure you a better deal with the bank.
What is a due diligence report?
When doing due diligence, always have your lawyer review three key documents: the sale agreement, the property title, and the LIM report. In New Zealand, most residential agreements use the standard Law Association form that’s generally fair, but new build developments will often include additional “further terms” that will override or vary the standard provisions. These further terms might allow the vendor to cancel the agreement, substitute materials, or alter the plans—so it’s crucial to understand them. Even if the agreement is already signed, some terms may still be negotiable, and your lawyer can help you identify any risks or issues you need to be aware of.
What is a LIM report?
A LIM is a Land Information Memorandum – this is a report provided by the local council and includes all relevant council-held information about a property. This covers information like building and resource consents, outstanding permits, and ana assessment of any natural hazards (like soil contamination or flood risk) affecting the property. It’s a valuable tool for identifying potential issues or risks that may need to be addressed.
Are LIM reports always necessary?
Even if the property is a new build and a new title will issue, we still recommend that you review the LIM for the underlying title. That’s because the land will still contain information that’s directly relevant to how you will use and enjoy the property, including any of those natural hazards that might apply.
What are some red flags people should watch out for with developers?
What we’ve generally found is a bad developer will have a contract that’s really heavily skewed towards them. And what that really tells us is they aren’t prepared to stand by their work.
Once the development’s finished, they’ll likely disappear. Good developers have provisions that are fair to both parties and include robust post-settlement obligations. It means they’re not afraid about their workmanship and they’re happy to fix any defects that might apply.
What is a sunset clause?
All new build contracts should include a sunset clause, which allows either party to cancel the agreement if settlement hasn’t occurred by a specified date. This protects buyers by giving them an option to exit and reclaim their deposit if the development is delayed.
However, it’s important to check how far out the sunset date is and whether the vendor also has the right to cancel. Some developers have misused this clause to relist properties at higher prices, so it’s essential to get legal advice to ensure the clause works in your favour.
What should people focus on when reviewing a title?
A record of title for the property is provided by Land Information New Zealand. It confirms essential aspects of that title, including the size, who the registered owner is, and any also sets out a schedule of all legal interests that are attached to the title.
Interests can include caveats, easements and land covenants. These instruments can contain provisions that will hugely impact how the property can be used and enjoyed.
Why should people use a property lawyer over their family lawyer?
It’s always recommended to use an experienced property lawyer. They can not only identify potential risks but also explain how those risks could impact your use and enjoyment of the property. This helps you make a well-informed decision about whether the risks are manageable and if the property is right for you.
What happens when you go unconditional?
Once you’re ready to proceed, your lawyer will confirm with the vendor’s lawyer that all conditions have been met and the agreement is now unconditional. At this point, the deposit is usually payable. For new builds, it’s essential that the deposit is paid into a stakeholder account—typically held by the vendor’s or agent’s lawyer—not directly to the vendor.
This protects you in case settlement is delayed or the contract is later terminated, ensuring your deposit (and any interest) can be refunded. If the deposit isn’t held in a stakeholder account, you risk losing it entirely, which has happened to other buyers in similar situations.
What is a settlement date?
Settlement for a pre-built house will occur on the date agreed in the contract, but for new builds it will be “triggered” usually only once the vendor has obtained a new title, code compliance certificate has issued, and practical completion of the building has occurred. All three must be in place before settlement can proceed. Before this, it’s important to carry out a pre-settlement inspection to check the property matches the agreed plans and specifications. Bringing along a qualified builder or someone with construction experience is also recommended to ensure the quality and workmanship meet expectations.
What rights do people have if there are issues with the property after settlement?
Most new build contracts should include a fixed maintenance period—typically 12 months after settlement—during which the vendor must fix any defects that arise. This timeframe is important, as some issues may only appear over time. In addition to this, the Building Act provides two protections: a 12-month defect period and a 10-year structural warranty covering key elements like the walls, floor, and roof. However, it’s usually easier to rely on the maintenance clause in the contract itself, as it creates a clear obligation for the vendor to complete any required work.
What is a residence association?
Many new developments require buyers to join a residents’ association after settlement. These groups help maintain shared areas and uphold the quality of the development, which can be beneficial. However, they also come with annual levies and responsibilities like attending meetings or joining a committee.
The association’s rules—registered on each property’s title—can cover a wide range of restrictions, from maintenance duties and Airbnb use to pet limits. While valuable for larger developments, they may be unnecessary in smaller ones with minimal common areas.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
