Our Services

PURCHASE OF HOUSE

Be careful. The real estate system in New Zealand favours the vendor (seller) of a house. The vendor is generally not required to disclose problems such as leaks, rotten timber, borer and the like. Appallingly there is not even any requirement that the chattels that the vendor sells such as appliances actually work. In short the system we have is stacked in favour of the vendor and is “buyer beware”.

I recommend:

That you consult me as your lawyer before you sign any agreement with a private seller or through an agent. And, if you agree on something put it in writing!
Conditions to be placed in to the Agreement for Sale and Purchase:
1. Finance condition: If you need to borrow money then you should always insert this condition and ideally give yourself 10 working days, so that there is plenty of time to obtain a valuation if required. ‘Pre-approval’ from a bank or other lender does not necessarily mean that you will get finance. Banks almost always want to see the Sale and Purchase Agreement and if you are buying a small unit or a property that they may consider a risk then they could still withdraw their offer.
2. Building report: Auckland has a very wet climate and houses rot. There is now leaky building syndrome for houses built between 1990 and 2005 and which have possibly been constructed without treated timber or an appropriate cavity system. These pre-purchase building inspection reports are almost essential to obtain as part of your due diligence investigation in purchasing a house. Even in regard to minor problems such a report can not only give you peace of mind but can allow you to negotiate with a vendor to reduce the price or rectify the defects. I recommend Abbey Property Inspections. Telephone my brother Peter Seton, on telephone 489 2656 or 021 443 313. Peter qualified as a builder in 1974 and has over 30 years practical experience.
3. LIM report: All purchases of a property should be made conditional on a satisfactory LIM report.   Whether the house is over 100 years old or newly built.   It angers me when clients tell me the agent said the house is new and does not need a LIM.   Rubbish!    Not only does a LIM cover whether there are appropriate building permits or consents or code compliance certificates for any dwellings, carports, garages and other buildings or structures (and retaining walls), it also covers other important issues such as resource consents (to undertake for example the felling of trees, possibly building closer to the boundary on the infringing of other site coverage rules).   In short you need to see the Council LIM because it is the Council’s written report concerning the property.   And you need to see a recent LIM not a six month old one or one the purchaser used when they bought two years ago.
  A LIM may not be as relevant when buying bare land.   In such a situation you need to visit Council to fully discuss what their rules are in allowing any development of the property, building of a house etc and any special requirements concerning the site.   Such investigation would be far beyond what a LIM will tell you.   Talk to me further about this.
  
  You may be persuaded to get a Property Bag Report which usually entails you visiting the Council to inspect the physical records on a property file.   More experienced purchasers may have the knowledge to know what they are looking for.   Generally, I can not recommend this approach.   In particular a LIM request forces the Council to review their file and place their information on a property into a written statement or report to you.   You can then rely on this report (hopefully!) at a later date should records be lost or misplaced or if a subsequent LIM (by say a purchaser to whom you are later selling) is inconsistent or incorrect.   Also many Councils have very poor records on older properties or even properties built in the 1980s or earlier.   It can be difficult to interpret the parts of a dwelling that have been inspected (and signed off) and what is missing.   Not getting a LIM because of the cost is the wrong reason! You are buying an expensive asset so do your investigation properly!
  
  However, LIMS are not a perfect solution.   Some Councils are now saying in their LIMs that they are not required to disclose whether buildings prior to 1990 or so have completed permits.   Remember Sergeant Schultz in the TV programme Hogans Heroes (if you are over 40?) and his stock standard reply “I know nothing”.   Some Councils seem to be now saying this for older houses.   Never mind that there was a building code at the time and a building system that showed some integrity.   Everyone ducks for cover nowadays so do your homework!   Let me help you with this!   Do get a LIM.
  
  You may also want to look at the Council file to view the building plans (which are not generally part of a LIM).
4. Valuation condition: A less common condition but useful say if you are new to the market and can not work out what a property is worth or for whatever reason are wanting to be careful that the price does stack up.
5. Due diligence condition: Agents don’t like this one. Quite useful as it allows you time to reconsider your purchase. There is no cooling down period in NZ so once you sign up then you are committed to the contract and to properly attempt to satisfy your conditions. A due diligence condition allows you the freedom to do all your research over a period and then pull out if the deal for any reason whatsoever. Real Estate sales are high pressure, hard sell and emotional so be careful. Such condition can be a godsend if you find yourself in the unenviable position suffering buyer’s remorse.
6. Body Corporate Units: Add a condition requiring the vendor to arrange disclosure of the Body Corporate’s minutes, resolutions and correspondence to the unit owners over the past 24 or 36 months. This may help reveal if there are any leaky building issues or other expensive repairs contemplated or arranged, or other problems. Also beware that the annual levies can be expensive and add an unexpected cost to your costs to complete the purchase.
Before you sign a Sale and Purchase Agreement check that all appliances in the house work and write them into the Agreement: dishwasher, rangehood, garage remotes, alarm etc. You will be buying the house as it is at the time of inspection so if you want something fixed (or if you want that old car or pile of bricks removed from the section) then write that into the contract. NEVER EVER rely on verbal agreement or advice. Sorry to be cynical but humans (unlike animals) lie, cheat, misunderstand and have selective memory (that is why there are lawyers). “GET IT IN WRITING” applies to everything in life and will be the cheapest and simplest advice you ever get from a lawyer.
Settlement days can be a real pressure-cooker for a lawyer’s office. Expect to move into a property early to mid afternoon and do not book carriers for the morning unless you are happy to wait around paying by the hour until the seller of the property vacates.
It is recommended that purchasers reinspect the property the day before settlement or the morning of settlement. Usually you can arrange one such visit through an agent.
Miscellaneous:

Be careful if there may be no permit for a basement development. These can be hard to remedy at Council.
Vacant sections should have survey pegs in place before settlement.
If buying a vacant section where the new title has yet to issue contact me before you sign. Agents, unless very experienced, do not usually include all the necessary clauses in the Agreement to protect you or to fully explain the obligations of the parties.
It can pay to check with Council (and Transit NZ) that no adverse developments are proposed for the area: motorways, prisons, road widening, changes to zone etc.
Cross lease properties entail special considerations. Any change to the shape of the house or unit will require the consent of all cross lease neighbours. Call me to discuss cross leases.
Rates and ARC levies for the property will be apportioned at settlement of the purchase. Rates if paid in advance by an owner for the year ahead can be an unexpected cost for a purchaser.

Talk to an accountant if you want to structure a transaction for tax or business purposes. I do not give advice on tax or GST issues.

SALE OF HOUSE

As a seller (vendor) the warranties or ‘promises’ you give in the small print of a sale and purchase agreement can make you vulnerable. It is important to have your solicitor draft appropriate clauses for an Agreement if the following is applicable:

If you undertook any building works on the property including any structural changes or additions without completing Council building consent requirements, or if you are aware that any former owner has undertaken such works. Perhaps you bought the house accepting that some Council permits or other matters were incomplete or unsatisfactory.
If you are aware of any problems notified on the Council file or by Council letter to you, e.g. stormwater problem.
In some situations where there is a problem with the house your failure to disclose information to a purchaser might be a misrepresentation leaving you vulnerable to Court proceedings. For example leaky building syndrome issues.
If you want to vacate the property but leave existing rubbish or other materials on site.
When you want to limit your liability in regard to an issue concerning the property.
If you are selling on a Friday but would like to move out on the Saturday (say by midday) then write this in to the Agreement.

These are just some examples and by no means an exhaustive list.

Other Issues:

Do not let the purchaser or their workmen have access or use of the property without consulting me to draft appropriate clauses to protect you. You may also want the purchaser to sign a Licence to Occupy if they are to move in and rent the property off you prior to settlement.
Make sure the purchaser pays a decent sized deposit and that this is collected as soon as possible. I do not recommend collecting a deposit only when the agent goes unconditional.
Make sure the purchaser appoints a solicitor from the outset so that you have an immediate address to serve documents. Some people sign up then change their minds and go in to hiding. If no address and no solicitor then this leaves matters in limbo.
Put a decent penalty rate of say 15% in the agreement. The purchaser is then less likely to let things slide at settlement.

SUBDIVISION OF LAND

I can assist you to create new titles for land. You can market the new lots for sale prior to the issue of new titles but there is a need for special clauses to be added to any Sale Agreement.

As a purchaser of a new lot you may wish in some circumstances to add a clause to the Sale and Purchase Agreement setting a time limit which will allow you to terminate the Agreement if there is a undue delay by the vendor in creating the title. All parties need to assume that it may take 3-6 months or longer to complete the new titles and in my experience many initial estimates are well short of the final date.

A copy of the survey plan should be attached to any Sale Agreement so that agreement is reached between the parties as to the location of boundaries, easements, driveway etc. Call me for specific advice on your situation before you sign.

BUSINESS SALES AND PURCHASES

Matters to consider:

You must carefully undertake proper due diligence and independently verify all matters, representations and agreed terms. Have an accountant peruse the books of the business and GST returns for the past twelve months. Watch the business being operated for at least two weeks. Add a due diligence clause to the Agreement and include these requirements.
A purchaser will have to ensure there is a comprehensive list of plant and equipment and that the same will be in working order, and not subject to any hire purchase or other finance at settlement.
To avoid GST on the transfer of a going concern both paries must be registered for GST at the time of supply. It is important for the purchaser to ensure that GST registration is completed at the appropriate time.
The terms and length of any lease needs careful consideration. Firstly the new purchaser will require the Landlord’s approval for the transfer of the Lease. Your solicitor can check carefully for any unusual terms such as a demolition clause which would allow early termination of the Lease or requirements for maintenance of the building itself. There are many issues to consider. Specifically you should not spend any money on the business or premises until you have the landlord’s written approval to the lease transfer. The landlord will also need to consent to any structural changes to the premises, types and location of signage etc.
Ensure that the vendor signs appropriate restraint of trade terms so that he can not take customers or compete with you after the business is transferred to you. Are there any key employees who will be leaving (or might leave) and cause a problem by taking away business or starting up in competition? Peruse all employment contracts. Will you require the vendor to terminate some or all current employees?
Visit the Council to view the property records and to see if they have any special requirements, e.g. Food Licence. If you intend to make structural alterations, then in addition to the Landlord’s consent you are likely to need a building consent.
Are you to get the benefit and ownership of all licences and software? Do you need to make an application for any licences (e.g. On-Licence for alcohol)?
Is the rent too high? What are neighbouring businesses paying. If adjacent rents are higher then you are likely to suffer a similar increase at the next rent review. Maybe the landlord will give you a rent holiday for a month or more if you are re-fitting or doing the premises up. When is the next rent review in the Lease? Does the lease have adequate rights of renewal?
Understand who the suppliers are for the goods or materials that the business uses. Talk to them to see if they have any special requirements such as a contract.
Ensure the vendor gives appropriate warranties for the turnover of the business for at least the last twelve months.
If you are to be in a mall or foodcourt does the lease give you any protection in regard to exclusivity so that no competitors are allowed. This can be very important. Even if you are in a small block of shops the landlord may agree to no competitors.

FAMILY TRUSTS

A Trust can be a useful scheme to protect your larger assets such as a home, rental property or shares in a business. You begin by selling the asset to the Trust at market value and each transferor can then forgive the Trust’s debt to them at the rate of $27,000.00 per year (per transferor).

It is regarded as prudent to have an independent trustee. This person (or entity such as a company) will ideally be a non-family member. For this purpose I have set up a company “Seton Trustees Limited” and I can arrange for this company to act as your independent trustee upon a suitable indemnity being signed. This can assist you in avoiding having to arrange your own independent trustee.

Trusts can not be treated in isolation but rather must be considered as part of an estate planning regime. Accordingly you should also have a Will (which amongst other things may appoint a replacement trustee upon your death) and a list or “memorandum of directions” to your fellow trustees so that the Trust may be then administered in accordance with your instructions in the event of your incapacity or death.

In my experience many Family Trusts are set up on the cheap and there are no wills or directions, a lack of book keeping, annual tax returns and resolutions. Sometimes no gifting is done. Trust matters must be reviewed regularly and proper record keeping is a must! Given that any one of us can be subject to an IRD audit it is best to be conservative with Trust administration.

WILLS

It is prudent and cost effective to have a Will drawn up so that your assets can be distributed following death. It is often more expensive to distribute assets without a Will as there is more work in preparing the alternative set of estate documents. Parents should have a Will so that they give instructions on guardianship and upbringing of children including the availability of finance for such purpose. In particular a Will can set up a trust so that funds are held and administered until surviving children reach the age when you want them to receive funds.

People with children by different relationships need carefully drawn wills to give effect to their wishes. For example you may want a partner to have the use of a house for life or until remarriage and for the house to then be sold at that time so that funds can be available to children. There are a myriad of issues for consideration.

I have Will instructions forms which I can email or fax to people.

PROPERTY RELATIONSHIP LAW

To limit the opportunity for a partner to claim a share of your property or assets, either if you split up or at death, you should enter into a Property Relationship Agreement. Both of you need to see separate solicitors and to have the written agreement appropriately witnessed.

Andrew Seton Property Lawyer - Best Price Legal Fees