Property Co-ownership with Friends and Family 23 Sep 1:16 AM (29 days ago)

Buying Property with Friends and Family: A Smart Strategy with Important Precautions

In Auckland, New Zealand, the dream of homeownership is increasingly difficult to achieve. As of March 2025, the average house value in Auckland was NZD 1,225,448, significantly higher than the national median of NZD 770,000. This steep rise in property prices has led many first-time buyers to explore co-owning homes with friends or family as a viable path to entering the property market.

While pooling resources can make homeownership more accessible, it's essential to approach this arrangement with careful planning and legal safeguards. Here are some key precautions to consider:

1. Establish Clear Ownership Agreements

Before purchasing, agree on the ownership structure—whether as joint tenants or tenants in common—and outline each person's share of the property. A Property Sharing Agreement should detail financial contributions, responsibilities for mortgage payments, and procedures for selling or transferring ownership. It's advisable to have this agreement drafted by a lawyer to ensure all parties are protected.

2. Define Exit Strategies

Life circumstances can change, and it's crucial to plan for potential scenarios where one party wishes to sell or move out. Agree on how the property will be valued, the process for buying out a co-owner, and the steps to take if one party defaults on their financial obligations. Having a clear exit strategy can prevent disputes and financial strain.

3. Seek Independent Legal and Financial Advice

Each party should consult with independent legal and financial advisors to understand their rights and obligations fully. This ensures that all aspects of the co-ownership are transparent and that everyone is aware of the legal implications, including tax responsibilities and potential capital gains tax upon selling.

4. Plan for Property-Related Expenses

Decide how ongoing property-related expenses, such as maintenance, repairs, insurance, and bills, will be managed. Clearly assigning these duties and costs can prevent conflicts and ensure the property is well-maintained.

5. Understand Financial Implications

Co-owning a property can affect individual credit ratings and borrowing capacities. It's essential to understand how shared financial obligations may impact future financial decisions and ensure that all parties are comfortable with the arrangement.

How Conveyancing Shop Lawyers Can Help

At Conveyancing Shop, we guide buyers through every step of co-owning a property. From setting up ownership agreements and exit strategies to ensuring all legal and financial obligations are clearly understood, our team makes the process straightforward and stress-free. Whether you're buying with friends, family, or a combination of both, we help protect your interests so you can focus on making your new house a home.

Can I cancel a Sale and Purchase Agreement? 30 Jul 4:27 PM (2 months ago)

Understanding your rights when buying or selling a home in New Zealand

Can I Cancel a Sale and Purchase Agreement?

We recently had someone come into our office with a Sale and Purchase Agreement they had signed to buy a property. A few days later, another house came on the market that they liked more — and they wanted to cancel the first agreement. Unfortunately, in New Zealand, it’s not that simple.

Once a Sale and Purchase Agreement is signed by both parties, it becomes legally binding . You can’t cancel just because you’ve changed your mind or found something better. You can only cancel if the agreement includes specific conditions that allow for it — and those conditions must be used properly and in good faith.

Let’s take a look at when cancellation is possible, and what options buyers and sellers have to protect themselves.

There’s No “Cooling-Off” Period in New Zealand

In some countries, residential property contracts come with a built-in “cooling-off period” — a short window (often a few days) where buyers can cancel the agreement for any reason.

New Zealand does not have a general cooling-off period. Once both parties sign the contract, it’s enforceable — unless there are conditions included that allow for cancellation.

When Can a Buyer Cancel?

Buyers can only cancel if one of the following applies:

1. Conditions Have Not Been Met

Most agreements include conditions that protect the buyer. These might include:

Finance – If the agreement is conditional on finance and the buyer can’t obtain a loan (despite making reasonable efforts), they may cancel.
Building Report – If a report uncovers major issues like structural damage or weather-tightness problems, the buyer may be able to walk away, depending on the wording of the clause.
LIM Report – If the LIM reveals significant issues like unconsented works or zoning restrictions, cancellation may be an option.
Solicitor’s Approval – Some agreements include a clause that allows the buyer’s lawyer to review and approve the contract. This must be used for legitimate legal concerns, not just a change of heart.
Due Diligence Clause – A general due diligence clause allows the buyer time to assess whether the property is right for them. This gives broader flexibility, but it must be negotiated and included in the agreement before signing.

2. The Vendor Breaches the Contract

Usually buyers cannot cancel if the vendor is in breach of the contract, rather settlement would be delayed or funds withheld. In some extreme cases there may be grounds for the purchaser to cancel for example if the Vendor is unable to give clear title or vacant possession. There is a process that needs to be followed with the purchasers lawyers issuing a settlement notice that provides a timeframe in which to settle failing which the Purchaser may cancel.

When Can a Seller Cancel?

Sellers also have limited cancellation rights, but there are some scenarios where they can cancel:

1. Buyer Fails to Meet Conditions

If the buyer doesn’t confirm their conditions (e.g. finance or LIM) by the deadline, the vendor may cancel the agreement.

2. Buyer Breaches the Contract

If the buyer fails to pay the deposit or doesn’t settle on the agreed date, the vendor can issue legal notice and ultimately cancel — though there is a formal process that must be followed.

3. Special Conditions Protecting the Seller

Just like buyers, sellers can also include custom conditions. For example:

Sale conditional on the vendor purchasing another property – We’ve seen vendors include a clause making their sale conditional upon their own purchase going unconditional. If that doesn’t happen, they can cancel their sale.
Retained occupancy or delayed settlement might also be negotiated depending on the seller’s situation.

You Can’t Cancel Just Because You Change Your Mind

Whether you’re buying or selling, you can’t cancel the agreement just because:

You found a better house or buyer
Your circumstances changed
You’re having second thoughts
You don’t like the price anymore

Once the agreement is unconditional, you’re legally obliged to follow through.

Get Legal Advice First — Not After

The best time to protect yourself is before signing the agreement. We can help you:

Draft conditions that suit your needs
Explain what you’re committing to
Review the agreement for potential risks

If you’ve already signed and are having doubts, don’t take any action before getting advice .

�� Need help? Contact the team at Conveyancing Shop Lawyers. We’ve helped thousands of Kiwis buy and sell with confidence — and avoid costly mistakes.

Vacant Possession when Buying and Selling 29 Jul 9:41 PM (2 months ago)

When buying or selling residential property in New Zealand, one phrase you'll often come across is “vacant possession.” But what does it actually mean—and why does it matter so much?

Vacant possession is a core concept in conveyancing. In plain terms, it means that the buyer will receive the property free from occupants, tenants, the seller’s personal belongings (other than chattels listed in the agreement), and any unwanted rubbish or debris . It is more than just an empty house—it’s a legal requirement that must be fulfilled at settlement when specified in the contract.

Why Is Vacant Possession Important?

For buyers, vacant possession guarantees that they can move into the property immediately after settlement without any unexpected surprises. For sellers, it is a legal obligation, if agreed to in the contract, that must be satisfied by the time settlement is due.

Most standard Sale and Purchase Agreements in New Zealand include a clause requiring the seller to provide vacant possession on settlement unless the property is being sold with a sitting tenant and the buyer has agreed to take over the tenancy.

Settlement Day Timing

Under the standard Auckland District Law Society (ADLS) Agreement for Sale and Purchase, vacant possession must be provided by 4:00 p.m. on settlement day . This includes:

The seller having fully vacated the property (including sheds, garages, and sleepouts)
All personal belongings removed (unless chattels are included)
No tenants or licensees remaining
The property cleared of rubbish

If you are also buying another property on the same day, coordination is key. The domino effect of multiple settlements can easily become a legal and logistical minefield. If your new home isn’t ready on time and you haven’t vacated your current property, you may find yourself unable to give vacant possession and this can have significant legal and financial consequences.

Selling a Tenanted Property

In some cases, the property is sold with a tenant in place, particularly if the buyer is an investor. In this situation, the contract should clearly state “sold subject to existing tenancy.” This must include:

The tenancy details
The rental amount and frequency
Any bond information

If, however, you intend to sell with vacant possession , the tenancy must be lawfully terminated before the settlement date. Under the Residential Tenancies Act 1986 , the notice period for periodic tenancies is generally 90 days , and longer if notice is being given for specific reasons. Fixed-term tenancies can only be terminated early with the tenant’s consent or as otherwise allowed by law.

Failure to give the correct notice or to ensure the tenant has actually vacated can delay settlement and open the door to penalty interest or worse.

What Happens if You Can’t Provide Vacant Possession?

Failing to provide vacant possession by the agreed time is not a minor issue. Here’s what the buyer may be entitled to do under the agreement:

1. Refuse to Settle

If the buyer cannot take possession, they may lawfully refuse to settle. This could trigger a cascade of defaults, especially problematic if you're relying on the proceeds to fund another purchase. You could be liable for any loss suffered by other parties in the chain.

2. Withhold Funds

If you've left rubbish or personal belongings behind, the buyer may agree to settle but retain part of the purchase price until the issue is resolved. This is often negotiated through the lawyers involved and can lead to delays or disputes.

3. Claim Compensation

If the buyer suffers loss or incurs expenses due to your failure to provide vacant possession (such as rubbish removal, storage costs, or alternative accommodation), they may file a compensation claim.

4. Issue a Settlement Notice

the purchaser can issue a 12-working-day settlement notice, giving the vendor that time to be ready to settle. If the vendor fails to do so, the purchaser may be able to cancel the agreement and/or claim damages (subject to the terms of the contract).

Best Practice Tips

Sellers:
Move out at least a day early, if possible.
Book professional cleaners and waste removal.
Double-check all storage spaces—don’t leave anything behind unless it’s listed as a chattel.
Buyers:
Confirm with your lawyer that the agreement specifies vacant possession.
Inspect the property shortly before settlement to ensure the seller has complied.
Be prepared to act if possession isn't properly delivered.
Both Parties:
Keep your legal representative fully informed about your plans.
Communicate early and often, especially if your settlement depends on another transaction.

The Bottom Line

In New Zealand property transactions, vacant possession is not just a courtesy—it's a legal obligation that plays a pivotal role in ensuring a smooth and enforceable settlement. Whether you're a buyer expecting to move into your dream home, or a seller looking to avoid costly delays and legal disputes, understanding and planning for vacant possession is essential.

As always, consult your lawyer well in advance of settlement day to ensure everything goes to plan. A well-prepared transaction is the best protection against unexpected surprises.

Disclaimer: This article provides general information only and does not constitute legal advice. For advice specific to your situation, always consult a qualified property lawyer.

Franchising Law in New Zealand: Why Specialist Legal Advice Matters 29 Jul 1:05 PM (2 months ago)

Thinking of buying or starting a franchise?

Franchise law is complex—and getting the right legal advice is key to long-term success. At Conveyancing Shop Lawyers, Director Thada Chapman specialises in franchising, from reviewing purchase agreements and commercial leases to setting up entire franchise systems and succession plans. With clients across industries like food, beauty, trades, and professional services, Thada brings practical expertise and fairness to every deal.

Franchising is one of the most common business models in New Zealand, offering the support of an established brand with the independence of running your own operation. But before signing any agreements or launching your franchise dream, it’s crucial to get expert legal advice—because when it comes to franchising, one size definitely does not fit all.

At Conveyancing Shop Lawyers, franchising law is a key area of expertise, especially for our Director, Thada Chapman . With years of experience setting up franchises, reviewing agreements, and guiding clients through every legal stage of their franchise journey, Thada brings a wealth of practical knowledge to the table.

Why Use a Specialist Franchise Lawyer?

Franchise agreements are detailed, binding contracts that govern how you run your business—often for many years. These documents can be heavily weighted in favour of the franchisor if not carefully reviewed.

Thada provides pre-purchase assistance for prospective franchisees, ensuring that all agreements are fair, clear, and aligned with your business goals before you commit. This includes:

Reviewing and advising on franchise agreements
Checking commercial leases and lease renewals
Ensuring that disclosure documents comply with relevant regulations

She also acts for franchisors, having helped set up entire franchise systems from scratch —drafting robust agreements that protect the brand while still offering fair terms to franchisees.

Succession Planning and Buy-Sell Agreements

Franchise businesses often involve partnerships or shared ownership, making succession planning critical. What happens if one partner wants to exit or can no longer work in the business?

Thada regularly advises on and drafts buy-sell agreements , giving franchise owners peace of mind that there’s a clear, agreed-upon plan for ownership changes. This forward planning helps avoid costly disputes later on.

Franchising Across Industries

The franchise model spans nearly every sector of the economy. Thada has worked with a wide range of businesses, including:

Support services : Snap Printing, Jims, VIP Cleaning, Hire A Hubby, Coffee News
Automotive and heavy machinery : Bridgestone Tyres, John Deere
Health, beauty & fitness : Caci Clinic, The Cosmetic Clinic, Just Cuts, Creo Gym, Snap Fitness
Professional services : SBA Accounting
Food & hospitality : Nandos, Flame, Quest, The Coffee Guy, Columbus Coffee, LJ’s, Hell Pizza, Seafood collective, PappaRich, Mexicali —and many more!

Get It Right From the Start

Whether you’re buying into a franchise or launching one of your own, it’s essential to work with a lawyer who understands the franchise model. The legal landscape is complex, but the right support ensures you're protected—and set up for long-term success.

Did you know https://franchiselaw.co.nz/ is part of Conveyancing Shop Lawyers and led by Thada Chapman herself. If you're involved in franchising in New Zealand, you're in the right hands.

Get in touch today to book a consultation or learn more about our franchising legal services. Let’s make your franchise journey a success—right from day one.

Celebrating 20 years of Conveyancing Shop Lawyers ! 17 Jul 11:31 PM (3 months ago)

Marking 20 years of innovation and excellence in New Zealand.

Over the past 20 years, we’ve walked alongside our clients through some of the most memorable chapters of their lives. We've shared the joy of first-home buyers finally getting the keys to their dream home, and we've been there to support families navigating the legal side of losing a loved one. These moments—both the highs and the lows—are why we do what we do.

At Conveyancing Shop Lawyers, we’ve never seen ourselves as just lawyers. We’re people who care deeply about making legal services feel less daunting and more human. From the very beginning, we wanted to change how law was practiced in New Zealand. Back in 2005, we pioneered fixed fees and transparent pricing, simply because we believed our clients deserved to know exactly what they were paying for—no surprises, no hidden costs. It was a radical idea at the time, but one that has now become the industry standard.

Over two decades, we’ve helped tens of thousands of New Zealanders buy and sell homes, refinance properties, and grow their businesses. Thada’s deep expertise in franchising has made her a go-to advisor for many of the country’s leading franchise brands, as well as for countless individuals stepping into business ownership or preparing for a successful exit.

But more than the numbers or the deals, it’s the people we remember. The newlyweds signing their first contract. The retirees downsizing after decades in the family home. The grieving children needing support with an estate. These moments matter. And we’re honoured to have been trusted through them all.

Led today by Directors Thada Chapman, Michelle Erasmus and Gurleena Walia, our team remains as passionate as ever about offering clear, compassionate legal support to the communities we serve. We’re proud of what we’ve achieved—but even more excited for what lies ahead.

Thank you to everyone who’s been part of our story so far. Here’s to the next 20 years of helping people navigate life’s biggest moments—with integrity, heart, and a smile.

– The Conveyancing Shop Team

Infrastructure Costs: The Hidden Price Tag in New Developments 2 Jun 3:34 AM (4 months ago)

Thinking of buying into a new residential development? Here’s what you need to know before signing on the dotted line.

Buying a brand new home should be exciting. Maybe you're eyeing a house-and-land package in a fast-growing suburb, or considering subdividing your own backyard. But there's something many buyers don’t even know to ask about, and it can hit hard—sometimes long after you've settled in.

We’re talking about infrastructure costs .

No, not interest rates. Not title delays. Not even construction blowouts (though those matter too). This is about the rising cost of roads, pipes, and public infrastructure—costs that are increasingly being passed on to you.

What Are Infrastructure Costs, and Why Are They Rising?

Councils across New Zealand are under pressure to deliver infrastructure fast—especially in growth areas like Auckland, Drury, and Tamaki. To help fund this, they charge development contributions (DCs) to developers for things like:

Roads
Water and wastewater
Stormwater
Parks and community facilities

While these are technically a developer’s responsibility, the reality is: those costs often end up in your contract price .

And the numbers aren’t small. In some areas, proposed development contributions have topped $100,000 per dwelling. Even after public pushback, they can still range between $50,000 and $70,000. That’s a hefty chunk of change—not going toward your kitchen benchtop or outdoor patio, but into underground pipes you’ll likely never see.

Why Should Buyers Care?

Because many buyers are getting blindsided —sometimes well after they’ve bought. Here’s what we’re seeing:

DCs may be added into the cost of your land or home—even if you weren’t told explicitly.
In some contracts, you could still be liable if the developer hasn’t yet paid the DCs.
Higher infrastructure costs are discouraging development , which can limit housing supply and drive up prices.
In other cases, infrastructure bottlenecks (like limited wastewater capacity) are delaying or halting developments entirely.

What Can You Do?

This isn’t about scaremongering. It’s about being informed.

New Zealand desperately needs more housing, and well-planned infrastructure is essential. But when the costs are poorly communicated or unfairly distributed, it’s everyday buyers who end up paying—often without realising it.

Do Your Due Diligence:

Ask your lawyer or agent whether development contributions have already been paid.
Review the title, LIM, and sale and purchase agreement carefully. Are there any outstanding charges?
Check for any clauses that allow price escalations if council fees increase mid-build—even in “fixed-price” contracts.

Because once you’ve signed the contract, the pipes are already in—and so is the bill.

Need guidance before you buy?
The team at Conveyancing Shop Lawyers can help you review your contract, explain the fine print, and make sure you’re not caught off guard. Get in touch with us today.

Do I need a lawyer to buy a house in New Zealand ? 24 Nov 2024 2:46 AM (11 months ago)

What first-home buyers need to know about NZ conveyancing

Buying a house is one of the biggest decisions you’ll ever make—and one of the most Googled questions in New Zealand is: “Do I need a lawyer to buy a house?”

The short answer? Yes.

In New Zealand, it’s a legal requirement to use a lawyer or registered conveyancer when buying or selling property. But not just any lawyer—ideally, you want an experienced property lawyer who specialises in NZ conveyancing .

Why Do You Need a Lawyer to Buy a House?

Whether you're a first-home buyer or a seasoned investor, buying property in NZ involves complex legal documents, titles, and financial commitments. A property lawyer will:

Review and explain the Sale and Purchase Agreement before you sign
Conduct title searches
Manage conditions like finance, LIM reports, or building inspections
Ensure legal transfer of ownership (settlement)
Liaise with your bank or mortgage broker, receive funds and pay these across to complete settlement
Register your name on the title through Land Information New Zealand (LINZ)

Trying to DIY this process is not only risky—it’s not legally allowed in most cases.

What Is NZ Conveyancing?

Conveyancing is the legal process of transferring property from one owner to another. In NZ, conveyancing includes checking titles, dealing with local councils, arranging finance, and ensuring the transaction complies with all laws.

Some law firms, like us Conveyancing Shop Lawyers , specialise in this area and offer affordable fees, fast service, and extra support for first-home buyers. If you’re looking to avoid stress and surprises, this kind of expertise matters.

First-Home Buyers: What to Expect

If you’re a first-home buyer , it’s especially important to have a lawyer who can guide you through:

Checking Sale and Purchase Agreements before you sign and advising on what conditions to include
KiwiSaver withdrawals
First Home Grant applications
Understanding conditional offers
Dealing with developers or off-the-plan purchases
Navigating cross-leases, unit titles, or easements

Your lawyer will also help make sure you don’t miss key deadlines or get stuck with hidden costs.

Choosing the Right Property Lawyer

Look for a lawyer who:

Specialises in NZ conveyancing
Offers transparent pricing
Communicates clearly and regularly
Has a strong track record with first-home buyers

Final Word

So, do you need a lawyer to buy a house in NZ? Absolutely.
More importantly, you need one who speaks your language, has your back, and knows the ins and outs of New Zealand property law.

At the Conveyancing Shop , we’ve helped thousands of Kiwis into their homes. Get in touch today to find out how we can help you too.

Reflections from lockdown - newsletter 13 May 2020 1:15 PM (5 years ago)

Looking forward to life post lockdown

Lets face it lockdown meant some big changes, for us individually, as a firm, an industry and a country.

Working from home took some getting used to - our team reported quite varied challenges, from mastering new technology, balancing home schooling kids with work, coping with loneliness in isolation, to struggling to work with a dog on your lap (which if you have a St Bernard like I do, is a real challenge!) and last but by no means least, missing our favourite coffee fix! The transition was seamless for our clients, as we had all the systems in place to manage files, receive calls and emails and continue business as usual.

Like most industries we have seen a marked decrease in work during the lockdown as property sales practically came to a standstill. We are pleased to see the market is starting to pick up again. The drop in mortgage interest rates make it a great time to refinance and easing of LVR restrictions mean that we are now seeing many enquiries from first home buyers which is a good sign!

There have been some legislative changes that allow us to witness many documents via audio visual links rather than in person. This has definitely made things easier during lockdown and we will continue to use this method Post-covid to look after clients New Zealand wide and overseas.

Our team is excited to transition back to the office from Thursday 14th May. We ask that clients please continue to email, call and video conference for a while longer as we will not be open for face to face appointments at this time.

We trust that you are all safe in your bubbles and looking forward to returning to normality soon!

Thada, Sirpa, Michelle and the CSL Team

Mortgage Holidays - relief during Covid 19 3 May 2020 3:46 PM (5 years ago)

Mortgage Holiday - Will it help or hinder?

Many people have taken advantage of the mortgage holiday option offered by mainstream banks to provide relief during the Covid 19 crisis in New Zealand. What some people may not have considered is that this is a repayment holiday not an interest holiday. The interest keeps accruing on your loan and is added to the amount you owe the bank. After the 6 month mortgage the amount you owe the bank will have increased.

Let me give you an example.

Say you have a $500,000 Mortgage fixed at an interest rate of 4.25% for 20 years. The interest you will be charged for the 6 months would be $10,625. During a mortgage holiday this interest would still accrue and would be added to the overall amount you owe. After 6 months your mortgage would have increased to $510,625. You would then be charged interest on this higher amount and/or the term of your loan would be extended.

I realise that for some a mortgage holiday is the only way to make ends meet at the moment, but I have also seen many people who are just taking advantage of the offer and having a break from repayments just because they can.

While a mortgage holiday may give you temporary cash flow assistance you need to consider the long term cost and assess if it is worthwhile. Could switching to interest only payments work out better in the long run. This way you will reduce your payments but not increase the amount you owe.

Important note: This is a discussion topic only based on the personal opinion of the author. It does not reflect the companies views or policies and is not intended to give legal, financial or tax advice

Due Diligence when Buying a Business 23 Apr 2019 6:29 PM (6 years ago)

Due Diligence Investigation of the business before buying.

If you are considering buying an existing business, you need to do your due diligence. Doing a due diligence investigation allows you time to find out more about the business and engage professional advice. This enables you to make an informed decision as to whether this business is feasible and right for you.

What is Due diligence?

Due diligence refers to the process of evaluating a prospective business before purchasing. This will allow you the opportunity to thoroughly investigate all aspects of a business including the business’s operations, financial performance, legal compliance, employee staff arrangements, customer contracts, intellectual property, assets and other details.

Why is due diligence necessary?

This is your opportunity to assess the value of a business and the risks associated with buying it. There is often a lot more involved in operating a business that one might expect. If you don’t do your due diligence you may end up making a bad decision and buy something that isn’t as you thought it would be. In particular you should check that any information presented by the Vendor (especially with regards to financial forecasts and reports) is accurate. You must satisfy yourself that the company is profitable and any projections as to future earnings are realistic and achievable.

When is the best time to conduct your due diligence investigation?

The due diligence process can be carried out either before or after an agreement for sale and purchase is entered into. Where it is to be carried out after an agreement has been signed, the agreement will need to include a “due diligence” condition. This condition provides a set timeframe for you to carry out your investigations. It should also say that the vendor will provide or to allow access to the relevant information and documentation, and give you the option to cancel the agreement if your investigation is unsatisfactory for whatever reason.

Who should you involve in the due diligence process?

We recommend that you have the financial information and forecasts checked by an accountant. They should also advise on any potential tax implications and the best ownership structure for business purchase. You should also have the Sale and Purchase Agreement, lease and any supplier, customer or employment contracts that you would be taking over reviewed by your lawyer. Valuers and other experts may be required depending on the type of business and industry involved.

What is included in a Due Diligence Investigation?

Due diligence can take many different forms as it varies from industry to industry. We would be happy to discuss your particular situation with you. Some of the common issues covered however are:

Accounts, financial information and tax records.
Leases, employment, supplier contracts, customer terms of trade and any contractual agreements to which the business is party.
Proprietary information such as copy rights trademarks patents.
Systems, operating procedures, workflows – this may involve spending time in the business observing how it operates.
Customer references.
Industry regulations, health and safety requirements and compliance issues.
Inspection of the condition and value of the assets including property, vehicles equipment and machinery.
Should you sign a confidentiality / non disclosure agreement?
The information that Vendors disclose during due diligence is often highly sensitive and confidential. It is not uncommon for them to as you to sign a non-disclosure agreement / confidentiality agreement before you access this information. You should ensure this agreement relates only to keeping the business information provided confidential and does not limit or prohibit you from operating a similar type of venture that you may already have in mind. It is always a good idea to get confidentiality agreements checked by your lawyer before you sign.

If you have any queries regarding buying a business our team of experienced commercial lawyers in Auckland are here to help. Get in touch with our friendly legal team on 09 237 1008

This article does not constitute legal advice and should not be relied upon as such. It is intended only to provide simplified general information on matters of interest and it is not comprehensive. You should seek legal or other professional advice and not relying on any of the contents of this site.

Mortgagee Sales Buyers Beware 23 Apr 2019 6:07 PM (6 years ago)

The risks of buying a property at Mortgagee Sale

There may be some bargain properties up for grabs at mortgagee sales but buyers need to beware. Purchasing at mortgagee auction is not without its risks.

Buying a property at auction is quite different from negotiating on a standard Sale and Purchase Agreement through a real estate agent. Apart from the fact that purchasers get caught up in the excitement and pressure of the auction day they are also bidding to purchase the property unconditionally. This means that they need to have done their homework and satisfied all of their conditions (finance, LIM report, builders report etc) prior to the auction.

Mortgagee auctions differ further from standard auctions in that the owners of the property have defaulted on their loan repayments and the bank, after giving them the required notice, has foreclosed and is selling the property. The auction agreement that purchasers sign at a mortgagee sale does not include many of the standard fine print clauses that are there to protect purchasers in the usual Agreements for Sale and Purchase of Real Estate and auction agreements.

Some of the additional risks purchasers face buying at mortgagee auction are:

1. Not getting vacant possession on settlement date

In a standard property purchase the vendor is required to give the purchaser vacant possession on settlement date unless the purchaser has specifically agreed to take over a tenant. This is not the case with mortgagee sales where it becomes the purchasers responsibility (and cost!) to evict any tenant or old owner. The purchaser is also limited by the fact they can only start the eviction process once they are the legal owners of the property which is after settlement has occurred.

2. Not being covered for damage to the property before settlement

The mortgagee (bank/lender) will not compensate the purchaser or rectify and damage to the property which may occur between the time of the auction and the settlement date. There have been cases of disgruntled old owners who are upset that the bank is selling their house from out under them and trash the house, or strip the kitchens, bathrooms, door frames, windows etc and leave only a shell of a house. It is therefore essential to get insurance on the property from the day of the auction.

3. Chattels can be removed prior to settlement

The basic chattels that come with a standard property purchase are floor coverings, window coverings, light fittings and the stove. Other items such as dishwashers, rangehoods, heat pumps and heated towel rails are often included in the sale and listed in the sale and purchase agreement (see article Dont Forget the Chattels for more details). In a mortgagee sale situation the chattels are commonly not included in the S&P Agreement as the Mortgagee (bank) only has security over the property and the previous owner is within their rights to remove them before settlement.

4. Not viewing the property prior to the auction

Sometimes prospective purchasers do not have access to view the interior of the property prior to the mortgagee sale. This means that they are in effect buying sight unseen. It also means that the purchase may not be able to get a building inspector through the property and takes the additional risk that the property may not be structurally sound or water tight.

5. No Vendors warranties

The standard Vendors warranties are typically removed from a Mortgagee Auction Agreement. This means that mortgagee will not warrant for example that the any work done on the property complies with the local council requirements and has a Code of Compliance Certificate (CCC).

In summary mortgagee sales are very high risk so professional advice should always be sought prior to bidding at a mortgagee auction. Contact our team of lawyers before you go to auction!

Joint Tenants VS Tenants in Common 23 Apr 2019 5:51 PM (6 years ago)

Who will inherit your property when you die? If it is owned as joint tenants it may not be who you intended it to go to!

Do you own a property jointly with another person? (be it a husband, wife, business partner, family member or friend) Is the property registered in your personal names as opposed to a trust or company?

If so it is vital that you understand the implications of the ownership structure and what will happen to the property on your death or the death of any co-owners. There are two options: firstly, to own the property as joint tenants; secondly as tenants in common.

1. Joint Tenants:

Where a property is owned as joint tenants all of the owners names are listed on the title in the following format: Jane Sarah Jones and Mathew John Smith. This is the most common form of ownership and banks will issue mortgage documents in this form unless you specifically request otherwise.

If one owner dies the property will pass directly into the name of the other owner(s). In this example if Jane Jones dies the property will pass directly into Mathew Smith’s name. This is all very well if they are a couple that have kids together, but families these days are not always that simple. If Jane Jones had children from a previous relationship they would miss out entirely, even if her will specified otherwise! Or if she had no children she may want her assets to go to her family (parents and siblings) rather than to her current partner as listed on the title.

Putting someones name on the title to help get a mortgage is quite a common occurrence – however few people realize the consequences . An example of this is a lady in her 70’s who wanted to purchase her dream retirement home. The house she chose cost $1,000,000 however she only had $900,000 saved and required a loan for $100,000 to complete the purchase. As she was no longer working the bank was reluctant to give her a mortgage so her eldest son kindly agreed to purchase the property jointly with her. His name went on the title, and he assisted his mother by making mortgage repayments. When she passed away, 15 years later, the entire property went directly to the eldest son. Needless to say her other four children were horrified at loosing out on their inheritance and a long nasty family feud (and legal battle) ensued.

2. Tenants in Common:

With this option the ownership of the property is divided into shares. Should one of the owners pass away, their share in the property will go to their estate and be dealt with according to their wills and?or the laws of intestacy and relationship property.

This method of ownership is usually suited to:

– business partners or friends co-purchasing a property

– couples with children from former relationships that wish to leave a share in the property to their children

– anyone going on the title to give financial assistance for mortgage purposes.

The amount each party contributes to the purchase can be reflected in the shares, so in the case of the son helping his mother he could have had a 1/10th share in the property and his mother a 9/10th share. On her death the mothers share would then be divided equally among her children, as she had no doubt intended.

Get in touch with the Conveyancing Shop Lawyers for more advice on property ownership options including: Joint Tenants, Tenants in Common and other property ownership options .

Buying Leasehold Property In New Zealand 22 Apr 2019 9:59 PM (6 years ago)

The Pro's and Con's of buying a leasehold property in New Zealand

What is leasehold land?

Leasehold is a form of property ownership whereby you own the buildings and any other improvements on the site, but you lease or rent the land from a land owner.

The Pro’s

Leasehold land is without a doubt cheaper than buying freehold. This is because you are not purchasing the land outright, only a right to us it for the period of the lease. In Auckland it is possible to purchase an affordable leasehold home in a trendy area like Parnell, the City Waterfront or One Tree Hill where freehold properties can sell for well over double the cost of a leasehold!

For some people buying leasehold works out cheaper than renting over the period of the lease with the added benefit of owning your own home. Others decide to buy leasehold as after doing the sums they find that paying a typical lease fee of 5% p.a. of the freehold value of the land to the landowner is less than paying 8% mortgage interest to the bank on a more expensive freehold property!.

The Cons:

You should be aware however that while the lease may be affordable at the time of purchase there are rent review periods where the ground rent is assessed in comparison to the current property market values. This means that if the freehold value has increased you run the risk of a sometimes substantial increase in ground rent. I remember a few years back some clients of mine were most distressed to learn that the lease fees for their city apartment were increasing by over $10,000 per annum!

Generally people buy real estate as an investment, as way to build wealth for themselves and their heirs. It is usually the value of the land which increases over time providing capital gains to the land owner. In a leasehold situation it is the owner of the land that benefits from this increase in value of the land over time where the tenant only has the right to live there and owns an ageing house that could be decreasing in value and needing expensive maintenance and repairs.

Leasehold land is more difficult to finance with banks requiring higher deposits than for freehold equivalents. It can also prove more difficult to sell a leasehold property, particularly if you are nearing the end of the lease or approaching a review period. And remember with a leasehold property all outgoings are still your responsibility (not the land owners). These include city and regional council rates, body corporate fees if it is a stratum title, insurance and maintenance.

Do your homework:

Each leasehold property needs to be assessed on its own merits as not all leases are the same. Many have a finite term of say 50 or 100 years. The value of the property is obviously affected by the remaining term of the lease whether it has 60 years left to run or 6 can make a big difference! Some leases give the tenant the option to purchase the land freehold on expiry of the lease with a formula included to calculate the sale price of the land at that time. Other leases while having a finite term also have a right of renewal which if exercised would mean the lease could continue in perpetuity. There are also often restrictions as to the land use included in the lease. Before entering into an agreement to purchase leasehold land it is essential to get legal advice and go through the lease documentation with your lawyer before deciding whether or not to proceed.

Contact the Conveyancing Shop Lawyers today on 0800 Solicitor for more information on buying leasehold land.

Essential conditions for a S&P Agreement 25 Apr 2018 4:00 AM (7 years ago)

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Buying a property is a big investment, often the biggest individuals make in their lifetimes making the Sale and Purchase Agreement one of the most important documents they will ever sign. It is therefore quite alarming to see how many people enter into this legally binding contract without getting advice from a lawyer and without understanding what is contained in the agreement.

Only last week I had a young couple bring in a signed agreement to purchase a property that contained no conditions. They had found a property on Trade Me and signed up a Sale and Purchase agreement with the Vendors thinking that they were just “negotiating the price” and now wanted to order a LIM report and apply for finance approval. They were extremely surprised to discover that they had entered into an unconditional contract without including the necessary conditions! I come across this type of easily avoidable problem on a daily basis that purely result from individuals not getting legal advice before entering into an agreement. Some other examples are purchasers not realising that the price they have agreed to is plus GST, poorly drafted clauses that lead to disputes over the interpretation and the worst case of a client signing a blank agreement and leaving their friend to fill in the details!

Another misconception is that purchasers or vendors can cancel the agreement if they change their mind. This is not the case so it’s imperative that conditions are inserted into the agreement (before signing!) allowing the purchaser time to do their homework on the property.

The three most common conditions which are recommended for most residential property purchases are:

1. Finance Condition

Even if you have pre-approval from your bank you still need to get unconditional finance approval for the particular property you are purchasing.

2. LIM Report

This is report prepared by the City Council giving information regarding the property such as land features, rates, building consents, zoning and more

3. Building Inspection Repor t

Get a qualified building inspector to investigate the property for any potential maintenance, water tightness or structural issues

If you are purchasing a house that is being built or subdivision that is not yet complete a Sunset Clause may be appropriate. This would give you the option to get out of the agreement should the work not be completed and settlement not have occurred within a specified time frame. If you are an overseas person wishing to purchase sensitive land in New Zealand then an OIA consent condition would be required

Other common conditions include a subject to a Registered Valuation, Solicitors Approval, the Sale of an existing property and Due Diligence..

It is important that conditions are properly worded so that their meaning is clear and they are not disputed at a later date. A lawyer can help you in drafting a clause tailored to your specific situation.

Do not rely on verbal agreements with the Vendor or Agent. If they have agreed to do something like maintenance work on the property prior to settlement include this in the further terms of sale

Remember – No two property purchases are the same it is therefore essential to always consult your lawyer before entering into an agreement for Sale and Purchase to discuss what conditions are appropriate for the specific circumstances.

Tips for Buying at Auction 23 Apr 2018 4:00 AM (7 years ago)

The 5 Essential Checks Before Buying a Property at Auction

5 essential pre-auction checks:

If you’ve been house-hunting in Auckland, you’ll know that the majority of properties in the region are selling at auction.This is tough for buyers as you have to do all the checks prior to bidding but remember a property is most peoples largest investment so well worth spending the time and money on!

1. Title and Auction Agreement – what type of property are you looking at? Is it a cross lease, fee simple, unit title or leasehold? What are the implications of each of these? Are there any additional clauses or exclusions in the contract? It is essential to go through the title of the property and auction agreement with your lawyer to be sure you fully understand what you are getting into..

2. LIM report – At auctions, the real estate agent often supplies the LIM to save potential buyers the cost of ordering one from the council. The LIM shows all the information the council has on file for the property, like Code of Compliance certificates and any outstanding requisitions.

3. Property file – In addition to the LIM, you may want to go into the Council to do a property bag inspection – this is highly recommended if you suspect un-consented work has been done on the property. You can view the plans and make sure they match what actually exists.

4. Builder’s report – Before buying you should always get the opinion of a building inspector. They will do moisture tests and check things that you may have missed. This can be expensive, but compared to the cost of the house it’s money well spent.

5. Finance – It is important to get finance approval in writing from your lender before you commit at an auction. Pre-approval is only half of the process – you also need to get the bank’s approval for the specific property you are bidding on.

Want to know more about buying at auction? Contact us on 0800 Solicitor for a free no obligations chat..

Don't forget the Chattels! 12 Sep 2016 9:30 PM (9 years ago)

An important but often neglected part of a Sale and Purchase Agreement is the chattels list.

A chattel is any moveable item that is not permanently attached to the land or building (not a fixture). There is a small box on the second to last page of the Sale and Purchase Agreement that comes preprinted with the basic items that stay with the property. These include the floor coverings, window coverings, light fittings and stove. Any additional items which a purchaser expects to come with the property need to be added to this list. If it is not on the chattels list the Vendor is within their rights to take it with them. Items such as garden sheds, dishwashers, waste disposal units, heat pumps, range hoods, heated towel rails and alarm systems are often forgotten and I regularly receive distressed calls from purchasers doing their final pre-purchase inspection and discovering the vendor has taken these.

I have also come across several cases of Vendors removing chattels such as light fittings and curtains and replacing them with a cheaper versions prior to settlement. They are not legally allowed to do this as the purchaser buys the property in the condition it was in and with the chattels that were present at the time they signed the Sale and Purchase Agreement, but it is sometimes difficult for the purchaser to prove or even remember what existed at that time.

Tips for ensuring you get the chattels you were expecting:

Go through the property carefully and discuss with the agent or Vendor what items stay with the property and list these on the Sale and Purchase Agreement.
Take pictures of the property (with your phone or digital camera) at the time you sign the Sale and Purchase agreement so that you have proof at a later date should anything be changed or removed by the Vendors.
Go through your Sale and Purchase Agreement with one of the Conveyancing Shop Team before signing!.

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