FREQUENTLY ASKED QUESTIONS
If your question about buying and selling property in New Zealand is not answered below then please email us and we'll answer your query shortly. You can also fill in our enquiry form with your question.
If your question about buying and selling property in New Zealand is not answered below then please email us and we'll answer your query shortly. You can also fill in our enquiry form with your question.
What is Conveyancing?
Conveyancing is the legal process of transfering the legal title to property from one owner to another, which includes preparation of all necessary documentation to effect that change. The types of documentation include both paper and online documents. In New Zealand many titles are now transferred electronically by lawyers using the Government’s e-dealing facility on the Land Information New Zealand (LINZ) website.
Do I need a lawyer/conveyancer situated in New Zealand to act for me if I am buying and selling property?
Yes you do. Lawyers not only protect your own interests they also ensure that financiers interest are protected by either registering the mortgage against the title or releasing it and repaying the amount you owe back to the bank.
How much will the Conveyancing cost?
Conveyancing costs vary from firm to firm and regionally in New Zealand. Our site has an Online Quote Request which enables lawyers in your area to provide costings for you. The overall cost is generally made up of the lawyers fee, GST plus Disbursements. Disbursements are expenses that lawyers have to pay out to third parties to effect the transaction and can include Registration fees paid to the Government, Council Fees, fees paid to Banks to release a mortgage, fees paid to search titles etc.
New Zealand conveyancing fees are extremely competitive globally as a result of strong competition among Legal firms to attract new clients to their firms. As a prospective client, price should only be one of the factors you consider in determining which firm you will give the instructions to. You should also consider, the firms expertise in Property Law, it’s location for ease of signing documents, is it the full service that you get, does the firm have Professional Indemnity Insurance (do not be afraid to ask this), how much experience do the lawyers and legal executives doing the day to day work have, does the firm provide online access for you and the agents, have you heard good things from other people about the firm, what other benefits are they able to give you, will you be kept up to date by emails and text messaging?
When do I pay the lawyers?
Generally you pay the lawyers on completion of the transaction. That is on settlement day or the day before, by which time the lawyer will have given you a statement showing the full amount that they require to settle. That statement will show how much has to be paid over to the other parties lawyer (generally the purchase price less deposit). A credit will show for any funds that the lawyer is receiving from the bank on your behalf (banks will not give you mortgage money directly as they have a personal undertaking from the lawyer that the money will be applied to the purchase - in return, the bank receives a registered mortgage) The lawyers costs and disbursements will also show on this statement.
With a sale, you’ll receive a statement showing funds collected by the lawyer, less repayment to bank on your behalf and less Lawyers Fees and Disbursements. Generally the lawyers should be able to deposit the balance of funds available to you electronically to your account on the day of settlement. This is another factor you may want to ask the lawyers when choosing who you will instruct to act.
Should I get a LIM Report?
Should I get a LIM Report?
Generally speaking you should although occasionally after talking it though with your lawyer there are times when it may not be necessary. This could be where you are buying a section or where a LIM report had recently been obtained by another party and your lawyer, the agent and you are comfortable relying on that report. As a general rule though, a LIM report should be obtained. More information about this can be obtained from council websites with many having online forms enabling you to order a LIM report. We look forward to the day when full LIM Reports will be available online.
LIM reports include information held by the Local Council about the property you may be looking to buy. Sometimes the Real Estate Agents may have also have a recent LIM report obtained to assist in their client's marketing of the property. It’s important that you ensure that Consents were obtained from Council for building works and that Code Compliance Certificates have issued. Your lawyer will assist you with these aspects and in NZ the common practice is for lawyers to order the LIM report on your behalf as part of the conveyancing process.
If the house has a swimming pool, the LIM will record whether the pool complies with the requirements under the Fencing of Swimming Pools Act 1987.
How much do LIM Reports cost?
LIM Report fees vary from council to council and may depend on whether you want urgent service, 1 or 2 days, or non urgent service, which may take a week or so. The cost of a LIM Report in New Zealand ranges from approximately $80 incl GST to $345 incl GST. Most lawyers, if they are ordering the LIM Report on your behalf, will ask you for a cheque to cover these costs while some may be happy to simply collect this money from you on the day you settle up for the purchase of the property. At your initial meeting with the lawyers these sorts of matters will be discussed.
What is a Conditional Contract?
Most contracts signed in New Zealand are subject to some types of conditions. Perhaps the most widely used condition is that of finance. This enables you to sign a contract for the purchase of a house without knowing whether or not the bank will give you the required finance. A condition date will be set in the contract which gives you time to check whether you will be able to obtain finance and choose an appropriate lender. If you genuinely are unable to obtain finance, you are able to cancel the contract and have your deposit refunded.
Other common conditions that can be written into an agreement for sale and purchase of property include;
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A Builders Report condition. This gives you the opportunity to check the quality of the building. The problems that have occurred in NZ over recent years with leaky homes has made this condition far more widely used and we would recommend that a clause of this sort is inserted into contracts. Your lawyer and/or Real Estate Agent will be able to help you in this regard.
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The sale of your existing property. This enables you to set a time frame in which you can market any existing house you have for sale. Again, if after making genuine efforts to sell your house, it doesn’t sell then you are able to cancel the agreement that you have to purchase.
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LIM. This enables you and/or your lawyers to obtain a LIM report. Generally under the ADLS/REINZ Agreement for Sale and Purchase of Real Estate, the vendor has the opportunity to rectify matters that may arise in a LIM report before you are able to cancel.
Conditional Contracts can be complex, particularly where there are numerous conditions. We recommend that you consult with your lawyer prior to signing the contract.
What is an unconditional contract?
Once the parties to an agreement have satisfied any conditions that may have been included that is when the agreement can be considered “unconditional”. It is a key milestone in the process as it triggers a number of conveyancing requirements and is the moment when you should be able to say with certainly that the deal will proceed to completion. If either party did not complete after this stage, then they would be in default under the agreement and remedies are available to the non-defaulting party.
Once you have an unconditional contract the banks are generally involved in either arranging for the release of mortgage on settlement for a vendor or a drawdown of mortgage for a purchaser. In either case, your lawyers will have documents prepared that you’ll have to sign to allow the transaction to proceed. Because the New Zealand system is now almost fully electronic you’ll be asked by your lawyer to sign an Authority & Instrument document. Once that is signed, the lawyers are able to modify the Government’s Land Registry recording the transfer of land from one party to another.
Declaring an agreement unconditional is a role that the lawyers carry out. If your lawyers are using the KeyTrack system, you as either the Vendor or Purchaser, the branch manager, administrator and land agent of the Real Estate Company will all be notified simultaneously by Text and Email. Your Transaction Status Report (TSR) in KeyTrack will also record the exact moment that the agreement was notified as being unconditional.
As a vendor, can I pull out of the agreement if I get a better offer?
Most of the time the answer is “No” assuming that the purchaser has paid the deposit and has fulfilled the conditions on or before the settlement date. It is however quite common practice in New Zealand, that if you are signing an agreement to sell a property subject to conditions, that you as the Vendor insert a “cash out” clause into the agreement. Most cash out clauses (prepared by your lawyer or real estate agent) allow you to give notice to that purchaser that unless they declare the agreement unconditional with 3 working days from receipt of your cash out notice, you will cancel the agreement as you have received a more favorable offer.
Do I have to pay a deposit and who do I pay that to?
Generally, to show good faith you will be required to pay a deposit when purchasing a property. The deposit is usually between 5 and 10 % but is subject to negotiation between the parties. As a vendor you naturally want the deposit to be as high as possible, yet as a purchaser, you'd like to pay less particularly if you have funding costs. It’s up the Vendor whether they are prepared to accept a lesser deposit. If you have been introduced to the property through a Real Estate Agent the deposit is usually paid into the Trust Account of the Real Estate Company that has marketed the property. It is held by the Real Estate Company until the transaction becomes unconditional. At that time, the deposit is released to the Vendor less the agent’s fee for selling.
If you have negotiated the deal privately you should see lawyers to formalise the contract and the deposit will normally be paid into the Vendors Solicitors Trust Account for safekeeping until the agreement becomes unconditional.
Do I have to have house insurance before purchasing the property?
If you are borrowing finance to assist in purchasing the property then you WILL be required to have the property fully insured before the financiers will release your borrowings to your lawyers. It will also be a requirement that the financiers mortgage is noted on the Insurance Policy.
If you are not borrowing and the property is to be held by you mortgage free, then you are not legally required to have the home insured however we strongly recommend that you do insure it. The insurance market is very competitive and house insurance normally is one of the lesser expenses in owning a property.
What is KeyTrack?
KeyTrack is a website that allows you as a vendor or purchaser to be kept up to date with developments as your conveyancing proceeds via online access, emails and Real Time SMS Text messages. The website also assists lawyers in their conveyancing case management and preparation of certain conveyancing documentation. KeyTrack will notify you and the key people in the Real Estate Agency of important milestones by Real Time emails and text messages. The most important notifications as a client will be when your transaction becomes unconditional and when it settles. You are able to communicate with your lawyers online using KeyTrack’s Transaction Status Reports. (TSRs).
Where do I collect the Keys from?
There is no standard rule on where keys are collected from. Standard practice seems to vary regionally in New Zealand however in the majority of regions keys can be collected from the Real Estate Agents office after all the parties have been notified that settlement (transfer of money & title) has occurred. Sometimes the vendors lawyers may hold the keys after settlement and occasionally the Vendors may in fact hold the keys and hand these over to you, after their lawyers advise that your money is through. A week or so before settlement you should ring your Lawyer or Real Estate Agent to ask them if they have discussed key issues and where the keys are likely to be.
How do I know that I’m not buying a leaky home?
As a purchaser, you are entitled to ask questions to the Vendors Agent and the vendors about these issues. The vendor must answer honestly or could face potential claims from you if they said the home didn’t leak and in fact it turned out that it did. The vendor, is however able to say nothing about this and often the vendor can simply say “not as far as I’m aware” if they haven’t had Moisture Reports conducted themselves. To be safe as a purchaser, you need to satisfy yourself concerning the weather-tightness of the home. Generally that would involve the inclusion of a clause for your benefit making the contract conditional upon you being entirely satisfied with a Builders / Weather-Tightness report. Your Lawyer or Real Estate Agent will be able to assist you with appropriate wording in this regard.
What happens with Land Rates on the Property Transfer?
In addition to title to the land being transferred to a purchaser on settlement, the local council are also notified that a sale has taken place. Land rates are paid to the local council (often in installments or by regular automatic payment) to provide services such as storm water, sewage, rubbish collection, water, street maintenance etc.
When your agreement becomes unconditional, the lawyers who act for the vendor will check with the local council to determine exactly what the annual rates are and what payments have been made for that particular annual period. After that has been done, the Vendors Lawyers will apportion rates on their settlement statement to the purchaser lawyer. On settlement, the Vendor receives a credit for any prepayment of rates or indeed credits the purchaser if rates have not been paid. The lawyers will explain this to you when they issue you with a statement showing the flow of funds through their trust account and rates apportionment is part of the Conveyancing Process.
You can be comfortable that Land Rates apportionments will be properly sorted out by your lawyers.
What happens with Water Rates on the Property?
Some Local Authorities have separately metered water usage for properties in their area. If that is the case, Lawyers will request from the water department (or company in some cases) that a Special Water Meeting reading be done on, or as close to, the settlement day as possible. The lawyer who acts for the vendor will retain in their trust account a sum sufficient to clear that account when the invoice arrives from the Water Authority.
Your lawyer will give an undertaking to the purchaser that those water rates will be paid so therefore as a purchaser you can move into the property safe in the knowledge that any prior water usage will be paid for by the Vendor. Your statement from your lawyer, if you are a vendor, may include an entry – Amount retained to clear water account. Within a fortnight after settlement you should receive notification from your lawyer that the account has been paid with any balance of funds remaining credited to your account.
What is a Cross Lease title and do I have to be extra careful purchasing a Cross Lease Property?
A cross lease title is where you share the ownership of the title with other owners of houses (called flats) but each owner has an exclusive lease of their house and surrounding areas noted on a flats plan usually for 999 years. All the owners share any common areas such as driveways and are responsible for the equal contributions to maintain common areas. Your conveyancing lawyers will be particularly vigilant when checking the title to make sure that the house (flat) that you are purchasing is correctly depicted on the flats plan. If there is an error on the flats plan, often it can be corrected by the vendor, but it can also be quite expensive to do so.
This type of ownership has been commonly used in New Zealand and assuming the plan and lease is in order, it should not affect the value of your property at all. When purchasing a house on a cross lease title you need to check carefully the state of repair of common areas to be sure that you will not incur any unwanted maintenance bills after completion.
A copy of the flats plan should be attached to the agreement showing exactly which flat you are intending to purchase. If you own a cross lease site you may not make any alterations to your flat without consulting both your Conveyancing lawyer and the owners of other flats on your title.
NOTE: All information contained on Conveyancing.co.nz is to the best of the knowledge of Online Conveyancing Limited true and accurate. However Online Conveyancing Limited assumes no liability for any losses suffered by any person relying directly or indirectly on information contained on this website. We strongly recommend that you consult one of our Law Firms or other professionals before acting on any information.
