Hilary Anderson joins Holland Beckett as Special Counsel 

Purchasing your first home is an exciting experience but can also be a daunting one. There are a lot of things you need to know when you’re looking to make that first step. Below is a guide for first home buyers looking to enter the property market. It is often tempting to put an offer in on a property as soon as you have walked into the first open home but there are a few things you should look at before signing the Agreement for Sale and Purchase. Budget The first thing to consider is your budget. The Bank will generally require you to have a 20% deposit which is often challenging for first home buyers, however there are options available to help which include your personal savings, your Kiwisaver (provided you have been a contributing member for at least three years and are eligible for a first home withdrawal) and gifting, loans and guarantees from family. It is important to be realistic about the amount you can afford while also taking into consideration how much the vendor is expecting to get for the property. Type of Property The second thing to consider is what type of property you are buying. In New Zealand there are four main types of property, these are: Freehold also known as Fee Simple; Cross Lease; Unit Title; and Leasehold. Therefore, before you put your offer in or during your due diligence, it is a good idea to review the Record of Title to the property to ascertain what restrictions or interests you should be aware of. For example, while a property may be freehold, it could be subject to easements and covenants, among other interests, that may impose obligations on you as the property owner or restrict any plans you may have for the property. Conditional or Unconditional? The third thing to consider is the type of offer. There are two options when making an offer on a property, which are a conditional offer or an unconditional offer. An unconditional offer is one where there are no conditions attached to the offer, and you carry out your due diligence prior to making the offer. A bid at auction is an unconditional offer and you will be advised of all the due diligence you need to complete before the auction day. A conditional offer is one where you can specify conditions that must be satisfied before you declare the Agreement for Sale and Purchase unconditional and all conditions must have a timeframe attached. What kinds of conditions should you include in your offer? Not many first home buyers can put in a cash unconditional offer, and we generally wouldn’t recommend it as this may be one of the biggest investments and you will want to ensure you complete your due diligence on the property to be satisfied with all aspects of the property. We can prepare your offer to the vendor of the property or review an offer prepared by a real estate agent before you sign. A few of the most common conditions included in agreements are as follows: Finance– you may already have pre-approval from your bank but there may be conditions attached to the approval such as a requirement to obtain a registered valuation of the property or a building report, both of which can take a number of days. In addition, if you will be using your Kiwisaver as part of the deposit, you will need to ensure the finance condition is at least 10 to 15 working days so your Kiwisaver provider can process your application and you can complete any checks required by your bank. It is important that you have a confirmed offer of finance before the agreement becomes unconditional. Building report– This is a report undertaken by a registered building inspector. They will assess the property and indicate any areas of concern, highlight issues that need to be resolved in the property and give you a better indication of the condition of the property you are looking at purchasing. LIM– This is a Land Information Memorandum, a report provided by the local council which will tell you if building works have been consented to, provide information regarding council services to the property (such as sewerage and water) and highlight any possible risks known to the council affecting the property such as flooding or erosion. We can also recommend bespoke conditions, depending on the type of property and your particular circumstances. We can help look through building reports and LIMs and highlight key issues you should be aware of. Should these documents raise issues, we can liaise with the vendor’s solicitor to request they rectify any issues prior to settlement or negotiate a price reduction as a result of any issues the property may have. In an ideal world, your offer would be conditional upon as many conditions as you feel are necessary but consideration should be given to the number of conditions you put in your offer so you can put your best offer forward. Pre-settlement inspection The vendor also leave behind a number of chattels (such as carpets, heat pumps, dishwasher and stoves) in the property, so while you inspect the property it is a good idea to note the conditions of the chattels. If you go unconditional on the property, you will be able to inspect the property again before the settlement date and check all the chattels are in reasonable working order and in the same condition as you first inspected them, this is known as a pre-settlement inspection. Insurance It is also important to liaise with insurance companies as you will be required to hold sufficient house insurance prior to the settlement date. If your bank is providing a mortgage for the property, your bank must be recorded on the policy as the interested party. Have a look at insurance options, read the policy wording and get a home insurance quote which will help you understand the terms of the insurance cover and its cost so you can account for it in your budget. Before you sign an agreement for sale and purchase, or bid at auction, we recommend you talk with us and we will make assist to make sure that the process run smoothly. Once you have an unconditional offer on a property we will prepare all necessary documents and attend to settlement on your behalf. We pride ourselves on assisting first home buyers and making your first home purchase as stress free as possible.

Rotorua is a wonderous place, known for its cultural significance to Māori, its geothermal activity, many lakes and tourism (to name but a few). From those seeking adventure, mountain biking in the redwoods, or taking some time to bask in one of the many day spas, Rotorua has something to offer everyone. For those seeking to permanently secure a foothold in Rotorua, we’ve collated a selection of relevant factors for the prospective purchaser to consider when looking at Rotorua residential property: Geothermal Activity Geothermal / volcanic activity is part of the natural landscape and surrounds of Rotorua. Undertaking due diligence in this regard at the outset will help to mitigate unexpected surprises. This includes checking that you will be able to secure insurance (without exception). Note: Insurance is critical if you are obtaining a mortgage. Geothermal Bores While it may seem unusual, some properties in Rotorua are heated through access to a geothermal bore. If the prospective property you are looking at purchasing does have access to a geothermal bore, we suggest you check matters such as: Whether there are any known issues with the supply/users of the bore; The maintenance contribution you would be liable to pay (including the amount and frequency); Who manages the bore. For example some areas have a geothermal bore association who meet on a regular basis; and How to transfer the right to use the bore, if applicable. Water Supply The Rotorua Lakes Council (Council) has two methods of charging for water use: Unmetered properties – these properties are charged a set annual charge included in their general rates. Metered properties – these properties receive separate quarterly invoices, based on the actual volume of water consumed. Council operates 10 water supplies for urban, rural residential and farming supplies. These supplies do not receive any funds from general rates and are funded through water charges. You should check if water use for your property is metered and if it is subject to any additional water charges. Air Flight Path Rotorua has the benefit of a domestic airport in Ōwhata. Properties that are located near the airport (where applicable) may be in areas of high Airport Noise, this will be noted on the Council file. The airspace above the property may also be designated on flightpaths to the airport, this will also be noted along with any restrictions such as the height of trees and property or the use of drones. You should check whether the property you are looking to purchase is subject to Rotorua Regional Airport Noise Control and Mitigation requirements and if there are any restrictions associated with this. Jetty’s If you are looking at buying or selling a home with a Jetty ensure you understand your obligations. This includes the transfer of the resource consent (if applicable), the resource consent terms and the costs. Fireplaces and the ‘Point of Sale’ Rule Check whether the property falls within the Rotorua Clean Air ‘airshed’ which requires non-compliant fires and wood burners to be decommissioned or removed. If the home has a solid fuel heater and it is not on the list of compliant solid fuel heaters it must be decommissioned with a certificate filed with Council by an appropriately qualified person. It is a requirement at the time of sale, (which is a seller’s obligation). Leasehold Titles Sometimes, you will come across some well-priced lake-front (or near to) properties that are comparably lower than some surrounding homes and the \'good price\' may be attributed to those properties being “leasehold” titles. A leasehold, generally speaking, means you have a “leasehold” title that is subject to a lease which includes the leasehold owner paying ground rent. There is someone else who owns the “fee simple” or “freehold” of the underlying land (the ‘Landlord’ or Lessor) who you pay that rent to. You only have the right to exclusive use of the property for the time specified in the lease (subject to any renewals). The lease should be carefully reviewed and understood by you prior to purchasing as your use and occupation is subject to the terms of that registered lease. General If you are considering purchasing (or selling), seek legal advice prior to signing an agreement (this is to ensure that your I’s are dotted, and your T’s are crossed). To protect your interests, we can assist in reviewing your agreement to ensure the appropriate clause(s) are included in the sales and purchase agreement. If you are looking to secure your own piece of paradise in Rotorua, reach out to our property team for legal advice, prior to signing the agreement. As the saying goes, it is much easier to negotiate before you sign!

Land covenants are very commonplace in modern subdivisions and often impose significant restrictions on the way a property can be developed and used, now and into the future (sometimes indefinitely). While usually intended to promote and protect the amenity of subdivisions and preserve property values in the years to come, covenants can stymie development, prevent neighbourhoods from moving with the times and create difficulties for owners trying to renovate and extend or sell their properties. Common issues are: Requirements that the developer or other third party approve in writing any plans and specifications for construction of buildings on the land. Often these requirements are overlooked, and approval is not actually sought or there is nothing in writing to show that this requirement was complied with. This causes issues when the property is sold as a purchaser inherits (and could be required to fix) any covenant compliance issues when they buy a property. These requirements can also be written in such a way that it’s not clear whether approval has to be obtained for the initial construction of buildings on a property, or whether the obligation is ongoing and approval must be obtained for any new additional buildings (like a tiny home or extra garage) or changes to original buildings - which would cause further issues if the developer no longer exists. Prohibitions on subdivision or the number of dwellings that can be constructed. It is very common for covenants to specify that only a single dwelling can be constructed on a property, which can prevent an owner from redevelopments such as converting their property into a home and income and inhibits intensification of residential land. Inflexible material requirements, like obligations to use only certain types of cladding, which have become obsolete or problematic over time. These requirements can also prevent the use of new superior materials and building innovations. It is possible to put a time limit on covenants and to update or remove them, but the process of doing so (if not provided for in the original registered covenants) can be painful. Updates or removal can be done by: Obtaining the consent of all owners in the affected subdivision - but often this is simply not practical due to the number of impacted owners or the risk of one or more owners refusing to cooperate or requiring some sort of payment to do so. Making a Court application for an order under sections 316 and 317 of the Property Law Act 2007. Court proceedings can be costly and lengthy, with no guarantee of success. To be successful, an owner would have to convince the Court that: There has been some relevant change (such as the use of the land or in the character of the neighbourhood) which means that the covenant should be modified or removed; The continuation of the covenant as is would impede the reasonable use of the property; and There is no-one who will be substantially detrimentally impacted by the modification or removal of the covenant. If you are considering buying, selling, developing or redeveloping a property that you know or suspect is affected by covenants, it is prudent to check the property’s title and understand the impact the covenants may have on your plans and what your options. Our property team can assist with this, please get in touch.