Signed and sealed? Not so fast – why legal advice on your Master Build Contract matters

Receiving the keys to your new home is a significant milestone. Clients often enquire about the exact timing on settlement day, especially if they are coordinating with moving companies or eagerly awaiting possession of their new home. Unfortunately, there is no “one size fits all” answer for when this will happen. Before you can take possession, the settlement process must be completed. This involves payment of the purchase price and transfer of the property\'s title. The timing of this process can be a bit unpredictable on the actual day of settlement. The key issue revolves around the exchange: the Vendor doesn\'t want to transfer the property without receiving payment, and the Purchaser doesn\'t want to pay without assurance of acquiring the property. Lawyers handle this by providing each other with \'undertakings\' – enforceable promises to carry out specific actions. These undertakings ensure everyone can proceed confidently with their respective tasks. There are 2 undertakings given on settlement, one from each lawyer. The Vendor’s lawyer undertakes to transfer the property\'s title to the Purchaser upon receiving the settlement payment from the Purchaser’s lawyer. The Purchaser’s lawyer can then pay the settlement payment to the Vendor’s lawyer and undertakes that the payment will not be altered or withdrawn. While this seems simple enough, there are several other steps that must align before you can get those precious keys. If the Vendor has a mortgage, their bank must confirm the amount payable to discharge the mortgage. This amount is confirmed the morning of settlement to include interest to that date; a key factor contributing to time uncertainties. The Purchaser\'s lawyer cannot release the settlement payment until the Vendor’s lawyer has given their undertaking, received any loan funds (if bank financing is involved), and the Purchaser’s contribution is deposited into the lawyer’s trust account. So, there is a bit of patience required on settlement day, but this ensures that the various factors align so you can take possession of the property without a hitch. Rest assured that your lawyer is working diligently to ensure a smooth transition, enabling you to step into your new home with confidence.

Registering easements can be a time-consuming process but there are ways to avoid unnecessary delays. Engage Key Parties Early The process to register an easement usually begins with the parties to the easement reaching an agreement to create an easement. This is usually between neighbouring properties which are intended to benefit from or be burdened by the easement. However, a party can obtain the benefit of an easement which is not connected to their ownership of any neighbouring property; this is known as an easement in gross. Sometimes creation of easements is imposed by a Council as a condition of granting consent to a subdivision and these compulsory easements have to be registered before the affected properties are able to be transferred into separate ownership. Where easements are being voluntarily created, the parties should at a minimum reach an agreement in principle to create the easement and record this in writing before incurring surveying or legal costs. The parties may also wish to enter into a formal agreement to create the easement with a scheme plan of the easement areas attached which will be used as a starting point for creating a survey plan. Where a formal agreement is required, lawyers are often engaged to assist with preparing and/or reviewing the agreement. Once the parties have reached agreement to create the easement, the next step is to engage a surveyor to prepare a survey plan of the easement areas. It is important that you engage a trusted, reliable surveyor. Unnecessary delays are often caused by surveying errors which end up needing to be corrected and slow down the easement registration process. It is important to engage a lawyer early in the process too. Once a draft survey plan (Land Transfer (LT) plan) has been prepared by the surveyor this should be sent to your lawyer who can: review the LT plan from a legal perspective; advise you on the process to complete registration of the easement; prepare the easement instrument; and request any third party consents. Putting your surveyor and lawyer in contact with each other early in the process enables them to coordinate effectively to ensure that registration can be completed in a timely manner. Consider Location and Suitability of Existing Access and Easement Equipment Where a right of way is being granted over an existing access way it is important to make sure that the surveyed easement areas shown on the LT plan align with the actual location of the access way. The parties may also need to consider whether the existing access way is sufficient for the intended use and any increase in use by the parties. For example, where no suitable access way exists in respect of a vehicular right of way, the benefiting users have the right to establish a suitable access way and the parties share those costs unless agreed otherwise. Where there will be an increase in use of the access way or the nature of the use will change, for example heavy goods vehicle using an access way which was previously only used by light vehicles, it is important for the parties to engage appropriately qualified roading contractors to investigate whether upgrades to the access way are required and if so for the parties to reach agreement as to how those upgrade costs will be apportioned. Where easement rights are granted in respect of existing underground equipment such as pipes for conveying or draining water or underground electricity or telecommunications lines, additional care needs to be taken to ensure that the surveyed easement areas shown on the LT plan align with the location of that equipment. This can be determined with reference to as built plans, and you should ensure that your surveyor has a copy of those plans when they start preparing the LT plan. Drafting Documents Easement instruments are typically drafted by lawyers, but certain organisations like Council and electrical lines companies often require their own easement template forms be used as a starting point which reduces the scope for negotiation. If you are granting Council or a lines company an easement over your property, then they will typically provide their easement template to your lawyer so that it can be populated with the relevant details. The terms of the easement instrument will depend on the nature of the easement and its use. For common easements such as rights of way or rights to drain water between a few properties, the implied easement terms in the Land Transfer Regulations 2022 and Property Law Act 2007 are usually sufficient. These are standard terms that lawyers are familiar with so it is unlikely that negotiation of these terms will be required.  For less common easements such as party wall easements and loading bay easements, bespoke terms will need to be drafted into the easement instrument which will need to be reviewed by the lawyers acting for other parties and increases the likelihood of protracted negotiations. Consents Consents may be required from third parties in order to register an easement. A couple of common examples of consents are: Where a mortgage or caveat is registered against the title to any of the burdened land, the consent of the mortgagee and caveator to registration of the easement will be required. Typically, mortgagee and caveator consent is requested once the LT plan is drafted and the easement instrument is in agreed form. Where the easement instrument includes a private road or private way, Council’s consent is required. This is known as a section 348 certificate and must be registered together with the easement instrument. Survey Plan Approval The LT plan needs to be approved by Land Information New Zealand (LINZ). Your surveyor will submit the LT plan to LINZ for approval together with any other necessary approvals. For example, where the LT plan is being deposited as part of a subdivision, Council approval to the LT plan will be required under section 223 and often section 224 of the Resource Management Act 1991. If you are looking to register an easement over your property, we recommend you talk with the Holland Beckett property law team so that we can assist you with keeping the process moving forward smoothly and avoid unnecessary delays.

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.