What a lawyer helps with when you’re purchasing a new home
The process of purchasing your new home can often be an intimidating one. There’s plenty of jargon, complicated procedures, and a big financial commitment involved. Having a lawyer along for the ride is crucial – but what exactly are they looking for when they’re helping you complete your purchase?
While you don’t need to understand the ins and outs of everything a lawyer will be looking at (we don’t all have law degrees!), it can be helpful to have some idea of what documents they’re going through. After speaking to my lawyer, Campbell McGill of Duncan King Law, about why property inspections are so important, I asked him for his expertise around what a lawyer looks at throughout the purchase process.
Certificate of Title
The Certificate of Title is the key legal component of any house purchase. It’s a significant document that identifies the ownership of a property, and has different subsections depending on the type of property in question.
Campbell will normally pay particular attention to unique aspects that are registered on the title, such as easements, rights of way, and whether any other people may have an interest in the land. He’ll also check the cross-lease plan, and that the shape of the house in the plan matches the house in real life.
Terms of contracts
A lawyer will review the terms of the contract between the parties involved in the purchase. They’ll ensure the right bit of land is being bought, that all references match up, and that you know what the agreement might be conditional on – so that you’re fully aware of what you’re getting into before going ahead with the purchase.
LIM reports
Campbell will also go through any other documents that are sent to him, like a LIM report. LIM – short for a Land Information Memorandum – is a document that summarises all the information the local council has on a property. It’ll normally include information about resource and building consent, and whether the property has had any alterations. It might mention the presence of any hazardous substances, whether there any overdue rates on the property, and any plumbing and drainage information.
The agreement for sale and purchase will explain any tenancies on the property and the chattels that are included with the house – such as the stove, light fixtures, and curtains. It’s important to be familiar with all the chattel details so you know exactly what is and isn’t included in your new home!
A lawyer will spend time reviewing all of these documents thoroughly, and they’ll report back if they think there’s anything out of order.
“The right advice about the documents is immensely important before taking any other steps,” says Campbell. “Otherwise you can run into problems later.”
What happens if you don’t get the right advice?
The most common mistake people make when purchasing a home is signing an unconditional agreement without taking the right precautions – whether that’s not getting advice from your lawyer about the documents mentioned previously, or not getting a pre-purchase property inspection.
Signing an unconditional agreement is exactly like what it sounds. It means you absolutely have to complete the purchase of the home, unless there are unusual exceptional circumstances.
“Even so, after signing the agreement you have a serious obligation to satisfy your conditions,” explains Campbell. “You can’t just sign it and change your mind, as in extreme cases the vendor can ask for proof that you can’t meet the particular condition.”
For example, if you say you couldn’t get finance to complete the purchase, a vendor may require you to provide proof from your bank to ensure there is no way the agreement can be met. It’s a pretty serious document, and should never be entered into lightly.
Not getting a property inspection on the house – or not fully understanding it when you’ve had one done – will mean you’re likely to encounter some serious problems after signing the unconditional agreement. Something seriously wrong with the property, such as unconsented building works, may mean you’ll struggle to obtain insurance or a loan from the bank. This will result in you being stuck in a bit of a limbo, which is not exactly the welcome you’d like to your brand new home!
Purchasing a new home is a big commitment, so make sure you know what you’re getting into. Getting the proper advice from a property lawyer right from the get go, and asking questions about anything you’re unsure of, will mean the journey to your brand new home should be as smooth as possible.
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