Legal Guides

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Buying a Home in New Zealand – The process explained

So, you’ve decided to move to New Zealand have you? Good on ya! You won’t regret it. Next step. Finding somewhere to live.

The process of buying a house in New Zealand is similar to that in the UK. Essentially, the process can be broken down into five stages:

Stage 1 – The Search

During stage 1 you will be liaising with the real estate agent, attending open homes and liaising with your bank regarding finance. You won’t have much, if anything, to do with a solicitor during this stage.

Stage 2 – The Agreement

Once you have found your dream home, your real estate agent will prepare the Agreement for Sale and Purchase which will contain the terms and conditions of your offer. Your solicitor will get involved at this stage to check the Agreement before you sign. Once signed, the Agreement will be presented to the Seller. There is usually some negotiating between you and the Seller at this stage before your offer is accepted.

Stage 3 – Satisfaction of Conditions

Most Agreements are conditional on satisfaction of certain conditions. Once your offer has been accepted, your solicitor will be heavily involved to help you satisfy the conditions.

Stage 4 – Preparing for Settlement

Once all conditions are satisfied, the Agreement is declared unconditional (i.e neither party can back out). During this stage your solicitor will prepare all the necessary settlement and loan documents for you to sign.

Stage 5 – Settlement

The shortest and most exciting stage! Money is transferred and title to the property is transferred into your name (usually this all takes place over a couple of hours). Time to pick up the keys!

We will explain each of these 5 Stages in more detail below, but first…

A (very) brief history of the land title system in New Zealand

From the 1840s New Zealand’s land records were managed under a paper system like in the UK. Since 2002, the land titles and related documents are held in an electronic database called Landonline, which means a huge part of the conveyancing process now takes place online (i.e. very few paper documents are involved). In New Zealand, only solicitors and conveyancing practitioners (a special group of non–lawyers who are permitted to work in conveyancing) are allowed to deal with land titles.

Stage 1 – The Search

Finance

In New Zealand, if you need to borrow money, different conditions will apply depending on your residency status.

If you are a permanent resident, you will be treated like any other Kiwi and will be able to borrow based on the banks’ standard lending criteria (usually Banks will require you have a deposit of 20% of the value of the property). If you are on a work permit or buying a holiday home in New Zealand (as a non resident), you will be required to have a deposit of anywhere between 20% – 50% of the value of the property. There are also limits on the amount of land you can buy without getting special government permission if you are a non resident.

Types of Houses

The average house in New Zealand is single storey, timber framed (with either weatherboard (timber) or brick cladding), tile or corrugated iron roof, built on a ¼ acre section. You can also buy town houses (usually two storey on a 1/8 acre section), or apartments within multi storey blocks (these are sometimes referred to as Unit Titles), or baches (modest holiday homes or beach houses popular in New Zealand).

There have been issues in New Zealand with weather tightness in more modern properties. During the 90s, because of problems involving the design, construction and incorrect installation of materials (such as monolithic cladding), certain houses became susceptible to leaking when it rained. Real estate agents should make you aware if the property you are looking at is at risk from weather tightness issues. Make sure you do your homework on this aspect of a property prior to making any offer and if in doubt, ask your real estate agent or your solicitor for advice.

Types of sale process

  1. Private Treaty – this is the usual manner by which property is sold in New Zealand and means that a property is being sold at an agreed price by the seller to the buyer without using the auction or tender process.
  2. Auction – Terms and conditions are supplied in advance and the Agreement becomes unconditional at the fall of the hammer (i.e. you have to have done all your checks before the auction – there will not be an opportunity afterwards).

Your real estate agent will be the first point of contact during the Search stage. Try and get on the books of as many agents as possible. If an agent knows what you are looking for and in what price bracket, they will often contact you before a property which matches your requirements formally goes to the market (so you can beat the crowds).

Stage 2 – The Agreement

Once you have found that perfect property, it’s time to make an offer. The real estate agent will prepare the Agreement (using the standard form Auckland District Law Society Agreement for Sale and Purchase of Real Estate). The Agreement will contain details of the property, the amount you want to pay, the deposit (usually 10% of the purchase price), any conditions that you want the Agreement to be subject to and the settlement date (i.e. the day monies are paid and you take possession).

The following are the most common conditions:

  • Subject to finance being approved
  • Subject to a registered valuation (so you know you are not paying too much for the property)
  • Subject to a satisfactory builder’s inspection report
  • Subject to a satisfactory inspection of the Council’s records on the property

The builder’s inspection report will identify any problems with the house itself, while a review of the Council’s records will highlight any issues with the land on which the house is built or with the surrounding area.

The agent will present the offer to the seller who will either accept or reject the offer or enter into further negotiations with you. It is only once an offer/counter offer has been accepted on the same terms that there will be a binding contract.

Stage 3 – Satisfaction of Conditions

Once your offer has been accepted, you have a binding contract. You solicitor will now work through the various conditions.

You would usually arrange for a builder to inspect the property and the report to be sent to your solicitor to review. If the report highlights anything wrong with the property you can either cancel the Agreement or negotiate a reduction to the purchase price (if the seller agrees). Likewise, the Council will send a special report called a Land Information Memorandum (LIM) which contains all the information which the local council holds on the property to your solicitor for your solicitor to review.

If you and your solicitor are happy with the reports and the other conditions have been satisfied, your solicitor will confirm to the seller’s solicitor that the Agreement is unconditional. At this stage, there is no opportunity for either the seller or the buyer to back out. Your solicitor will start preparing for settlement.

The deposit is paid once the Agreement becomes unconditional.

Stage 4 – Preparing for Settlement

Your solicitor will now prepare the online documents required to transfer the title to the property into your name. You need to authorise your solicitor to do this by signing an Authority and Instruction form (one of the few paper documents required to be signed) which your solicitor will prepare.

If you are borrowing money, your bank will send the loan and security documents to your lawyer who will prepare them for you to sign. Your solicitor will also prepare the mortgage in accordance with the Bank’s instructions which will be registered electronically and will appear on the title to the property. Once signed, your solicitor will send the loan and security documents to the bank on your behalf.

The day before settlement you should arrange to inspect the property (or have someone inspect the property on your behalf if you are overseas). The purpose of this inspection is to ensure that the property is in the same condition as it was when the Agreement was signed. If it is not, you can require the seller to remedy before settlement is completed.

Stage 5 – Settlement

On the day of settlement, the Bank will deposit loan monies into your solicitor’s trust account (your solicitor will have already asked you to deposit the balance of the purchase price into their trust account during stage 4).

Your solicitor will transfer the settlement monies to the seller’s solicitor’s trust account (along with a special solicitor’s promise that the payment will not be cancelled or reversed). The seller’s solicitor will send your solicitor another solicitor’s promise that they will transfer title to the property to you on receipt of settlement proceeds. They also promise to release the keys to you.

Once title is transferred into your name (i.e. the electronic title to the property will now show your name and the details of the bank’s mortgage), your solicitor will report to you, provide you with a copy of the title and update the local council that you are the new owner.

General

Solicitors will usually charge between NZ$750.00-NZ$1,250 for a straightforward property purchase.

The New Zealand Law Society has a special section dedicated to all things related to Property Law (http://www.propertylawyers.org.nz/) and is a useful source of information. You can also find yourself a property lawyer in New Zealand using the site’s handy search tool (http://www.propertylawyers.org.nz/public/find-a-lawyer).

Author: Richard Williams

Solicitor, Billings Lawyers

DISCLAIMER: This article should not be regarded as constituting legal advice in relation to particular circumstances. This article is merely a general comment on the relevant topic. If specific advice is required in connection with any of the matters covered in this article, please speak to Billings Lawyers directly.

Published on 8th October 2014
(Last updated 13th July 2023)