Lawyer up before buying
Pattie Pegler has some key questions to ask when buying your first home.
Buying a home is more than likely the biggest single investment you will ever make – and most buyers know they need a lawyer to help them along the way.
You probably also know that you should find a lawyer you like before you need one. It’s not unheard of for people to sign a contract and then look for a lawyer, but the phrase ‘‘subject to solicitor approval’’ is not the get out of jail free card some assume.
So take time early on to find a lawyer you like and understand. Then, when it’s time to make an offer, you have already been through any onboarding admin, and you have someone ready to help you immediately.
It’s their business to make sure your interests are looked after. But what are the right questions to ask them?
Ask about the money
‘‘Don’t be afraid to ask your lawyer about costs,’’ says Auckland lawyer Tessa Dickie, who has dealt with many firsthome buyers. You may find that some will have a fixed fee for first-home buyers or be able to give you very clear information on their fee, so you don’t have any surprises.
You can also ask about the home-buying process and timeframes, so you know what to expect. First-home buyers might be accessing funds from their KiwiSaver for example, and this can take at least 10 working days, says Dickie.
Ask the ‘stupid’ questions
If you’re unsure – ask. What is a LIM (Land Information Memorandum)? What does unconditional mean? Christchurch solicitor, Emma Piercey says that even the way the word deposit is used can be confusing.
‘‘When you buy a property the deposit you have to pay to the vendor is typically 10%. However, when talking about bank lending, the bank may talk about needing a deposit of up to 20%. It’s the same word used, but they can mean different things in different contexts.’’
Ask about the specifics of the property
When it comes to a specific property, the questions vary. ‘‘With apartments, it’s important to find out about body corporate fees, are there any ongoing costs for major remedial works, that sort of thing,’’ says Dickie.
In Wellington, lawyer Mell Clarke-Cornor says cross leases are often popular with first-home buyers. Typically these tend to be older stock on smaller lots, she explains, perhaps a row of three or four freestanding houses that all look the same and the land that the homes stand on is jointly owned by all the homeowners.
‘‘So you have obligations to the other owners, there is an underlying lease that you are all party to,’’ she says. ‘‘And you want to really understand the terms of that lease as it can mean you can’t extend your home or put a permanent structure on your piece of land without the other owners’ agreement.’’
Ask about leaky homes
With homes built around the 1990s it’s also worth asking about the leaky home issue, says Clarke-Cornor.
‘‘We are always cautious when we see a property built around that time. We make sure clients are doing their due diligence and getting a report from a qualified builder who knows about leaky buildings.’’
Ask about the location
Sometimes questions can be specific to the town you are buying in. Take Christchurch, says Piercey, who regularly deals with property purchases in the city. It’s not uncommon to find lingering issues with earthquake claims.
‘‘If you’re offering on a prequake property, then ask your lawyer about the status of any earthquake claims, including private insurance claims,’’ says Piercey. ‘‘Have the claims been assigned? If the repairs have been done are they to the necessary standard? Is there any damage that has been missed?’’
Ask about your future plans
The lawyers all agreed the more they know about your plans for a property the more they can help you consider the right questions.
Some things might seem trivial, but can have a big impact on your enjoyment of your new home. If you’re dreaming of moving into your new apartment and getting a dog then let your lawyer know that’s important to you.
‘‘With apartments you may not be allowed to have a pet, and that is often in the body corp rules,’’ says Dickie.
Cross leases can throw up all sorts of issues, says ClarkeCornor. It might include terms around keeping your pet quiet or maintaining the outside of your home, it might mean you need to get the agreement of the other owners before you can add a deck.
New subdivisions also tend to have restrictions. These are usually in the form of covenants that dictate things such as the type of fence you can put up, or the colour you can paint your house.
‘‘Don’t be afraid to ask anything,’’ says Dickie. ‘‘A good lawyer can help guide buyers and point out things they might not have thought about. There is no such thing as a stupid question.’’