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Useful Tips & Information
Buying a home
See your lawyer first
The single most important act in the house purchasing process is signing the sale and purchase agreement. Signing the sale and purchase agreement creates binding obligations. There may not be much that your lawyer can do to protect your interests after that point in time.
See your lawyer before you sign the sale and purchase agreement.
The price
We recommend that you either obtain a valuation before signing the sale and purchase agreement, or make the agreement conditional on you getting a satisfactory valuation. Sales histories and simple valuations can be obtained cheaply over the internet, or better still get a valuation prepared by a registered valuer.
What else is important?
Check the following. If any may possibly be an issue ask the real estate agent to insert appropriate conditions into the sale and purchase agreement.
Wills
Without a valid will certain rules will apply to an estate on death that may or may not provide for loved ones. is simple. Get a will and keep it current. You owe it to the people who are most important to you.
Enduring powers of attorney
Where a person loses their mental capacity through accident, illness or just the passing of time, enduring powers of attorney will make everyday administration of their affairs very much more manageable at a time of uncertainty and stress.
An enduring power of attorney in relation to personal care and welfare will enable you to choose who may make decisions regarding your day to day care.
An enduring power of attorney in relation to property may be granted to more than one person and may be limited to take effect only when the grantor loses their mental capacity or to certain specified property or circumstances.
Enduring powers of attorney must be granted by a person while they are still able to understand the effects and implications of granting them. Now is the right time to think about putting enduring powers of attorney into place.
Trusts
A trust is a way that property is owned. See our explanation of a trust in our legal dictionary.
This is not the place for a full explanation of the workings of a family trust however a brief summary of the pros and cons may provide a useful introduction.
Family trusts have been very popular recently and many have been set up for the benefits that they offer in protecting assets from creditors.
With the coming into force of the Property (Relationships) Act 1976 in 2002 family trusts are being used more frequently to protect assets that would otherwise be at risk of a claim by a future or current partner or spouse.
Trusts may also have some tax benefits.
Trusts have the advantage of taking property out of harm's way but still allowing control of those assets to be retained.
While trusts will not be for everyone there may be very sound reasons for forming a family trust. We can assist you with your decision.
Relationship Property
The Property (Relationships) Act 1976 raises many issues and contains a number of traps for the unwary.
The essential thrust of the Act is that two people (including same sex couples) in a domestic relationship of 3 years or more or where there are children of the relationship are entitled to share equally in the property of the relationship whether owned by either one of the partners or by both.
For the majority of couples this will be an acceptable situation but for others this may be an unintended consequence of the relationship. This will often be the case where one partner has brought significantly greater assets to the relationship than the other or where the partners have obligations to other family members such as children of previous relationships.
There are ways to limit or remove the effects of the Act. This is usually done:
If you have assets you want to protect then take steps to do that early. Once separate property is brought into the relationship pool it is usually too late to do anything about it.
Overseas Investment in New Zealand
Are you an overseas person buying land in New Zealand? The Overseas Investment Act 2005 may apply to you. There are stiff penalties for breaching this Act.
What are the rules?
Overseas Investment Office ("OIO") consent must be obtained if an overseas person proposes to acquire an interest in sensitive land.
In most cases overseas people are allowed to buy houses on small areas of land.
Who is an overseas person?
An overseas person may be a natural person, or could be a company, a partnership or a trust where 25% or more of that entity is owned or controlled by an overseas person or persons.
An overseas person is a person who is neither a New Zealander nor ordinarily resident in New Zealand.
A person is ordinarily resident if they are either:
What does acquiring an interest mean?
It means coming into ownership or possession of an interest in 25% or more in the land, a lease of the land of 3 years or more or certain other interests in the land such as a mortgage.
What is sensitive land?
Any proposed purchase by an overseas person of the following types of land will require OIO consent:
If the above applies to your proposed purchase you need to get OIO approval. Seek advice before signing the sale and purchase agreement.
What will the OIO consider before giving consent?
Gaining consent is basically a question of whether the purchase would be in the national interest. Lifestyle blocks are treated the same as any other land. The criteria require that:
Farmland
If the land being purchased is used principally for farming (other than forestry) then the land must be advertised for sale in New Zealand for at least a month before OIO approval will be given.
A note of caution for vendors selling land to an overseas person
The Crown is granted a right of first refusal to purchase at its market value land referred to as special land.
Special land is the foreshore, seabed, a river bed (a river having an average width for the length on or adjoining the relevant land of 3 metres or more measured as the width from bank to bank at the highest flow of the river before it over tops its banks) or a lakebed (a lake of over 8 hectares 12.35 acres in area including any artificial lake).
Owners of land containing special land are required to notify the Minister of any overseas investment transaction before proceeding with it. Failure to notify the Minister may result in a fine of up to $100,000.
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