What you need to know when buying your first home

Talk to us first

Ideally, when you start looking at open homes or engage a real estate agent, give us a call to have a chat.  If we know what you’re planning, we can help you to be as prepared as possible.  This is a good time to discuss things such as Kiwisaver, whether you need to take tax advice and whether the purchase will coincide with a larger estate planning or lending restructure.

Contact us before you sign the agreement

Where possible, it’s useful if we can see the agreement before you sign it.  The best time to make changes to an agreement is before it is signed.  If you need to put in an offer outside of working hours, be sure to include a solicitor’s approval clause.  A solicitor’s approval clause gives us some ability to request changes to the agreement after it has been signed.

Forward us the agreement as soon as it is fully signed

Let us know as soon as the agreement is signed by you and the vendor.  The real estate agent will usually send us a copy of the agreement the day it is signed.  Occasionally though, the agreement doesn’t reach us until a few days later.  This can be a problem if there are conditions to be satisfied.

Satisfying your conditions

As soon as the agreement is signed, you need to start working on getting the conditions satisfied.  You will be responsible for arranging any builder’s report, methamphetamine testing, registered valuation, finance approval or other reports you need.  If you need us to order a LIM from the Council, you can let us know and we can do that for you.  We will check the title for you and let you know if there is anything you need to know about the title documents.

The conditions in most contracts are quite specific and you are obliged to make reasonable endeavours to satisfy those conditions.  You will generally not be able to pull out of a contract because you have found a better property, because you decide you offered too much for the property, or because you have had a change of heart.

Keep us up to date with what is happening with the conditions

Most often, if you do not satisfy a condition by the time it is due, the vendor has the right to cancel the agreement.  Sometimes though, the condition will be waived if you don’t satisfy it on time, or even worse, the contract will be automatically cancelled.  To avoid these unwanted consequences, it is important that you keep us up to date with whether or not the conditions can be satisfied.  Don’t leave it until the last minute.  Ideally, we need to know either the day before the condition is due, or the morning of the condition day.

If you need more time, let us know as soon as possible.  We can request an extension to the condition date but remember, the vendor does not have to agree.

Paying the deposit

Most contracts will require you to pay the deposit when the agreement becomes unconditional.  The deposit will generally be paid to the real estate agent’s trust account or to the vendor’s solicitor’s trust account.  You need to be ready to pay the deposit when the agreement is made unconditional.

Providing information to us

When the agreement becomes unconditional, we will start to prepare for settlement.  It is helpful if you can let us know your IRD number (or the IRD number of the entity that is purchasing the property) and whether you will be living in the property yourself or if it will be rented out.  It is also helpful if you can provide a copy of your passport or driver’s licence so that we can make sure that your name is recorded correctly on the transfer documents.

Getting finance

If you are getting a loan from a bank, you need to let your personal banker know that the agreement is unconditional.  He or she will finalise the loan structure with you and then loan documents and instructions will be prepared by their documentation team and sent to us for you to sign.

Depending on the complexity of your finance arrangements and how busy your bank is, this process can take several days and sometimes longer.  So don’t delay and if your bank requests additional information from you, provide it to them as promptly as possible.

Obtaining an insurance certificate of currency

If you are getting a loan for the purchase and that loan is secured by a mortgage over the property, your bank will require proof that the property is insured.  Once the agreement becomes unconditional, you should contact your insurer to obtain a certificate of currency and ask them to forward it on to us.

Signing the transfer and loan documentation

Before settlement we will meet with you to sign the transfer documentation and also the loan documentation (if any).  If you will not be able to come in to our offices to sign the documents, you need to let us know well in advance as we will need to make alternative arrangements with you.

If your family trust is purchasing the property and you have an independent trustee, you need to ensure that the trustee is available to sign the documentation as well.

Pre-purchase inspection

If the property is being sold with vacant possession, you are entitled to inspect the property once before settlement.  The inspection must be done before the date of settlement.  We recommend that you inspect no later than 10am on the day before settlement.  This gives us time to deal with any problems that might arise from the inspection.

At the inspection you should be checking that all the chattels listed on the agreement that “work” such as rangehoods, stoves, heat pumps, are in reasonable working order.  All other chattels, such as carpets and drapes should be in the condition they were in at the date of the agreement.  You should also check that all keys and garage door remotes are present, or will be available on settlement.

If there is an agent involved, he or she will arrange the inspection with you and may often be able to resolve any minor issues immediately.  If not, you need to let us know no later than midday on the day before settlement if there is a problem.

One common issue is the cleanliness of the property and the removal of rubbish.  The vendor is not required to leave the property clean and tidy, or to mow the lawns before settlement.  If this is particularly important to you, you need to let us know before you sign the agreement.  We can then include a specific clause in the agreement requiring that the property be cleaned before settlement.

Providing us with the settlement money

Prior to the settlement date we will let you know how much money we need to complete the settlement.  You will need to make sure you transfer this amount to our trust account, in cleared funds, prior to settlement.

Most buyers will have done a rough calculation of how much they will need to pay, however, it’s easy to get caught out with the rates apportionment.  You will usually have to pay the vendor your share of the rates which they have paid in advance.  This is sometimes just a few dollars, but can be several hundred dollars.

On the settlement date

On the settlement date we need to have sufficient money to settle along with properly signed transfer documentation.  We also have to wait for the vendor’s solicitor to confirm that they are in a position to settle.  Once both sides are ready to settle, we will transfer the settlement money to the vendor’s solicitor.  The vendor’s solicitor will then advise the real estate agent that the settlement is complete and that they can release the keys to you.

Most settlements are completed between 11am and 2pm.  However it is not unusual for settlement to occur right up to 4pm.  You need to keep this in mind when you are arranging your moving vehicle.  A settlement is not considered late until 4pm and while every effort is made to complete settlement as soon in the day as possible, many delays will be out of our hands.

If there are any issues on settlement we will need to contact you so please ensure that you are easily contactable on the phone numbers we have for you.

After settlement

We’ll send you a follow up letter giving you a copy of the certificate of title showing you as the new owner of the house.  You should keep this letter safe in your records.  If you would like to pay your rates by automatic payment or direct debit, now is the time to contact the council to arrange.  Otherwise though, it’s time to sit back and enjoy your new home!

This article is current as at the date of publication and is only intended to provide general comments about the law. Harkness Henry accepts no responsibility for reliance by any person or organisation on the content of the article. Please contact the author of the article if you require specific advice about how the law applies to you.