Month: December 2018

 

Conveyancing – What Do All Those Confusing Terms Mean?

There is a common misconception that conveyancing is ‘easy’ and that you should be able to get your house purchase done ‘on the cheap’ by anyone claiming to be competent in this field. In this post, we will try to bust a few of those myths and at the same time, explain a few of those confusing terms which you will hear used often in connection with your house purchase.

To many, the term ‘conveyancing’ itself is a confusing one. After all what exactly does it mean? Put simply, it is the process by which we, as your conveyancing lawyer, help you ‘convey’ or transfer ownership of a property from the existing owner (the vendor) to you (the purchaser) as the new owner. At the same time, in the vast majority of cases, we will also be instructed to act for your bank to register a new security in favour of the bank for loans advanced to assist you with the purchase.

This again is an area where many folk find the terminology used by lawyers confusing. When someone pays off their loan to a bank they will often be heard to declare that they ‘don’t have a mortgage’, when in fact, a distinction needs to be made between having a loan from a bank and having a mortgage in place over the title to the property you own as security for that loan.

You see, when you finish paying off your loan(s) to the bank and you no longer owe any money to the bank, you have in fact cleared or paid off your loan, but the security for that loan is a different issue altogether. The mortgage you hear referred to is the security registered by your conveyancing lawyer to give your bank security for the money it has advanced to you by way of loan. In order for the ‘mortgage’ to be removed once you have repaid the loan in full, it is necessary for someone to write to your bank requesting that the mortgage security be released. Once you have paid off the loan and discharged or removed the mortgage from the title, you can truly be said to be ‘mortgage free’.

In some cases, even though your loan has been repaid, it is still a good idea to leave the mortgage security in place on the title. If, for example, you were contemplating buying an investment property or upgrading the kitchen or the bathroom in your home, you might want to borrow funds from the bank to help with this. Having the mortgage still in place over the title saves you the time and money of registering new security for the further advances, whatever the purpose of those advances might be.

The phrase ‘equity’ is another term which often confuses some people. The equity you have in the property is calculated by taking it’s current market value of your home and deducting any loans you owe to your bank. The net figure you arrive at will represent the equity which you have in your home.

This can become particularly important if you wish to buy an investment property as a part of your retirement plan. In many cases, rather than having cash savings to put toward the deposit, you might borrow against the equity you have in the family home. The purchase price is often therefore 100% borrowed, partly against your ‘equity’ in the family home and then partly against the security of the investment property itself.

If you want conveyancing done well, and everything explained in Plain English by an experienced practitioner with 30 years’ experience offering guaranteed fees at competitive rates you don’t need to look any further. Just enter your details on our contact page and we will get back to you, usually within 24 hours at the latest.

KiwiSaver And Buying at Auction

If you are thinking of buying at auction then there are a few basic things which you need to be aware of. 

For starters, if you are a first homebuyer looking to avail yourself of funding from either or both of the Home Start grant or your KiwiSaver first home withdrawal then buying at auction is not ideal for you. Why not? Well for starters, you cannot begin the process of formally having your withdrawal approved until you have a contract in place. There is always going to be some risk involved in that as a purchase at auction must generally be unconditional. In other words, there are no conditions inserted for your benefit as there generally are when you buy land through a process other than auction. The sort of conditions we refer to are those relating to you arranging suitable finance, approval of a Land Information Memorandum, insurance, building inspection and so on. Non satisfaction of any of those conditions for genuine reasons will give you an ‘out’ and a way to cancel the purchase that you do not generally have when buying at auction.

Secondly, a purchase at auction generally requires a 10% deposit at the fall of the hammer or in other words, as soon as you are confirmed as the successful buyer. Now you can of course enter into an aside agreement with the vendor agreeing to a smaller deposit or a delayed payment of the deposit.That might, of course, make any offer from you look less appealing if there are other offers to be considered.

For reasons stated above, you cannot use your KiwiSaver money for immediate payment of a deposit at auction because you cannot even commence the process of withdrawing your savings until you have a contract in place.

A further issue with KiwiSaver funds is that the provider (the fund manager you have your KiwiSaver with) require your lawyer to obtain an undertaking that KiwiSaver funds be paid, not to the agent, but to the trust account of the solicitor for the vendor and, that we obtain an undertaking from the vendor’s solicitor to hold those funds until settlement and, should settlement not proceed due to the default of the vendor, that they will refund your KiwiSaver funds to us in full so that we, as your lawyers, can pay it back to your provider. This is not necessarily ideal as for starters, the agent usually collects the deposit and once a statutory time frame has been observed, is entitled to deduct their commission from it. The balance of the deposit after commission is then paid to the vendor, who might be needing the same for the deposit on their next purchase.

So, whilst it isn’t impossible by any means to buy your first homeat auction there are a few hurdles to get out of the way if some or all of yourdeposit is coming from KiwiSaver or Home Start funding. For that reason, it is really important that you engage the services of a specialist conveyancing lawyer to assist you with your purchase.

If you miss out on buying at auction you need also be aware that you are likely going to get a bill for anywhere between $300-500 plus GST for the solicitor’s time in appraising and advising you on the auction pack. That is, unless you click on our contact page and take us up on our offer of a FREE review of any auction pack for you. We will provide you with a written overviewof the auction pack and our pledge to you is that if you are unsuccessful, wewon’t send you a bill. Just put your details on the contact page of this websiteand Brent will get back to you within a very short time to arrange the reviewof the auction pack for you.

Are You Able To Buy Land In New Zealand?

With recent changes to the law, we have had a lot of inquiry regarding the recent changes to the Overseas Investment Act 2005, and whether clients are eligible to buy a home in New Zealand. The rules can be confusing, particularly if you are not a New Zealand Citizen. Since 22 October 2018, anyone purchasing land in New Zealand is required to complete a Residential Land Statement relating to whether the transaction requires consent before they can proceed.

An area of confusion is if you are not a New Zealand citizen but are in a relationship with a New Zealand citizen. In most cases, the answer will usually be yes and you will be able to purchase a home. However, we need to temper that by saying that your relationship will almost certainly need to be a qualifying relationship as defined by New Zealand law. This is because there is an exemption if your spouse or partner is a New Zealand Citizen or ordinarily resident in New Zealand – no consent is required.

You can also purchase land in New Zealand if you are ordinarily resident in New Zealand yourself (have a residence class visa and have been living in New Zealand the last 12 months and are a tax resident – have been in New Zealand for 183 days in the last 12 months and tax residency has not stopped).

If you are unsure about your eligibility to purchase a home, feel free to contact your conveyancing lawyer to discuss your eligibility.