Buying a property? Why you should seek legal advice first!
If you are contemplating buying a home, before you sign an agreement with the real estate agent or bid at auction you should seek legal advice. We have come across many clients who have lamented to us that they did not have the contract reviewed before they signed. This occurs particularly when they discover they are unable to cancel the agreement as easily as they thought when an issue is discovered.
Remember, when you enter into an agreement to buy or sell property – you are legally binding from the time it is signed by both parties. If you are the purchaser, you must make honest and reasonable attempts to satisfy the contract conditions. If you think that you can get out of an agreement by not doing anything to satisfy a condition – for example; the finance condition, you could be in for a nasty surprise if the vendor later attempts to sue you for breaching your obligations under the agreement.
We believe that it is a crucial step as part of the purchase process to seek independent legal advice before you sign along the dotted line. Our team at Turner Hopkins are more than happy to quickly check a draft agreement prepared by a real estate agent and, if required, actually prepare the agreement for you, to ensure that you have the best possible terms to protect your interests. Even though the agreement used is the form produced by the Auckland District Law Society Inc. you may not be aware of the consequences of standard clauses having been deleted or whether to activate the optional standard conditions that are contained in the agreement or add additional clauses to protect your interests.
Our experienced conveyancing professionals can assist you by picking up on any changes which have been made and advising you on the implications. We can also, where necessary, recommend and make amendments to the Agreement. We will discuss the transaction with you ensure that you understand your contractual rights and obligations. It may be that you can raise issues with the vendor regarding elements of the title or Land Information Memorandum (LIM) to see if they will be willing to fix the issue/s or defect/s before you decide to continue on with the purchase. A review of the timing of the contract conditions is also an important consideration.
The minimum conditions in your purchase contract are usually finance approval, LIM, building inspection report, and the sale of an existing home if required. It is still advisable to speak with us to go over your particular transaction as we may have recommendations for other conditions depending on the property you are purchasing.
You may not be aware that as your solicitor we will also be instructed by your bank to act on their behalf and look after their best interests as well. In this role, we are required to inform the bank if we discover any impediments to the bank obtaining a first mortgage over the property or any major building or LIM issues with the property or the legal title. This knowledge may mean that the bank does not see the property as fit security and may pull its finance approval. This would obviously put a buyer in a serious legal predicament if they did not make the contract conditional upon finance approval.
We firmly believe that by engaging us to review and make recommendations on the terms of the agreement, your mind will put at ease, and you will have the comfort that your agreement meets your needs. We recommend that you engage with us as soon as you are thinking about buying. This will allow us to conduct the now mandatory identification requirements under the new anti-money laundering legislation and be ready to provide you with advice as soon as you need it.