Irrespective of whether you are a home seller or a home buyer there are several important matters in a property transaction that need to be addressed to ensure that the sales process proceeds without any major problems. Taking certain steps before a sale and purchase is consummated by a legal agreement should avoid disappointment and eliminate any grounds for frustration and costly litigation between the parties. Buying a property should be a satisfying experience and observing the matters covered in this article should go a long way towards achieving a good outcome.
Being a home seller carries a number of obligations under the banner of ‘Vendor Disclosures’. This is a topic that has been covered previously but the implications of not fulfilling the vendors’ and the agents’ obligations of disclosure are probably the most common starting point for complaints and disputes. In simple terms, any matter that may influence the buying decision of a potential home buyer should be disclosed. An agent acting for a home seller is obliged to disclose certain matters to prospective purchasers whether they ask about them or not. Staying silent regarding a past or potential problem with a property does not absolve the agent from their responsibilities.
This may appear straightforward but an agent must firstly be informed of the problem and then have the home seller’s approval to make a full disclosure. If this approval is not forthcoming, agents are advised to withdraw from the sale process. A vendor’s obligations of disclosure are far reaching but some of the more common items are listed below:-
• Water tightness is a common one. Any known issues must be disclosed.
• Lack of Building Permits or Code Compliance Certificates for repairs and alterations is a common grey area.
• Any known issues of subsidence or ground instability.
• Adjoining or nearby developments that may impact on the sunlight, view or general enjoyment of owning the subject property.
• Confirmation that there are no outstanding notices or demands from any local or government authority or other statutory body.
• That any chattels are in reasonable working order (fair wear and tear excepted) and that the chattels are free from any charges or encumbrances.
• That there are no arrears of rates, water rates or similar charges.
• That there are no outstanding issues relating to compliance with the Building Act or Resource Management Act.
Vendors of properties that come within the ambit of the Unit Titles Act (and this embraces most apartment buildings) have even greater responsibilities of disclosure when selling. Irrespective of the nature of the property being sold, our recommendation is to take advice from a competent agent and from your solicitor.
As a prudent home buyer you should look carefully at the list of items above and ask questions until you are satisfied that what you are buying is problem free. After all, you don’t want to be taking over the present owners problems! A prudent home buyer may also consider the following:-
• Is it necessary to have a condition in your sale and purchase agreement to allow for a period of ‘due diligence’? This could include obtaining a builder’s report, an engineers report or other independent opinion regarding aspects of the property.
• Is a Land Information Memorandum (LIM) report available? If not it may be advisable to obtain one.
• Is the property insurable? No insurance cover will usually mean funding will be withheld so it is prudent to check that adequate insurance cover is available before concluding the transaction.
These matters are even more important when you are making an unconditional offer or if you are buying a property “as is where is”. A sale of this nature occurs from time to time particularly in the case of a property that has had some obvious structural or watertight issues or other problems. Often when a home is being sold by representatives of a deceased estate through their solicitors or with a mortgagee sale, the vendors will contract outside the normal vendor warranties so as a buyer it is essential to know exactly what you are buying and any associated problems that you may inherit as a new owner.
All of these matters are dealt with regularly by a busy and successful agent and we urge both buyers and sellers to take advice from your agent and solicitor thereby enjoying a trouble free property transaction.