Rachel is a Legal Executive in the property team at Davenports Harbour. She is an Associate member of the NZ Institute of Legal Executives. Rachel and the Property Team manage a wide range of property matters from simple residential sales and purchases through to complex apartment developments, banking security and restructuring.
Jason and Sarah wanted to purchase a property. They were nervous about facing the open market as they were first time buyers. Luckily Ian, Jason’s brother, was selling his home and the opportunity seemed too good to pass on.
Jason and Sarah decided that Ian’s property would be perfect for them as it was a short walk from the beach. They also liked the fact that by buying from a family member they would not have to compete in the property market. Jason and Sarah assumed there would be no issues with the property, as they were simply buying the property from a family member.
The parties signed a private sale and purchase agreement with no conditions. They did not bother to get a LIM, Building Report or have the title checked. These seemed unnecessary costs. Settlement proceeded without any issues.
While living in the home, Jason and Sarah had no difficulties. Five years later, Jason and Sarah were facing pressure to sell the property as Sarah had been offered a new job in Hamilton. When they went to sell the property on the open market, they learnt that the property had significant issues which made it unattractive for potential buyers.
Jason and Sarah were told by a potential buyer that the extension to the house that Ian had carried out some years ago did not have Council consent. Due to the change to the building outline, the cross lease title was now defective.
Had Jason and Sarah obtained a LIM Report, a Building Report and had the title of the property checked they would have been aware of these issues and discussed their options with their solicitor.
The combination of the pressure Jason and Sarah were facing to sell the property and the substantial issues with the property meant that Jason and Sarah had to sell the property at a loss after clearing their debts.
It is important to remember that when buying a property, even if you are buying from your most trusted and dearest, there are certain steps you must take to ensure that your investment is protected. Jason and Sarah’s investment would have been protected had they sought specialist advice in respect of the property.
