Are you buying an Apartment in New Zealand? Are you clear on what you need to know before you enter into a contract? This week the Queen City Law team look at more property dangers and what to look out for when you are buying an apartment. We have written extensively on apartments click here to read more on apartments.
There are a lot of apartments in New Zealand especially Auckland. There are numerous developments that are currently underway and given that there is excess demand for residential houses in New Zealand, it has become one of the most popular forms of investment for both local and overseas investors. And the election is over and many commentators are expecting this sector to boom.
Most apartments fall under the unit titles regime, which is the most widely used form of property ownership and involves private and common property ownership. Currently, the main legislation which governs this structure is the Unit Titles Act 2010 (“the Act”), which came into force in 2010. Based on the Act, the body corporate management system gets created and each owner becomes a member of the body corporate for the whole unit title development.
If you are intending to purchase any property which is under this unit title structure, it is important that you have a full understanding of this unique structure and undertake a full and detailed due diligence investigation prior to making your final commitment. Check out more on our Real Estate and Property Development Services here.
In addition to the purchaser’s usual due diligence investigation (which includes building inspection, LIM report review, property file review, engineering report review, valuation report review etc.), we would also recommend a prospective purchaser to review the following information (non-exhaustive):
- Pre-contract disclosure statement (which is the information that the owner (as vendor) should provide before entering into any sale contract) and Additional disclosure statement (which can be requested by the purchaser as this will provide additional information including detailed financial information concerning the body corporate);
- Minutes of the body corporate – including Annual General Meetings, Extra Ordinary Meetings, Committee Meetings and any other special purpose committee meeting minutes. For this information, we would say “the more the better” as this should provide any current and historical issues concerning the body corporate;
- Financial statements including budgets;
- Long Term Maintenance Plan which should have been prepared and adopted by the body corporate.
- We would also suggest a review of any current and future maintenance or repair plan; Information concerning earthquake strengthening issue – e.g. IEP report;
- Operational rules – There should be new rules (if not a draft) adopted after 1 October 2012. This should be carefully reviewed as this will affect the common area usage also.
- Any current or historical claim or dispute – including any weather tightness issue(s). Given that a lot of (if not most) apartments in Auckland are or have been subject to leaky building or weather tightness claims, it is important that, proper advice is sought (including the issues concerning the assign-ability of the claim and legal implications in relation to your future rights and remedies) before you enter into any agreement.
Are you buying an Apartment in New Zealand? Are you clear on what you need to know before you enter into a contract?
Again, we emphasise that the list is not exhaustive and given that there are other factors which you need to consider as part of your acquisition proposal, it is important that you (as the prospective purchaser):
- seek advice from appropriate experts including lawyers;
- undertake a suitable due diligence investigation as outlined above before signing any unconditional agreement or before declaring the agreement unconditional in all respects.
- If not, a prospective purchaser can include simply a broad due diligence condition with suitable timeframe in the sale and purchase agreement and go over potential issues before making the agreement unconditional.
Queen City Law are uniquely positioned to help, with its language skills which include Mandarin, Cantonese, Korean, Indonesian, Tagalog, Spanish and of course English coupled with its intimate knowledge of the Auckland property and development sector .
Queen City Law has several of its lawyers listed as providing real estate services in accordance with the provisions of the Lawyers & Conveyances Act 2006.
Again, we have been involved with many of Auckland’s high rise development projects and acted for both countless vendors and purchasers in relation to the body corporate units. Therefore, it is important when you come and talk to us if you are considering to purchase any body corporate unit in the future.
We offer this service at our firm and if you want to act prudently and be well informed you should definitely consider seeking our advice before any action is taken.
Our fees are highly competitive and we can also assist with structuring your purchase and we also suggest that you click on Legal Checklists in our Practical Law Library as you will find useful information there which will assist you.
Our residential conveyancing team is one of the best in town and we would hope that we can make the process as smooth and painless as possible for you. On the other hand if you require assistance with negotiations, disputes and so on we are here and ready to help. Our team will put in the extra yards if this is required.Contact Us