When Luke and Yassica’s daughter Mildred decided to purchase a house, Luke and Yassica were keen to support and help her. Then Mildred told Luke and Yassica that she was going to purchase with her partner Jack so that they could combine resources. They were still struggling to be able to afford the sort of house that Luke and Yassica thought they should live in. Luke and Yassica had some savings that they were happy to allow Mildred and Jack to use, so they started thinking about how they could best help Mildred and Jack.
After talking to their solicitor, Luke and Yassica proposed to Mildred and Jack that they would provide them with $25,000 towards their purchase. Luke and Yassica’s solicitor would prepare a simple document that would record that the payment of $25,000 would be a loan to Mildred and Jack. Mildred and Jack would not be required to pay any interest, no security would be taken, but they would need to agree that the loan could be called up at any time. This arrangement gave Luke and Yassica the comfort of knowing that they were helping Mildred and Jack to get into a lovely home, but if Mildred and Jack’s relationship ended, Luke and Yassica would be able to call for repayment of the loan, so that the benefit of their hard-earned savings was kept in the family.
Evoto
Lukes friend Tom was excited to have found a property he wanted to buy and was preparing to make an offer. Having purchased property before, Luke suggested Tom speak with a lawyer before signing anything and passed on his lawyer’s contact details.
When Tom met with the lawyer, he learned about the purchase process and the importance of protecting his assets. Although he intended to buy the property in his sole name, he had not considered the implications of relationship property laws or the need for a Contracting Out Agreement with his girlfriend.
Although Tom wanted to make an unconditional offer to appeal to the vendor, his lawyer advised he needed the following conditions:
- KiwiSaver Approval Condition: To get KiwiSaver approval, Tom’s lawyer would need to send an application to his provider, who could take 10 to 15 working days to respond.
- Finance condition: Tom’s conditional loan approval from his bank was not enough. He needed unconditional approval and time to work through the bank’s conditions.
- Builder’s report condition: Although the property looked in good condition at a glance, there could often be structural issues that only a qualified building inspector would identify.
The agreement was signed and Tom started working through his conditions. The builder’s report identified some major structural issues in the living room and he ended up negotiating a significant price reduction from the vendor.
Tom soon satisfied his conditions, and settlement was complete a few weeks later. He was glad he took the time to work through his due diligence prior to purchasing.
Macayla Brdanovic
