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.
