Residential Property Information for Purchasers of a Fee Simple Property Part 2
Before you sign an Agreement:
Often, the Agreement is prepared by a real estate agent (Agent). We are happy to review that document before you sign it.
Once you have signed an Agreement:
- However, once you have signed the Agreement the Agent will forward it to us. We will check the Agreement and report to you.
- We will forward you a Purchaser Questionnaire for completion and return to us. That completed questionnaire assists us in determining how you are structuring the purchase.
- This may be an opportune time for you to check you have current Wills.
- We may need to undertake Anti-Money Laundering checks on you if we have not acted for you within the past year, or you are purchasing under another entity (that is, a trust or company), which we have not acted for previously. This means you must provide us with a copy of your passport and a utilities’ invoice.
- If your company or Trust is completing the purchase, we will advise you what other supporting documentation is required.
- If you do not have a current photo ID or your name is different than that shown on your photo ID, please let us know as we will require further information.
- When attending at our office to sign documentation, please ensure you bring a current photo ID (NZ driver’s licence or passport) as we need to sight this and make a copy for our internal records to meet Land Information New Zealand, Law Society, and statutory requirements.
- The title to the property you are purchasing is known as a "fee simple" or a "freehold" property. We will provide you with a copy of the title and advise you if the title discloses any registered easements, encumbrances, restrictive covenants, consent notices, or other documents that may affect your ability to deal with the land freely. If you wish to object to any encumbrance on the title, this must be done within 10 working days from the date of the Agreement. If a requisition is not validly made within that timeframe, you are deemed to have accepted the title as it is. We will advise you if we feel there is a valid reason for requisitioning the title. (A fee simple title is considered the most desirable form of land ownership in New Zealand.)
Land Information Memorandum (LIM)
- If your Agreement is conditional upon a satisfactory LIM being obtained, this must be ordered within 5 working days from the signing of the Agreement. Either you can order this or we can do it on your behalf.
Land and Water Rates:
- Land rates are apportioned in the settlement statement, which is prepared by the Vendor's solicitor. Generally, rates will be shared between you and the Vendor based on the days in the rating year that you both respectively own the property.
- The Vendor's solicitor will usually undertake they have ordered a final water meter reading as at the settlement date and will pay that account from sale proceeds.
- Once the Agreement is unconditional, please arrange for the building and contents to be insured from the date you take possession (usually the settlement date). If you are obtaining mortgage finance, please ensure the interest of your lender is noted against the insurance policy. Please ask your insurer to send us a copy of the Certificate of Insurance as we will need to send this to your Lender prior to settlement. The name of the insured must reflect the purchaser; that is, personal name(s), Trust, or Company.
Tax Statement and IRD number:
- We are required by statute to supply your IRD number when transferring property (unless the property is going to be your main home and owned in your personal names). In any event, a Tax Statement will need to be signed by you before settlement. Without this information, settlement cannot occur.
- If you are purchasing the property in a Trust or Company, you must ensure that entity has a NZ IRD number or settlement cannot proceed. We can assist with the obtaining of an IRD number for you.
- Residential properties are usually sold as GST inclusive. If you are registered for GST and purchasing the property as part of a taxable activity, then we may need to discuss how to treat GST in respect of the purchase documentation. Alternatively, you may wish to take advice from your Accountant.
Prior to Settlement:
- If you are purchasing a property with vacant possession (that is, not tenanted), you are entitled to view the property one time before the settlement date to check that all chattels you contracted to buy are still situated on the property and are in the same condition as they were at the time you signed the Agreement. You should also check to ensure any works that the Vendor was to undertake have been done. Arrange this inspection with the Agent. We suggest you do this inspection as close as possible to the settlement date.
- We will contact you once settlement has been completed; so that, you can liaise with the Agent about uplifting of keys, garage remotes, alarm codes, and such like. Sometimes, one set of keys and the alarm code (if applicable) is left with the Agent with any other keys left inside the property.
- Unfortunately, we cannot predict exactly what time settlement will occur as we are dependent on outside influences. We suggest you remain flexible and call us should you have any queries as to how your settlement is progressing.
- This may affect residential property other than your main home. Simply put, selling a property that is not your main home can result in liability for income tax charged on any profit made re-selling a property before the expiry of the Brightline period (the length of which differs depending on when you acquired the property and could be 2, 5 or 10 years) from the date of acquisition. You can only have one main home at a time. This is a complicated issue; therefore, seek advice from either your Accountant or us if you feel this may affect you.
Who can buy land in New Zealand?
Only the following groups can buy new or existing property in New Zealand without restrictions:
- New Zealand citizens
- New Zealand permanent residents
- Australian citizens
- Singaporean citizens
All other nationalities are subject to restrictions on buying ”residential” or ”lifestyle” property and may require consent from the Overseas Investment Office (OIO). The OIO has published some useful guides about the restrictions. Generally, an application to purchase residential land or lifestyle properties are unlikely to be granted.
If you hold a residence-class visa but you haven’t yet arrived in New Zealand or you’ve been in New Zealand for less than 183 days in the previous year, you will need to apply to the OIO for consent to buy property, commit to living in New Zealand for at least 183 days in the following year, and be a tax resident.