Buying your first home - the legal steps to settlement

OneRoof paper houses. Picture / Jason Oxenham.

Purchasing your first home is a hugely exciting journey, and the feeling of having your name on the title and being able to redecorate withhold checking with a landlord is second to none.

However, because first home buyers haven't been through the process before, many are confused by the process and are unsure of what to expect.

Once you have been to the property viewing and decided to make an offer, the usual first step is for the real estate agent to send the contract (called an Agreement for Sale and Purchase) to your lawyer for checking before you sign.

Your lawyer will advise you on which purchaser conditions are necessary, which are usually finance, obtaining a builder's report, approving the title, and checking council records.

If you have suspicions about previous occupants of the property, then a toxicology report condition is also recommended.

Once the contract is signed, you will have a set amount of time to satisfy the purchaser conditions (usually 10-15 working days), and if you do, then your lawyer will confirm the agreement unconditional, and you will pay the deposit and start making preparations for settlement.

If you are withdrawing KiwiSaver funds for the purchase, or obtaining a First Home Grant from Kainga Ora (which is a grant of up to $5000 based on the property price and other factors), then you will need to sign those documents with your lawyer before settlement.

Because of the timeframes involved, it is important to make your lawyer aware at the outset if you are using either KiwiSaver or the grant.

Your bank will also send your loan documents to your lawyer, who will meet with you to explain the terms of the loan and the mortgage (the security the bank takes over the title).

Clients are often surprised at just how many powers the bank reserves to itself under the mortgage.

In the days before settlement, you will need to arrange to have your insurance in place, and to do a final pre-settlement inspection with the agent to ensure there hasn't been any damage to the property since you viewed it at the open home.

On the day of settlement, the bank pays the loan funds to your lawyer, who will also use any KiwiSaver or First Home Grant funds, and any cash you put towards the purchase, to pay the vendor's lawyer.

Settlement is then complete, and you are free to collect the keys and start unpacking!

Richard Small is a senior solicitor at Jacobs Florentine. The information above is general only and cannot replace specialist advice. The writer accepts no responsibility or liability for reliance on, or use of, this article.