Property conveyancing costs

WITH MARY HOLM

Q: As a cash buyer off the street, I recently purchased a section after negotiation. The asking price was $5000. I offered and bought at $3500.

A cheque for $3500 was given to the real estate agent, and the sale and purchase of property form was duly signed by both parties.

The real estate agent then proffered the view that the purchaser - me - was liable for and had to institute the conveyancing fees. Since lawyers' quotes were in the $600 to $800 bracket, I refused.

What is the law, what is the usual protocol and who should pay?

A: It's heartening to know you can still get a piece of land for a few thousand bucks. Needless to say, you're not writing from Auckland, but a small town.

In answer to your question, both the buyer and seller - I prefer "seller" to "vendor", because everyone knows what it means - usually pay conveyancing fees.

Each has responsibilities, and each usually hires a solicitor, says Stephanie Tait, a partner in the Conveyancing Centre.

In most cases - but not in yours - the buyer pays a 10 per cent deposit. His or her solicitor then has 15 days to check the title.

This means making sure the seller has the right to sell, and that nobody else has rights over the land, says Tait.



The solicitor also explains any building restrictions. There may be "onerous" local authority requirements, which is why nobody has already built on it.

The buyer's solicitor also provides a registrable transfer to the seller's solicitor.

Then, on settlement date, the buyer's solicitor arranges for the payment of a bank cheque for the balance of the purchase price. She or he also collects the documents, and lodges them at the Land Transfer Office for registration.

Meanwhile, the solicitor for the seller has to make sure the title is clear, prepares the settlement statement, discharges any mortgage, and tells the local authority and Valuation New Zealand of the change in ownership.

As you're buying without a mortgage, you could do your own conveyancing, says Tait.

But there might be a rather steep learning curve. Realistically, you're probably in for a lawyer's fee. And, while $700-odd does seem high as a proportion of your purchase price, you might not have much choice.

The trouble is, as Tait puts it, "there's the same amount of work whether it's a $1 million or $5000 property. There's the same duty of care."

She adds that the buyer's solicitor has to do more, so his or her legal bill is usually higher than the seller's.

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