When buying and selling property, get professional advice before you sign anything.
Davys Burton's senior partner Richard Pryce said it was easier for a lawyer to deal with problems in an agreement early in the process, than to grapple with them after it had been signed.
"A property transaction, handledproperly, will generally go through smoothly. But, if it goes wrong, it can go wrong in a big way. Get professional advice."
Pryce said many people included conditions such as "subject to finance" or "subject to builders' inspection" in sale and purchase agreements as escape clauses because they had not entirely made up their minds. But it isn't as easy to opt out as they expect.
A buyer is expected to use "all reasonable avenues" to satisfy the conditions.
"You cannot back out of the agreement because one bank says no - you may have to go to several lenders to show you have genuinely tried to get finance."
Pryce describes the cost of a LIM report as "a very good investment" and said taking the cheaper option of looking through the council's property file was "not a good idea".
A Land Information Memoranda, or LIM, outlines all matters known to the local council affecting land and buildings on a particular property, from the potential for erosion and flooding to rateable valuation consents.
"If you get a LIM report from a council, you get everything on the council records about that property. If they make an omission or error, the council is responsible."
Pryce said a search of the property file, held by the council's building section, might not include information from other departments.
The buyer's lawyer has 10 working days to check the title from the time an agreement was signed and Pryce warned investors not to sign an unconditional agreement on a new property during that period if they are relying on money from the sale.
"If you cannot satisfy any complaints they come up with, they can cancel and you are stuck with the unconditional purchase of the other property."
The Rotorua Chamber of Commerce hosted a Property Investment seminar at the Distinction Hotel on March 28. This is the second in a series of Saturday articles based on presentations at the seminar.
