Legal issues for first home buyers [Apr 2008]

Research, research, research – there is simply no substitute for research into a variety of different issues for first home buyers.  Buying your own home is the single most important and expensive investment buyers will ever make.  It should not be done on a whim but after very careful consideration of a whole broad range of issues. 

The sort of issues that should be researched by a first home buyer covers a broad range of both legal and non-legal topics.  The sort of topics that might be included in research by first home buyers are as follows:

1                     Where to live and what sort of house to live in.  In other words, do we need a house or will an apartment do?  How many bedrooms are required?  What sort of schooling do we need now or maybe in a few years time?  Do we need a big/small section?

2                     What can we afford on our incomes?  How much will a bank lend?  How much can we borrow?  How much cash can we save and how long can we wait?

3                     Who do we get to help us with these issues?  You will need:

(a)                 A real estate agent;

(b)                 A mortgage broker;

(c)                 A valuer;

(d)                 A building inspector;

(e)                 A lawyer.

In many respects, lawyers who act for first home buyers on a regular basis have a network with all sorts of people, some of whom are mentioned.  So, the very first thing to look at is getting someone who has been through the process, is entirely objective and can cover off all of the bases.

Issues that a lawyer can assist you with are such issues as:

§         Selecting the right person to help with all the various tasks;

§         Explaining the contract process thoroughly and in non-legal terminology;

§         Providing ideas of costs and expenses;

§         Talking about the other issues that need to be looked at, such as finding a good insurance agent, finding a good house-mover, getting a building inspector organised and arranging a Land Information Memorandum from the Council.

In the above you will see that there are a huge number of matters that you need to look at.  One of the most important parts of all this process is for first home buyers to understand the process step by step.  Also to understand what the terminology means.  Many experts will use terminology that first home buyers may find unfamiliar, e.g., "conditional" or "unconditional" – what do those terms mean?

From experience many first home buyers setting out do not have an in-depth appreciation of the steps that need to be taken.  If they were to take time to work out what those steps were in a conveyancing transaction then they would be able to deal with those steps as they go through.  Many lawyers who act for first home buyers on a regular basis will appreciate this and will explain those sorts of issues to first home buyers, often at no cost at a first meeting. 

The New Zealand Law Society publishes a very useful pamphlet called "Buying or Selling a Property – Do the Right Thing and See your Lawyer First".  This sets out many of the issues in very simple language.  In many ways it is prepared with the first home buyer in mind.  Contact your local lawyer and ask them to obtain a copy for you off the New Zealand Law Society – Property Law Section website.

Remember, there is no substitute for research and preparation and never ever sign a contract without understanding what you are signing or obtain advice first.

For more information contact Tim Jones at .(JavaScript must be enabled to view this email address)

The contents of this newsletter are of a general nature only. While the information is believed to be correct no responsibility is accepted for its accuracy. Readers are advised to establish the applicability of information in relation to specific circumstances and not to rely solely on the text of this newsletter.

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