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Saving to buy your first home is always a challenge. Unfortunately, Budget 2018 hasn't provided much for first home buyers.

Budget 2018: no changes for first home buyers

May, 2018

While Labour was vocal on the campaign trail about helping people into their first home, there’s not much for those people to get excited about in this year’s Budget.

Getting into your first home

There are no direct initiatives to help prospective first home buyers in Canterbury, though there are a few measures which will help some in other parts of the country, and others which might dampen rising costs in the years to come.

KiwiBuild

KiwiBuild aims to build 100,000 affordable homes for first home buyers in the next 10 years. The Budget revealed that the Government will put $234.4m towards building 6400 new homes over the next four years.

Unfortunately, KiwiBuild isn’t seeking proposals for developments in Canterbury, so it’s unlikely this will do much for first home buyers down this way.

That’s about all that’s come directly from the Budget. There are a few other initiatives announced recently which might work to dampen the property investment market, which will in turn make things a little easier for first home buyers—but it’s still not much in the way of help.

Foreign ownership restrictions

In December 2017 the Government introduced a bill to amend the Overseas Investment Act 2005, which would have the effect of preventing non-residents from buying existing residential property.

The Bill is currently at Select Committee stage, with a report expected back in June.

Should the Bill pass in its current form, this may reduce demand and competition for homes, leaving more opportunities for first home buyers here. But it’s far from a guarantee.

Extension of the bright-line test

The bright-line test is used to figure out if you need to pay tax on the sale of residential property.

Essentially, it’s about whether you bought a property with the intention of selling it quickly for a profit. If you bought a property between 1 October 2015 and 28 March 2018, you would need to pay tax on its sale if you sold within two years, unless:

  • it’s your main home
  • it was transferred to you as part of an inheritance
  • or it was transferred to you as an executor/administrator of a deceased estate.

That test isn’t changing much—but it is being extended. If you buy a property after 29 March 2018, the bright-line test is now for properties sold within five years.

That may dampen property speculation, and therefore again reduce competition for first-home buyers.

Ring-fencing losses on residential property

Finally, the Government is considering loss ring-fencing rules, which would prevent property investors from offsetting losses on property investments against other income.

The aim is to “level the playing field” between investors and home buyers. At the moment, investors can offset the cost of servicing their mortgages with reduced tax on their other income sources, which makes purchasing properties easier.

The Government expects that this will also reduce competition and potentially slow rising house prices.

Still uncertainty for first home buyers

Most of these initiatives look to dampen the housing market generally—but that will take time, and first home buyers in particular might feel reluctant to dive in until the effect of the changes are known. It’s not as certain as, say, National’s campaign promise to double the HomeStart grant.

But that doesn’t mean holding back is always a good idea. If you’ve been thinking of buying your first home, have a chat with us. We can help you consider your options, and figure out what your next steps should be.

And if you’re already planning on buying your home, then we’re only too happy to help you get in the door. Talk with us about getting all your legal needs sorted.

Talk with us about buying your first home

Surrogacy in New Zealand

October, 2017

No Commercial Surrogacy

Surrogacy is the conception method by which a woman agrees to carry a pregnancy for a different couple who will become the parents after the child’s birth. In New Zealand, it can be extremely difficult for couples who have trouble conceiving to move forward with a surrogacy arrangement.

Surrogacy is legal in New Zealand where the surrogate mother donates her services altruistically, with no payment made other than the coverage of related and reasonable expenses by the intended parents. However, under the Human Assisted Reproductive Technology (“HART”) Act 2004, it is illegal to give or receive valuable consideration for a surrogacy arrangement. This means that commercial surrogacy, where surrogate receives compensation in addition to expenses, is illegal.

Approval Process

While the HART Act addresses commercial surrogacy, it is not legislation specifically aimed at dealing with surrogacy arrangements. New Zealand does not have such specific legislation, which has led to the HART Act encompassing all surrogacy cases.

In order to enter into a surrogacy arrangement, approval from the Ethics Committee on Assisted Reproductive Technology must be obtained. This Committee will determine, among other mandatory considerations and requirements, that:

  1. Where there is one intending parent, he or she will be a genetic parent of any resulting child; or
  2. Where there are two intending parents, at least one will be a genetic parent of any resulting child; and
  3. There has been discussion, understanding, and declared intentions between the parties about the day-to-day care, guardianship, and adoption of any resulting child, and any ongoing contact; and
  4. Each party has received independent medical advice; and
  5. Each party has received independent legal advice; and
  6. Each party has received counselling in accord with the current Fertility Services Standard.

Further Hurdles

Even if this approval has been obtained and the surrogacy arrangement entered into, prospective parents may still face certain difficulties.

The Status of Children Act 2004 provides that the birth mother of the child, the surrogate, is the child’s legal mother irrespective of the genetic origins of the child, and the legal father is the surrogate’s partner if he has consented to the surrogacy. Accordingly, under the Adoption Act 1955, the genetic or intending parents must adopt the child after it is born to have any legal relationship with the child.

The complexity and lack of specificity in the law has led to a wide-reaching debate, and reform has been suggested by many commentators and experts. Specifically, reform to allow commercial surrogacy has been encouraged.

Sperm & Egg Donors

Many people who choose to go through the surrogacy process also require the donation of genetic materials such as sperm and eggs. Donations can be made directly to a person, or can be donated to a fertility clinic.

Much like a surrogate mother cannot be paid for her services, sperm and egg donors are also unable to receive compensation. However, costs incurred in donating can often be compensated.

When a person donates their sperm or eggs, they must provide certain identity information to the fertility clinic to which they donate. This information is entered onto the HART register, which allows people conceived from donated sperm or eggs to find out information about their genetic origins.

Commercial Surrogacy through Overseas Arrangements

The ban on commercial surrogacy has led to many prospective New Zealand parents entering into international commercial surrogacy arrangements. This is where intending parents in New Zealand enter into an agreement with a surrogate mother in another country.

As there is no specific legislation in New Zealand that addresses international surrogacy arrangements, in all cases where couples arrange for a child to be born overseas and brought back to New Zealand, all New Zealand law will apply.

The frequency of this has led to the Ministry of Immigration and the Ministry for Vulnerable Children issuing a guide on the issue, as well as warnings to parents.

< https://www.mvcot.govt.nz/adoption/surrogacy/>

<https://www.mvcot.govt.nz/assets/Uploads/Documents/information-sheet-international-surrogacy.pdf>

The Ministries have also advised that prospective parents should avoid entering into agreements with certain countries, including India, Thailand, Mexico, Nepal and Cambodia. These countries are considered high risk, due to the lack of regulation surrounding surrogacy or, conversely, the restrictive laws.

Issues with International Arrangements

One of the primary issues in international surrogacy arrangements is the nationality of the child. It is common for the country in which the child is born to fail to recognise the child as a national. The laws surrounding surrogacy are often unclear and contradictory in relation to the child’s legal parentage and nationality. While the country of the child’s birth may recognise the genetic or prospective parents as the child’s legal parents, New Zealand does not. Children born via international surrogacy arrangements do not meet the criteria for New Zealand citizenship by descent, and thus one of the only ways that the intended parents may become the child’s legal parents, and the child a New Zealand citizen, is through adoption.

New Zealand is bound by the Hague Convention on Protection and Co-Operation in Respect to Intercountry Adoptions, which applies “where a child who is habitually resident in one Contracting State… has been, is being or is to be moved to another Contracting State”. While these enactments deal with international adoption and not specifically with international surrogacy, they have been used by the New Zealand courts where the child has already been brought back to New Zealand by the intending parents to go through the adoption process.

The Family Court has tended to find that intercountry adoption requirements do not apply in such cases, as the child born in an international surrogacy arrangement is intended to have the same habitual residence as the intended parents, not where the child was born, which is often the surrogate mother’s habitual residence, as they often do not have legally identifiable parents in that location. Further, the Convention on the Rights of the Child states that, in adoptions, the best interests of the child are paramount, especially where there is intercountry adoption. The best interest of the child will often mean that they should be with the intended parents.

Preparing for the Disputes Tribunal – What You Need to Know

October, 2017

Amount of Claim

The Disputes Tribunal is a useful tool to determine a dispute that is up to $15,000 (increased to $20,000 with the agreement of all parties). The purpose of the Tribunal is to provide for the litigation of disputes at a low cost.

There must be a genuine dispute before the matter can be heard. It is important that you collect evidence that proves there is a dispute and that the other party is aware of your claim.

A party can seek a declaration that they are not liable for a claim based on contract or quasi contract. This is valuable if you are facing a demand from a debt collecting agency. However, there is the risk that if your application is denied the Tribunal may order you to pay the debt.

Types of Claims

The tribunal can deal with:

  • claims in contract and quasi contract;
  • claims in tort relating to the destruction or loss of personal property but not loss that is purely financial;
  • Statutory claims;
  • claims involving implied contractual terms;
  • consequential loss such as the cost of a rental vehicle in a car accident claim;
  • Interest claims where a contract provides for it.

The Tribunal cannot determine disputes relating to:

  • Land;
  • Estates;
  • Goodwill of a trade or business;
  • Any chose in action; for example a debt that is assigned to a third party;
  • Trade secrets and intellectual property.

You can make an application online at www.disputestribunal.govt.nz  The website is a helpful starting point.

How we can assist you in the process

Canterbury Legal can provide you with an assessment of your claim and advise you whether pursuing it in the disputes tribunal is a sensible option. We can also assist you in setting out your claim and ensure you are fully prepared for a hearing. In doing so we would consider the:

  • Strength of your evidence and what could further strengthen your claim including witnesses that should be called;
  • Submissions to ensure that your story is told in the best light;
  • Key issues and evidence to ensure that they are all identified;
  • Identification and summary of relevant law to be explained in your terms;
  • Relief that you are seeking or a defence that you can rely on.

Filing a Claim

This should be carried out by you after consideration of the above. Claims can be filed:

  • Online at https://forms.justice.govt.nz/forms/uicomponents/7407267
  • By post. The forms can be printed at https://www.disputestribunal.govt.nz/assets/Documents/Forms/DT-form-1-claims-form.pdf
  • Filing Fees payable to the Tribunal at the time of filing depend on the amount in dispute and are as follows:
  • Less than $2,000.00 – $45.00;
  • $2,000.00 to $4999.00 – $90.00; and
  • $5,000.00 or more – $180.00.

Insured Property

Where an applicant and/or respondent is insured for the property that is damaged the insurer must be notified of the proceedings. The insurer will become a party to the proceedings but may waive its right to appear. The insurer may bring a claim where it has paid out to its client or abandon its rights in which case the claim will focus on the insureds unpaid losses which may include an excess payable and loss of no claims bonus.

Support Person

You are allowed to bring a support person but they may not address the Referee unless invited. They cannot be a lawyer or someone who undertakes advocacy work. Former or retired lawyers are excluded.

Presentation

You need to be organised to eliminate stress and arrive in plenty of time in advance the hearing. This includes knowing where the tribunal is situated and what parking options are available. There may be tele conferencing or video conferencing involved and you need to be prepared for this. The hearing will almost certainly be recorded so it is important what you say and how you present. Consideration should be given as to what clothing you wear.

Also consideration needs to be had as to what paperwork you are producing. These need to be in multiple copies for producing to the Referee and other parties. If the documentation is extensive it should be collated and paginated for easy reference.

If you are intending to produce electronic documents and photos, videos or sound recordings you need to bring your own laptop or device.

Hearing Process

Often the process will be as follows:

  • The Referee makes an introduction and requests the parties to introduce themselves explaining how the hearing will proceed;
  • An opening statement is made first by the applicant and then by the other parties;
  • The referee will then seek to identify both the issues and the legal position;
  • Following that the Referee will inquire in to each issue and review the evidence. They will also explain the applicable law as they see it;
  • Witnesses will then give their evidence usually one by one with the others waiting outside. All parties including the Referee can question witnesses;
  • The Referee will usually try to facilitate a settlement. This may involve short adjournments where the parties can consider their positions.

Orders and Awards

The Referees have a wide range of powers and can order:

  • Monetary payment from one party to any other party;
  • A declaration that a person is not liable to another in respect of a claim or demand;
  • A party to deliver specific property to another party;
  • A work order requiring certain work to be undertaken in conjunction with a money order which enables the claimant to choose either where the work order is not complied with;
  • Variation or setting aside of any agreement between the parties;
  • That the claim be dismissed;
  • Payment of interest;
  • Costs in limited circumstances.

Enforcement

Orders of the Tribunal are enforceable in the same way as an order of the District Court. Settlement Agreements are treated as an order of the Tribunal and are similarly enforceable.

Rehearing and Appeals

An application for rehearing should be lodged within 28 days of the making of the order or award. Grounds for rehearing include:

  • A party not receiving notice of the hearing date;
  • A party or a witness missing the hearing for a valid reason;
  • The Referee making an error in the order for payment of money;
  • New information that affects a settlement agreement approved by the Referee.

There is a right of Appeal to the District Court where the proceedings were conducted in an unfair manner which prejudicially affected the outcome. The application must be made within 28 days of the order or award and is filed by post with a filing fee of $250.00 payable.

Assistance

If you require assistance with all or any of the above please contact Holly Weston or David Ballantyne.

Are Your Terms of Trade Giving You the Protection You Think?

August, 2017

This is a question that Justice Nation was somewhat indirectly asked to decide in his recent decision in Thorn v United Steel Ltd [2017] NZHC 1865.

The background can be set out relatively concisely. United Steel Ltd (“United Steel”) was approached by Mr Thorn to provide steel to one of his companies. As you would expect, before United Steel agreed to provide the steel, it required Mr Thorn to sign a comprehensive credit application that set out United Steel’s terms of trade, and provided for him to guarantee and provide security for his company’s trade account.

United Steel’s terms of trade were in a relatively standard form. They contained a clause under which Mr Thorn agreed to provide, as security for his company’s account, all rights, title and interest in any property he held, either alone or jointly, and authorised United Steel to lodge a caveat against the property and appointed United Steel to be his attorney for this purpose.  United Steel’s terms of trade went a step further, and extended to Mr Thorn authorising United Steel to act as his attorney to create a mortgage charge on his property if the caveat was not possible or if the mortgage charge was necessitated to protect United Steel’s interests.

Not surprisingly, when the company’s account became in default, United Steel instructed its solicitors to lodge a mortgage against Mr Thorn’s interest in his property, and its directors signed an Authority and Instruction form to that effect acting under the power of attorney given to United Steel by Mr Thorn.

While it was not raised in Mr Thorn’s application, his Counsel submitted that the combined effect of s 12 and 157 Land Transfer Act 1952 and s 9 Property Law Act 2007 required the appointment of United Steel as Mr Thorn’s attorney to be by deed, and that, as Mr Thorn’s signature to the credit application form was witnessed by an employee of United Steel, it was not a valid deed, and could not be relied upon by United Steel’s director for the purposes of signing the authority and instructions (“A & I”) form for its solicitors to register the mortgage.

Justice Nation agreed with the submission and held that United Steel could only authorise the electronic registration of the mortgage over Mr Thorn’s interest in the property if it had been appointed as his attorney by deed, and that, as the terms of trade were not executed as a deed, the mortgage was invalidly registered.

In the decision, there was no question about whether United Steel had the right to register a caveat. Ultimately then it is not clear what impact this decision will have on the ultimate outcome of the case and Mr Thorn remained liable as a guarantor.

However, there are some timely lessons to be learned for any entity that has a similar provision in their terms of trade.

  1. Ensure that the customer’s signature is not witnessed by employees, but an independent witness;
  2. Ensure there is adequate provision in the terms of trade for witnesses to sign as witness and state their name, occupation and location;
  3. Ensure that the customer is delivered a copy of the signed terms of trade; and
  4. Ensure you have an adequate process or checklist in place for ensuring that your terms of trade or credit application is properly signed and witnessed before providing credit or goods.

 

If you think your terms of trade might need updating, please feel free to get in touch with us. Contact either Clive Cousins or David Ballantyne.

Josh’s Experience with Canterbury Legal

July, 2017

What made you want to own your own home?

It’s the classic Kiwi dream to own your own home. Aside from that, it is a good investment and I’d put it down to a few main reasons from a financial stand point. Having a roof over your head is a necessity and renting is a sunken cost. Houses generally appreciate over time at a faster rate than interest rates so I gain more than I would having savings in a bank. I also have the opportunity at my age to have flatmates to help out with the mortgage payments. I expect as I get older and priorities change this won’t be an option.

What was the hardest part about buying your house?

Finding a house to tick as many boxes as possible. I searched for almost a year before finally signing on the dotted line. In this time I saved a lot more, allowing me to increase my expectations, but it was a hard graft attending open homes almost every weekend only to decide that the houses were either out of reach financially or had no potential. The whole exercise was a roller coaster of emotions

What was the most rewarding step?

Going to the auction fully prepared and coming away with the desired result. I learned a lot from the whole experience and was very pleased with the outcome. Prior to the auction I had Jim Eddy at Canterbury Legal look over the auction documents and explain the process. This was really important because once you have won an auction you don’t have the chance to change the sale and purchase agreement. You need to make sure that everything is in order beforehand.

Is there any advice that you would give to other prospective first home purchasers?

Do your research; find out what’s involved financially. Visit a huge number of houses – even if you know a house isn’t the right house it will help you understand the market. Talk to those who have done it before and attend first home buyer seminars.

Did having a lawyer assist you make a difference in your understanding of the process?

Yes. The team at Canterbury Legal guided me through the process step by step. Aside from sorting the paperwork, Jim Eddy helped me understand the requirements and the potential issues that may arise with the property purchase.

Link to First Home Buyers Guide

 

For enquiries please contact:

 

Jim Eddy, Property Lawyer

L +64 3 377 0792

M +64 21 329 381

jim@canterburylegal.co.nz

 

 

 

 

 

Methamphetamine Affected Residences

July, 2017

P LABS

The manufacturing and use of methamphetamine more commonly known as P or meth in residential homes has become a huge problem for New Zealand landlords and home owners. People exposed to even small amounts commonly experience rashes, headache, nausea, dizziness, fatigue and shortness of breath. The research on the long term effects of second hand meth is scarce. However, it is assumed that small doses of the drug would have the same negative effect as for users,  but on a lesser  scale.

NZ STANDARD

The Standard for the testing and decontamination of Methamphetamine Contaminated Properties has just been released by Standards New Zealand. The national standard is not mandatory as it has not been included in legislation.  For the time being it can only provide “best practice” guidance .  If any litigation involving meth testing or contamination were to be considered by the Courts, it is likely that  the Standard would be highly influential .

The maximum contamination levels allowed under the new Standard have been set  in line with  standards worldwide. The maximum levels for a property to remain habitable without requiring further decontamination are as follows:

  • 1.5 microgram (µg)/100 cm3 in any high use areas;
  • 3.8 microgram (µg)/100 cm3 in any limited use areas.

A high use area is defined as an area easily accessed and regularly used by adults and children and includes living areas and bedrooms .

A limited use area is defined as an area that is likely to be accessed only by adults and for short periods of time such as crawl spaces, wall cavities and underfloor areas.

Under the Standard there must now  be a clear separation between those who test for contamination and those who are involved with its cleaning and remediation - this removes any possible conflict of interest.

THREE STAGE PROCESS

Meth testing now involves a three stage process:

The first stage involves a screening assessment by a qualified NZQA tester using the appropriate testing equipment. If that assessment shows a positive result then a detailed assessment must be undertaken.

A detailed assessment is undertaken on a room by room approach by an accredited sampler who will determine the exact level of meth present.  A detailed assessment report will then be provided.

Where the assessment shows that a property is contaminated above the limits previously specified, decontamination will need to be carried out.  A further test will  be undertaken by the accredited sampler to confirm the effectiveness of the decontamination work.

DUE DILIGENCE

This process  can result in significant expense if a property is found to be contaminated above the specified  levels.  To avoid this, anyone purchasing a property should consider a screening assessment as part of their due diligence. Ideally you should include a specific due diligence condition relating to meth testing in the agreement for sale and purchase.

A Land Information Memorandum (LIM) cannot be relied on to provide any information regarding contamination of a specific property, as the Council can only act where it has received information regarding the property. Often, that does not happen.

LANDLORDS

Landlords should also consider meth testing. Section 45 (1) (a) of the Residential Tenancies Act 1986 (“the Act”) states that “the landlord shall provide the premises in a reasonable state of cleanliness” and “the landlord shall comply with all requirements in respect of buildings, health and safety under any enactment so far as they apply to the premises”.  The Act creates a  presumption of  basic habitability.

To protect their investment it would be prudent for a landlord to have a screening assessment undertaken whenever there is a change of tenants. A negative test at the start of a tenancy and a positive test at the end will help place liability on the tenant. A lack of baseline testing would make it very hard to prove the liability of the tenants. The use of tenancy agreements that will allow for the testing of meth during a tenancy is also highly recommended.

Are you interested in investing in residential property in New Zealand? There may be tax consequences for you.

September, 2016

The Taxation (Bright-Line Test for Residential Land) Act 2015, took effect from 1 October 2015.

The changes mean that if you buy and sell residential property within two years after 1 October 2015 any gains made during that period may be taxable.

There are some exceptions. The new rules won’t apply to your main home, i.e. the home that is used as the principal place of residence by you or your family unless:

  • you fit the definition of an offshore person (includes a NZ citizen who has not been in the country in the 3 years prior to the sale);
  • you have multiple main home sales within two years (2 or more sales);
  • you are a principal settlor or a beneficiary of a Trust owned property which is your main home;
  • the transfer of the property follows the death of an executor, administrator or beneficiary;
  • the property is transferred under a relationship property agreement where the relationship has broken down.

If you are concerned that the changes may affect you or want to discuss the consequences of your purchase before you commit please contact Grant Smith or Jim Eddy.

Unit Titled Property? Body Corporate Rules?

July, 2016

You own a unit titled property on the ground floor. The tree in your back yard has grown so tall that it blocks the sun to your neighbour’s apartment on the first floor. Your neighbour complains to the Body Corporate Committee who then gives you written notice to remove the tree. Can the body corporate committee do that?

As an owner, you are a part of the body corporate so you can have a say. How will you challenge this?

At Canterbury Legal, we can help you interpret the Body Corporate Rules and let you know your rights and responsibilities. For Body Corporate Committees we offer advice on body corporate governance and proper procedures so as to avoid expensive litigation. For individual unit titled property owners, we can represent you in the event that a there is a decision that adversely affects you.

Please contact Grant Smith, Eric Lee or Jim Eddy at Canterbury Legal for all questions regarding unit titles.

New Premises

August, 2015

Canterbury Legal is now operating out of a new premises, located in the Christchurch CBD at Canterbury Legal Building, Level 2, 205 Durham Street South.

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