Buying property in Canterbury: Why legal due diligence should start before you sign
Finding the right property can take months. Signing the agreement can take minutes.
Unfortunately, those few minutes can determine a great deal of what happens next.
Buyers sometimes assume the sensible order is: find property, sign agreement, send it to lawyer.
A safer approach is often: find property, get advice, understand the agreement and conditions, sign when comfortable.
The difference is timing. Once an agreement is signed, your lawyer may be working within obligations you have already accepted.
A sale and purchase agreement is a contract
The agreement is not simply an administrative form that starts the conveyancing process. It creates legal rights and obligations.
The wording around conditions, dates, included items, finance, due diligence and other matters can have practical consequences.
That is why having a lawyer involved before signing can be considerably more useful than asking the lawyer to review a commitment that has already been made.
Due diligence is about the particular property
Buying property is not just about reading the contract.
Legal due diligence may involve investigating information connected with the specific property and transaction. Depending on the circumstances, that can include the record of title, registered interests, easements, covenants, ownership arrangements, the wording of the agreement and other property-specific matters.
A condition that sounds sensible in the abstract also needs to provide the buyer with the protection they actually need.
Conditions should match your situation
There is no single perfect set of conditions for every property purchase.
A first-home buyer using KiwiSaver may have different concerns from an experienced investor. Someone buying a unit title may face different issues from someone buying a standalone home. A purchaser buying property affected by historic natural-hazard claims may need different enquiries again.
The purpose of getting advice before signing is to make the agreement fit the transaction, rather than hoping the transaction fits a standard agreement.
First-home buyers have more than the purchase price to think about
For a first-home buyer, the process can involve several moving parts at once: finance, KiwiSaver, insurance, deposit arrangements, conditions, settlement dates, property investigations and coordination between the bank, broker, agent and lawyer.
That is exactly the stage where early legal advice can reduce stress.
The unconditional moment matters
A conditional agreement gives parties a period in which specified conditions may need to be satisfied. An unconditional agreement is a very different position.
That is why one of the most important questions for a buyer is: What needs to be checked before I become unconditionally committed?
The answer varies from transaction to transaction. The key is making that decision deliberately rather than discovering afterwards that an important issue was never investigated.
Christchurch properties can carry local history
Canterbury buyers can encounter property issues that deserve particular attention, including earthquake and natural-hazard history, insurance-related matters, repairs and claims.
Not every property with an EQC or NHC history is problematic. But a buyer should understand what information exists and whether it creates issues that need further investigation.
Don’t confuse market confidence with transaction certainty
A competitive market can create pressure to move quickly. A quieter market can create a false sense that there is plenty of time.
Neither changes the legal consequences of the agreement.
Five questions to ask before signing
Before signing a property agreement, a buyer should understand what they are agreeing to buy, what investigations remain outstanding, what conditions protect them, when those conditions must be satisfied and what happens if a problem is discovered.
If any of those answers are unclear, that is usually a good moment to involve your lawyer.
Buying property? Talk to us before you sign
Canterbury Legal advises first-home buyers, homeowners, investors and businesses on property transactions throughout Christchurch and Canterbury.
Getting legal advice earlier in the process can make the transaction clearer and give you more room to deal with issues before you are committed.
Talk to us before the signature becomes the problem.
Related legal services
This article provides general information only and is not legal advice. Property transactions and appropriate due diligence depend on the particular property and circumstances.
