When you’re buying a house, there are a lot of things to think about. One of the steps that is often a mystery for our clients is conveyancing; ie; what happens with their lawyer.
We spoke to Krystle Gardner from Gardner Barristers & Solicitors and asked her a few of our clients most common questions:
I strongly suggest that you make contact with your Solicitor as soon as you make the decision to start looking to purchase. Earlier is better when you are selling your existing house too.
Making contact with your Solicitor this early will mean that you can move quickly should you find a house you like. You can then confidently put an offer on it whilst also enabling your solicitor to work with you, and the Real Estate Agent, to make sure that you take all legal steps needed including the very important review and approval of the agreement for sale and purchase.
If you are buying your new house through a negotiation process (i.e. not at auction), there are a couple of steps that need to happen. The Real Estate Agent needs to prepare the draft agreement for sale and purchase and provide this to your Solicitor to review. They will include any conditions of the purchase and approve the agreement before it is provided to the Vendor as an offer. This process can take 24 to 48 hours depending on other demands. Upon your offer being accepted by the Vendor, the condition process starts.
The condition process involves you working with your Mortgage Broker and your Solicitor to sort out a home loan with a Bank. You’ll also carry out the legal enquiries on the house to make sure it is a good investment. In addition (and at a minimum) you would also be:
The timing is a little different if you are buying your new house at an Auction. In this case, your Solicitor will work with you to carry out the legal enquiries (legal due diligence) on the house well ahead of the auction. Your Solicitor will also review the Agreement for Sale and Purchase prepared by the Real Estate Agent for use at the Auction. This will mean you can confidently bid at the Auction and sign the agreement to purchase the house on the day.
The bank, after providing your mortgage adviser with final approval of your home loan, will send your Solicitor a letter of instructions which enclose all your home loan documents. For a basic home loan structure (i.e. not involving a Trust, Company or Guarantor) these home loan documents will usually include:
Your Solicitor will review the above home loan documents, and prepare any of the documents required by the Bank. They will also the prepare the required Authority and Instruction for Electronic Registration of the Transfer and Mortgage Instruments with Landonline and the Tax Statement. It’s then time to meet your Solicitor to sign the home loan documents and these additional documents. At this meeting, they will provide you with advice on the general nature and effect of the documents. You’ll also need a copy of your photo identification.
After receiving a copy of your insurance certificate for the new house, your Solicitor will then send the home loan documents, together with the completed solicitor’s certificate to the Bank. They’ll ask that the money be drawn down to your Solicitor’s Trust Account to complete the purchase.
In my experience, after receiving the Bank loan instructions, your Solicitor will require a minimum of 48 hours to review and prepare the documents. At this point, your Solicitor will be in a position to meet with you to sign these and give you the advice referred to above. The home loan documents must, according to most Bank requirements, be returned to the Bank a minimum of 48 hours before the purchase date. This ensures any issues can be addressed without it holding up the purchase of your new house.
There are some circumstances in which it will be appropriate for your house to be put in a Trust. But there are plenty of other circumstances in which it is not appropriate. For example, the individual(s) purchasing the house intend to use part of the house as a home office or a holiday home.
Gardner Barristers & Solicitors know through experience that it is sometimes the more appropriate approach for clients to use relationship property law together with asset protection structures as the means to protect the house rather than the trust structure.
It is very important, therefore, that you seek legal advice early. This means the right ownership structure for your circumstances is decided and established before the home loan documents are prepared.
Your solicitor will absolutely help you with your KiwiSaver withdrawal. They will also receive the money into their Trust Account to use as part of the purchase price of your house.
Krystle is the owner of Gardner Barristers & Solicitors in Auckland.
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