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Cross-lease? Or Cross Lessors?

Tue, 14 May 2024 02:45:10 GMT

In our previous article on cross leases found here , we discussed the standard clause in a cross lease that prevents owners from developing their property without the cross-lessor’s consent. This issue is becoming more widespread as New Zealand’s population increases and development of older properties built on cross leases in the 70s and 80s is required.

The old High Court decision of Smallfield v Brown (1992) 2 NZ ConvC 191,110 has long been the leading authority on what amounts to an unreasonable withholding of consent in a cross lease context when one cross lease owner wants to develop or renovate their property. That case said that consent would be unreasonably withheld, where the benefit to the party seeking change would be substantial and the proposed alteration would produce only a trifling detriment to the neighbour. It was rather restrictive on cross lease owners who wanted to develop or renovate. That is no longer the law. A recent High Court decision changes the law in favour of cross lease owners looking to develop or renovate. We look into the new decision in this article.

In Martelli v Liow [2024] NZHC 968, the appellants had been prevented from undertaking renovations including increasing the size of the house, adding a swimming pool and new decking due to the cross lease neighbours refusing to consent. The matter went to arbitration (as required under the cross lease). The arbitrator held that the neighbours were reasonable in withholding their consent. He commented on the restrictive nature of the Smallfield case concluding that “If the law placed the fulcrum of assessment in the middle between the two competing sets of interest and concerns, I would have no hesitation in finding in their favour. But that is not the test.”

Martelli involved an appeal to the High Court from the arbitrator’s decision on the question of law regarding the Smallfield case. The High Court in Martelli concluded that ‘substantial’ benefit and ‘only trifling’ detriment should not be used as the legal test for determining whether the cross lessor has unreasonably withheld consent. Gault J considered that the Smallfield test would “add a gloss to the quintessentially fact specific assessment of unreasonableness required” under the cross lease terms. All cross lessors are required to do is to act reasonably including when considering their own concerns.

Gault J went on to say that the correct approach when considering whether the basis for withholding consent is reasonable is to consider what the reasonable landlord would do when asked to consent in the particular circumstances. The conclusion must be one that would be reached by a reasonable landlord. If the landlord or cross lessor reasonably believes that the proposed alternations would injure his interest then the landlord may refuse consent.

Martelli does not exactly provide cross lease owners with the definitive answer they might be looking for when considering these issues of consent to alterations. It strips the matter back to a factual assessment of what is reasonable in the circumstances. This does not provide owners with guidance as to what is reasonable. It is unfortunate that this area of law is largely dealt with behind closed doors by arbitrator’s private decisions which makes it difficult for cross lease owners to look at case law for factual precedents.

For cross lease owners looking to develop, Martelli does appear to make things easier for a cross lessor looking to alter or develop their property now that the trifling detriment requirement is removed. There is no longer a gloss placed on the “reasonable” requirement in the cross lease. This means that if the question comes before an arbitrator, the arbitrator is now required to consider both parties’ interests equally. At Urlich Milne, we consider building up and blocking a neighbour’s sea view is likely to be unreasonable but adding an extension to your house on your restricted use area may not be unreasonable if it does not significantly interfere with the cross lease neighbour.

If you have a cross lease dispute with your neighbour or perhaps you are looking to alter your dwelling on a cross leased title or you are concerned about the implications of the new law for your neighbours’ potential developments, then get in touch with us at Urlich Milne.

This article has been published for general information purposes only. It is not, nor is it intended to be, treated as legal advice.

Contributed by Oscar Ward - Senior Associate

Untying the Knot - Marriage, Divorce, and Wills

Wed, 26 Apr 2023 04:56:31 GMT

‘Will you please repeat this vow…’ What happens to your will if you get married?

Did you know that your will is automatically revoked if you get married?

If you have signed a valid will and subsequently get married, your will is automatically revoked (that is, becomes invalid) by operation of law. The same rules apply to civil unions.

A will can be saved by the following exceptions:

if it expressly says that it is made in contemplation of a particular marriage; or
the circumstances existing when it was made show clearly that it was in fact made in contemplation of a particular marriage.

The marriage that subsequently occurs must be the one contemplated by the will or the circumstances.

If you have a will in place at the time you get married, it is important to re-visit it either prior to the wedding and update it so that it is ‘in contemplation of’ the marriage, or as soon as possible afterwards.

If you do not, your existing will becomes void. One consequence of this is that any specific gifts you intended to give, along with the rest of your estate, may not be distributed in accordance with your wishes.

When an executor becomes an ex…What happens to your will if you get divorced?

Unlike the act of entering into marriage, divorce does not automatically revoke an entire will.

If you make a will while married and subsequently separate or divorce (meaning a separation order or an order dissolving a marriage is in place at the time of your death) only the following parts will become void:

if you have appointed your ex as an executor or trustee or advisory trustee of your will; or
if you have made any gifts to your ex.

Those parts of your will must be read as if your ex had died immediately before you. The same rules apply to the end of a civil union.

Some people may maintain an amicable relationship with their ex and still wish to appoint them as an executor or leave them gifts or other property when they subsequently update their will. In this case, your will must make it clear that you intend those provisions to be effective even though you are separated or divorced and that your will must not be read as if your ex had died immediately before you.

If you or anyone you know, requires advice or assistance we have a team of solicitors at Urlich Milne Lawyers who are able to assist.

Katee Yukich

Associate

Can you trust your trust?

Tue, 17 Jan 2023 01:57:58 GMT

A basic property right we all share is the ability to gift our assets whilst we are alive. There are however claims available that restrict what you can gift after death in your will. Blended families and estranged children can cause a headache for estate planning. The Family Protection Act 1955 (FPA) gives children of the deceased the ability to claim against their parent’s estate where they consider inadequate provision was made for them in the will (or if they are left out of the will).

One common tool for estate planning and avoiding potential estate claims after death (particularly where there are estranged children) is the family trust. This is effectively gifting assets before you die to avoid FPA claims. Until recently, it was widely accepted that trust property was beyond the claws of adult children making FPA claims as the property belongs to the trust not the estate. The decision in A v D [2021] NZHC 2997, a High Court case from last year, threw a spanner in the works for estate planners. The Court of Appeal has more recently overturned that decision in D and E Ltd (as trustees of the Z Trust) v A, B and C [2022] NZCA 430. So what does this case mean for those looking to protect their assets for the next generation? We look into the facts in further detail in this article.

The facts of A v D are extreme. There was horrific evidence of mental, physical and sexual abuse of the estranged children by their late father. The estranged children all suffered mentally and physically. In particular, the daughter who said she continues to live in poverty and that she suffers from poor health associated with PTSD.

The estranged children naturally did not have an ongoing relationship with their father and their father developed a new relationship and new family. The father sought to alienate his property from the estranged children and protect his assets for the new family. He did this by setting up a trust to benefit his new family, leaving his estate relatively small and unworthy of FPA claims from the estranged children – who undoubtedly would have had FPA claims against his estate. The father was effectively gifting his assets whilst he was still alive to avoid his estranged children having the ability to make FPA claims on his estate.

After the father passed away, the estranged children issued proceedings against the trust attempting to unwind the gifts made to the trust. The estranged children alleged that the alienation of the assets by their father to the trust constituted a breach of fiduciary obligations the father owed to them. They alleged that the trustees (one being the now deceased father) received the property knowing of the breach of fiduciary duty and sought orders that the assets vest in the father’s estate under a constructive trust so that they could bring FPA claims.

The estranged children were successful in the High Court. Gwyn J held that there was a fiduciary duty that the father owed to his adult estranged children. Gwyn J said “… at the time he gifted the property [to the Trust], [the father] owed each of the [children] a duty to recognise them as members of his family and to provide for them from his wealth, due to the vulnerability his earlier breach of fiduciary duties had caused them.” The assets held by the trust were declared to be held on a constructive trust for the estate of the father.

The Court of Appeal allowed the appeal. Gilbert J concluded that there was no fiduciary relationship between the father and the estranged children when the assets were gifted to the trust. Kós P agreed and found that the fiduciary duty ended when the father ceased to care for the children and did not result in a sustained fiduciary duty to make proprietary provision during the long years in which the children and father no longer lived together.

What does this mean for you? If you are in a position where you have assets you want to protect for future generations and perhaps have competing claims from other children, there are ways that you could alienate those assets. The family trust remains an important tool in the estate planning tool box and can assist you with ensuring your assets are left to those you want them to be left with.

We have a team of solicitors available to discuss your estate planning and help you structure your affairs in the best way possible.

Oscar Ward

Associate

Statutory Demands

Sun, 18 Dec 2022 22:43:11 GMT

On 23 November 2022, the Reserve Bank made its largest ever hike to the OCR to battle high inflation. With the cost of living increasing, inflation at an all time high and interest rates increasing more than expected, businesses will undoubtedly suffer. Debt becomes a real concern for small businesses that need to be paid or are struggling to pay invoices.

An effective means of eliciting payments from debtor companies or testing a company’s solvency is a statutory demand. A statutory demand is a formal demand made on a company for payment of a debt. Under the Companies Act 1993 (the Act), a failure to comply with a statutory demand gives rise to a rebuttable presumption that the company is unable to pay its debts. This is the first step in a legal proceeding to place the debtor company into liquidation.

However, creditors need to take great care before issuing a statutory demand to ensure that there is no dispute over the debt in question. Under section 290 of the Companies Act 1993, the debtor can apply to the High Court to set aside the statutory demand within 10 working days of being served. The debtor only needs to show the High Court that there is a substantial dispute as to whether the debt is owing. If the debtor can show a substantial dispute, not only will the statutory demand be set aside but the creditor is likely to also have an unwelcome Court order to pay the debtor’s legal costs. The debtor can also raise a counterclaim, set off or cross demand and if it can satisfy the Court that there appears to be a counterclaim, set off or cross demand, the Court will also have grounds to set aside the statutory demand.

An example of a successful application to set aside a statutory demand is Coffee Culture Franchises Ltd v Home Straight Park Trustees Ltd [2021] NZHC 577. In this case the landlord had served the tenant with a statutory demand for unpaid rent. The tenant applied to set aside the statutory demand on the basis that there was substantial dispute as to whether all the rent was due. The tenant’s argument was that the lease had a clause which entitled the tenant to a rent reduction for periods of no access due to an emergency (being Covid-19 lockdowns). Associate Judge Bell found that there was a substantial dispute and he ordered that the statutory demand be set aside and that the landlord pay the tenant’s legal costs for the proceeding.

There are also strict timeframes for a debtor to make payment or apply to set aside a statutory demand under the Act. If the debtor takes no action, after 15 working days there is a presumption of insolvency. The creditor is then in a position to rely on that presumption in support of an application to wind up the company and have a liquidator appointed. The creditor needs to file its application within a further 30 working days otherwise the statutory demand will go “stale”.

If you have companies that owe you or your business money, get in touch with us about whether a statutory demand might be an appropriate tool to help you get paid. If you have been served with a statutory demand, we can advise on your options.

Decoding Incorporated Societies

Sun, 28 Aug 2022 21:24:17 GMT

What's the new game plan?

Standing on the sideline on a Saturday morning, watching a family member or friend play sport, is a Kiwi institution and unsurprisingly many Kiwis are members of a club or society of some sort. Clubs and societies can cover a range of activities and interests. These include sports, social, cultural, religious, educational, and special interest groups.

Many clubs own significant assets including land and buildings and there are significant financial responsibilities for those members that are in charge of managing them. An incorporated society is the legal structure under which clubs and non-profit groups are run and managed in New Zealand. Until recently the legislation which governed incorporated societies was over a century old. In April this year, the Incorporated Societies Act 2022 (the Act) came into force and replaced the previous legislation. The Act makes various changes to the law which will have a significant impact on those involved in the management of incorporated societies.

Duties for Officers

One key change to the law is that the duties of officers have been codified. Officers are the people that manage the club or society, similar to a director who manages a company. The duties that have been codified in the Act are like those imposed on directors of commercial companies. The duties include duties to:

act in good faith;
exercise powers for proper purposes;
exercise the care and diligence that a reasonable person with the same responsibilities would exercise;
not agree to activities of the society which are likely to create a substantial risk of serious loss to creditors; and
not agree to the society incurring an obligation unless the officer believes at that time on reasonable grounds that the society will be able to perform the obligation.

In many cases, officers of clubs and societies are willing volunteers and not necessarily experienced businesspeople who understand the extent of their duties. Under the new legislation there may be an increased risk of personal liability if there have been any serious breaches committed and appropriate legal and accounting advice should be sought.

The Act also introduces specific criminal offences for officers and members of incorporated societies. The offences have penalties ranging up to a 5-year prison term and $200,000 fine. The offences include:

making false statements;
fraudulent use of property / using property for their own benefit;
falsification of documents;
defrauding creditors and knowingly incurring a debt that the society cannot pay;
Dishonestly operating under any name with the word “Incorporated”, “Inc”, “Manatōpū” as the last word; and
Breaching a banning order. The Court is separately given discretion to issue banning orders against people being officers.

Transitional requirements

All societies will be required to re-register under the Act and file a new constitution which complies with the Act. At that point, the society will become subject to the rules in the Act (rather than the previous law). The re-registration period will run from October 2023 to April 2026. Further regulations are expected to be published over the next year which will assist societies with what is required.

Other compliance changes

The Act introduces further requirements on incorporated societies to:

Have a committee consisting of at least 3 members and the majority of the committee must also be members;
Hold an annual general meeting of members within 6 months of the society’s financial year end;
File financial statements which comply with the legislation;
Have financial statements audited (not applicable for all societies);
Have a constitution with some mandatory provisions including a procedure for resolving disputes;
File annual returns;

The law changes bring added compliance which may increase the costs of managing clubs. The increased responsibilities may also deter people from taking on roles as officers, particularly if they are not adequately compensated which is often the case with voluntary positions.

Given the transitional requirements on societies to re-register, we suggest that now is a good time for societies to consider a new constitution that is compliant with the Act.

If you, or your local club, requires advice or assistance we have a team of solicitors at Urlich Milne Lawyers who are able to assist.

Oscar Ward

Associate

Pay your rent or else …

Thu, 28 Jul 2022 01:59:22 GMT

When a tenant pays rent late or fails to pay rent at all, the landlord has an important weapon in their arsenal - the Property Law Act 2007 (PLA) notice of an intention to cancel the lease.

The PLA notice gives the tenant notice, that if the tenant fails to pay the rent within 10 working days (currently 30 working days due to COVID amendments to the PLA), the landlord will be entitled to cancel the lease. Landlords can usually seek any legal costs incurred in the process as well, depending on the covenants in the deed of lease. Often the PLA notice will prompt a payment from a problem tenant.

If the tenant still fails to pay the rent after the notice period has expired, the landlord has two options and will need to think very carefully before exercising the next step, as there are advantages and disadvantages to both options.

Option 1 is to exercise the right to cancel the lease by re-entering the premises peaceably (and without committing forcible entry under section 91 of the Crimes Act 1961). Whilst this is the most immediate and possibly cheaper upfront option, this option is fraught with risk. The main risk is that the tenant might apply to the High Court for relief under section 253 of the PLA and get reinstated in the premises. The Court has a wide discretion to grant relief to a tenant. There are a number of judgments, where the High Court has given a problem tenant relief despite a pattern of failures to pay rent and arrears. This could be costly for a landlord who has removed a tenant and started the process of advertising the premises seeking a new tenant. The other risk to be aware of is, that if the tenant is present and the landlord forcibly enters the premises, the landlord may be committing the crime of forceable entry.

Option 2 is to apply to the Court for an order for possession of the land. This is the safer option but has a greater upfront cost. Fortunately, the landlord can simultaneously seek an ancillary order for rent arrears, penalty interest and costs under section 251 of the PLA. The tenant is still in a position to seek relief from the Court and to have the lease reinstated, however, in this scenario the tenant is going to be required to continue paying rent plus any arrears. If there are rent arrears, the landlord will likely be in a strong position to also ask the Court for “unless orders”. This means orders that unless the rent arrears, costs and default interest are paid by a certain date, the lease will be terminated.

A good example of this was a recent case of Mounfort v Cheam [2021] NZHC 1535. In this case the tenant had not paid all the rent that was owing. The landlord served a PLA notice and applied to the High Court for a possession order. The tenant opposed the application and applied for relief. Whilst the High Court granted relief, it ordered that the relief was granted on the condition that the tenant pay rent arrears, default interest and legal costs within a short timeframe. In the event that the tenant did not comply with the orders, the Court ordered that the landlord would be entitled to apply for a possession order and cancellation of the lease order on short notice. This left the landlord in a strong position despite having had relief ordered against it.

If the landlord in Mounfort v Cheam had cancelled the lease by re-entering without a Court order, it would have been in an uncertain position for three months (the timeframe within which a tenant can apply for relief under the PLA). Further, the tenant might be in a position to seek compensation as well, depending on the circumstances.

We are available to assist landlords with preparing PLA notices and can assist with any Court proceedings necessary as a result of failure to comply.
Get in touch with us at Urlich Milne Lawyers .

This article has been published for general information purposes only. It is not, nor is it intended to be, treated as legal advice.

Contributed by Oscar Ward - Associate Solicitor

What are my Duties as a Trustee

Thu, 09 Jun 2022 01:10:50 GMT

The Trusts Act 2019 (the Act) came into force on 30 January 2021. It represents New Zealand’s first major trust law reform in 70 years.

Its purpose includes making the law of trusts more accessible and strengthening the ability of beneficiaries to hold trustees to account.

Under the Act, a trust should be administered in a way that:

is consistent with its terms and objectives; and
avoids unnecessary cost and complexity.

The Act applies to express trusts. An example of an express trust is a discretionary family trust, which is a very common type of trust in New Zealand.

The Act can, in limited circumstances, apply to other types of trusts, but its main scope is express trusts.

There are several important elements of the Act that trustees must be aware of regarding mandatory trustee duties, default duties, record keeping obligations, duties to disclose certain information to beneficiaries and delegation by trustees.

This article looks generally at mandatory duties and the associated record-keeping obligations of trustees.

Mandatory duties

The following duties must be performed by the trustees. They cannot be modified or excluded by the terms of a trust. Every trustee has a duty to:

know the terms of the trust;
act in accordance with the terms of the trust;
act honestly and in good faith;
act for the benefit of the beneficiaries in accordance with the terms of the trust; and
exercise the trustee’s powers for a proper purpose.

A key method of ensuring a trustee fulfils their mandatory duties is by the obligation to retain what the Act calls “core documents.”

Obligation to retain core documents

Every trustee of a trust must hold:

a copy of the trust deed; and
any variations to it.

Each trustee must also, so far as reasonable, keep the following core documents relating to the trust:

records of the trust property that identify the assets, liabilities, income, and expenses of the trust and that are appropriate to the value and complexity of the trust property;
any records of trustee decisions made during the trustee’s trusteeship;
any written contracts entered into during that trustee’s trusteeship;
any accounting records and financial statements prepared during that trustee’s trusteeship;
documents of appointment, removal, and discharge of trustees (including any court orders appointing or removing trustees);
any letter or memorandum of wishes from the settlor;
any other documents necessary for the administration of the trust; and
any documents referred to above that were kept by a former trustee during that person’s trusteeship and passed on to the current trustee.

Do ALL trustees really have to keep ALL these documents?

No. Where there is more than one trustee, the obligation to hold the documents set out above can be satisfied by 1 of the trustees holding them on the basis that those documents or copies will be made available to the other trustees on request.

How long does a trustee have to keep the core documents?

The trustee must keep the documents, so far as is reasonable, for the duration of the trustee’s trusteeship.

What happens when a trusteeship ends?

If the trust continues, the trustee must give at least 1 replacement trustee or continuing trustee the documents that the trustee holds at that time.

If you are a trustee, you should:

review the current records of the Trust’s core documents to ensure all core documents are held;
where there is more than 1 trustee, ensure that each of you holds a copy of the deed and all variations;
consider adopting new record keeping practices to ensure that these duties are complied with; and
consider passing a resolution appointing one of the trustees to be the holder of all core documents which are to be made available to the other trustees on request.

This article is general in nature. If you would like to discuss your trustee duties and recording keeping obligations in further detail, please contact
Urlich Milne Lawyers .

Contributed by Katee Yukich - Staff Solicitor

Confusing Cross Leases

Thu, 09 Jun 2022 01:10:38 GMT

The New Zealand dream has always been to own your home on a quarter acre section. Even 50 years ago in Auckland, this was becoming out of reach for many people and subdividing that quarter acre section, into smaller more affordable sections, was restricted. However, a loophole existed. If you leased another building on your land (even if that lease was for 999 years), it was not considered a “subdivision” of land. This was the framework for the beginning of the infamous cross-lease title.

What is a cross lease

Under a cross lease, an owner owns two titles. They own an undivided share of the freehold land (or sometimes leasehold). They also own a leasehold interest in their “flat” and sometimes an exclusive use area for their outdoor garden. The two titles together form a composite title which is the cross-lease title. All the owners lease to each respective owner a leasehold interest in their respective building (or house) normally for 999 years. There is also a covenant that the lease needs to be sold along with the share of the freehold land (this binds the two titles together).

A cross lease became an effective way of subdividing the quarter acre section without actually subdividing. Nowadays under the Resource Management Act 1991, a cross lease is considered a “subdivision of land” and the use of cross-leases has been curtailed. However, due to the popularity of cross-leases in the 70s and 80s, there are still more than 200,000 cross-lease properties in New Zealand making them a common form of ownership.

Below is a helpful diagram of a two house cross lease. Under this example, Mr and Mrs Z own half the underlying land and Mr and Mrs X own the other half of the underlying land. Mr and Mrs Z lease Flat 1 and have exclusive use rights over area A from themselves and Mr and Mrs X as the landlords. Mr and Mrs X lease Flat 2 and have exclusive use rights over area B from themselves and Mr and Mrs Z, as landlords.

What issues do cross-leases present?

Cross-leases are fraught with issues. The most common issue relates to alterations and development. Generally there is a covenant in the cross-lease that prevents any alterations or renovations to the buildings without the consent of the lessor (i.e. the neighbours). If there is any animosity between the neighbours, this can make things difficult or even impossible for one owner to renovate their property. The standard clause says that consent to the alterations must not be unreasonably withheld. In Smallfield v Brown (1992) 2 NZ ConvC 191,110, there was a cross lease dispute over a minor addition of a deck where the cross-lease neighbour did not provide their consent. The High Court said the owner had not been unreasonable in withholding consent. It was held that consent would be unreasonably withheld, only where the benefit to the party seeking change would be substantial and the proposed alteration would produce only a trifling detriment to the neighbour.

Another common issue is where a cross lease property has already been developed (for example a conservatory has been added or a deck has been built). If the lessee did this without consent, and an amended flat’s plan has not been registered, it is possibly a defective title, which can create issues when it comes to selling the property.

Some cross-leases do not have properly defined “exclusive use areas” on the plan. Despite this, owners may have assumed certain areas as their own garden or outdoor BBQ area. Technically, if there is no exclusive use area on the lease, neighbours would be entitled to hang out on any area on the flat’s plan that is not formally leased, as it would be considered common property.

What can cross-lease owners do about their title?

If there is a defective cross lease title (for example if a conservatory has not been added to the flat’s plan) this can be remedied by registering a new flat plan on the title and a variation to the cross-leases. Obviously, this needs all the owners to be in agreement.

If all the owners are in agreement, it is also possible to convert the cross lease into separate freehold titles and effectively remove the cross lease. This can be an expensive process but might also add significant value to each owners’ title.

If cross-lease owners reach an impasse, they are likely to be restricted from taking Court action against the other(s) as the majority of cross leases have an arbitration clause. This means the dispute needs to be resolved by an independent arbitrator rather than the Court. The exception to this is where there are wrongly placed structures or if access is landlocked and relief is needed from the High Court under the Property Law Act 2007.

If you are buying or selling a cross-lease title or you have issues with your current cross-lease title, get in touch with us at Urlich Milne Lawyers about your options.

This article has been published for general information purposes only. It is not, nor is it intended to be, treated as legal advice.

Contributed by Oscar Ward - Associate Solicitor

5 vital checks you must do when you buy a property

Mon, 26 Aug 2019 22:07:00 GMT

For most of us, a house will be the single biggest purchase we ever make. The process of house-hunting can be exhausting, with dozens of properties to view and consider. Real estate agents can be persuasive and time may be short. How can you be sure you’re not buying a property with hidden problems?

Here are five checks you and your lawyer should undertake if you are seriously looking at purchasing a property:

Rule 1: Beware of leaky buildings.

If you are buying a house that’s not brand new, you should consider making your Agreement for Sale and Purchase subject to a builder’s report. If the property has been built with monolithic or plaster cladding, this is an absolute must. Many houses built between the early 1990s and mid 2000s were built with untreated timber and cladding systems that may leak. Some brick veneer and timber-clad houses also have leaky issues. A builder’s report should identify any hidden problems and allow you to back out of an agreement if you’re not happy with the state of the property.

Rule 2: Be specific with chattels.

Did you fall in love with the garden furniture and shade sail on the deck? Is there a handy garden shed on the property? If you want to be sure the owners have included them in the sale, you’ll need to spell that out. Make sure they’re listed in the Agreement for Sale and Purchase.

Rule 3: Boundaries can be misleading.

Just because there’s a hedge or a fence doesn’t mean the legal boundary lies there. If the buildings appear to be close to any boundaries, or if you have any doubts on the matter, you should check with a surveyor.

Rule 4: Check for flooding.

Newer infill housing in the Auckland region may have been located in areas prone to flooding. Council data can show whether the property is subject to drainage issues. Caveat emptor.

Rule 5: Methamphetamine labs are hard to spot.

Clandestine ‘P Labs’ are constantly popping up. If you are buying a property that has been rented, it’s well worth testing for chemical residues. These can be highly toxic and the clean-up is expensive. Meth testing is highly specialised and not covered by LIM reports from the Council. You can ask your lawyer to insert a clause in the Agreement for Sale and Purchase to make the agreement conditional upon a satisfactory P test.

These five checks are a good start to help ensure your investment is safe. As always, Urlich Milne will provide bespoke advice and answer any questions you might have.