August 24 2017
Buying, selling and owning property is usually straightforward… until it isn’t. These property briefs look at three such scenarios: How to avoid buying a property with insurance problems, how to protect your property title from unwanted searches, and how to avoid a hefty expense when selling a cross lease property with an altered flat plan. Here are the answers.
Buying a house? Will your insurer cover it?
For most people, a house is their most valuable asset. It would be very unwise not to have it insured. If you’re buying a house, your lender will require insurance coverage to obtain a mortgage. However, purchasers often overlook many specific items which are not covered by their insurance policy, resulting in significant expenses and sometimes worse. Here’s what to look for before you buy.
- Leaky buildings! Inspect the condition of the roof and look for any evidence of water leakage around existing vents or skylights.
- Water supply! Find out what type of pipe was used to plumb water through the house. Some pipe products used from 1970 to 1990 only had a 30 year lifespan. Any flexible or braided hoses used in the kitchen or bathroom only have a 10 year lifespan and will cause significant water damage if they fail.
- Retaining walls! First check to see if they have been well maintained and next if your insurance policy covers them. In some cases, retaining walls aren’t covered or are a policy extra.
- Boundary fences! Your insurer may not cover you for the cost of broken fencing if it has been poorly maintained.
- Additions, modifications and renovations! Ensure these have been properly permitted and completed.
- Drainage pipes! Water damage is expensive to fix. Even a partial blockage can cause flooding in a heavy rainstorm.
People often shy away from the added expense of a building inspection, but it could save you a lot of money in the long run. Our property lawyers recommend you get a qualified building inspector to do a thorough pre-purchase inspection before making any commitment to buy.
How to hide your title from unwanted searches
While only land professionals can search and survey titles, anyone can order a copy of a land record. There are cases where you may not want this information to be public. A hidden title procedure isn’t common, but it is available if you have concerns about your personal safety.
If you or a member of your family have been granted a protection order under the Domestic Violence Act 1995 you can apply to have any information that discloses your whereabouts hidden on the Land Register. This means no-one can search for your title information without your consent. The title remains hidden for five years unless the protection order is discharged earlier, or your circumstances change.
If you co-own a property, you’ll need consent from the other owners as their details will also become hidden by the title direction. The direction doesn’t extend to other public registers such as your local council or rating authority, so you’ll need to make separate applications to have those hidden too.
How to avoid large expenses when selling an altered cross lease property
If you own and have altered a flat on a cross lease title, you’re going to hit a problem if you want to sell it. The footprint of your flat, attached to your title, is shown on a flat plan deposited with Land Information New Zealand. If you have altered the footprint, the only way to correct the title is to deposit a new flat plan and this can cost thousands of dollars.
Before you sell, talk to our Hawke’s Bay property lawyers to find out if your flat plan is correct. If you don’t check and there are changes, a purchaser can requisition the title. The likely outcomes are that they will force you to amend the flat plan, drop their asking price or abandon the sale.
There is a way to protect yourself from this scenario, known as a ‘warts and all’ clause. If you ensure your real estate agent has added this clause to the sales and purchase agreement, purchasers will be alerted to footprint changes but required to accept the title ‘as is.’ This is not the most desirable situation to be in when you’re negotiating a sale, but it will prevent the purchaser from requiring you to update the flat plan at your expense.