Buying a House? What to Check Before Going Unconditional

Buying a house is exciting, but it is also a significant financial commitment. Once an agreement goes unconditional, your options for getting out of the purchase can become very limited.

That is why some of the most important legal work happens before you reach that point.

Whether you are buying your first home, moving house or purchasing an investment property, taking the time to understand exactly what you are buying can help avoid expensive surprises later.

Here are some of the key things worth checking before you go unconditional.

Start with the sale and purchase agreement

A sale and purchase agreement is a legally binding contract. It is not simply paperwork to deal with once you have decided you want the property.

Before signing, it is worth having your lawyer review the agreement and any conditions that have been included.

The agreement sets out much more than the purchase price. It can cover settlement dates, chattels, finance, LIM and building report conditions, title matters and other obligations for both the buyer and seller.

The conditions also need to give you enough time to complete the checks you need to make.

Getting advice before you sign is generally much easier than trying to resolve an issue after you have already committed yourself.

Check the title

The record of title provides important information about the property and the legal interests affecting it.

Depending on the property, this may include easements, covenants, consent notices, rights of way or other restrictions that affect how the land can be used.

These details are not always obvious when you walk through a property.

Your lawyer can review the title and explain anything that may affect your ownership or future plans for the property.

This can be particularly important if you are considering renovations, development or changes to the way the property is used.

Understand what the LIM tells you

A Land Information Memorandum, or LIM, contains information held by the local council about the property.

It can include information about building consents, rates, drainage, flooding and other matters recorded against the property.

A LIM is an important part of property due diligence, but it should not necessarily be looked at in isolation.

Depending on the property, you may also need a building inspection or other specialist advice to understand its physical condition.

The key is knowing what information you have and what you still need to investigate before your agreement becomes unconditional.

Make sure your finance is actually ready

Finance approval can involve more than an initial indication from your bank or mortgage adviser.

Your lender may still need to approve the particular property, receive a satisfactory valuation or have other requirements met before confirming finance.

If your agreement is conditional on finance, make sure you understand what needs to happen before that condition is confirmed.

Do not assume that pre-approval automatically means everything is ready to proceed.

Think about how you will own the property

If you are buying with another person, it is worth considering how the property will be owned before settlement.

The appropriate ownership structure will depend on your circumstances.

For some buyers, particularly couples, family members or people purchasing property together as an investment, there may also be value in documenting what each person is contributing and what should happen if circumstances change.

Ownership decisions can have consequences beyond the immediate purchase, so they are worth discussing early rather than treating them as a settlement-day detail.

Different properties come with different considerations

Not every property purchase is the same.

An established home, new-build, apartment, cross-lease property or rural and lifestyle property can each raise different legal considerations.

Depending on what you are buying, there may be covenants, easements, body corporate requirements, access arrangements, title restrictions or other matters that deserve closer attention.

A property that looks straightforward at the open home may have legal details that are not immediately visible.

That does not necessarily mean there is a problem. It means those details should be understood before you commit to the purchase.

Do your due diligence before you commit

The purpose of due diligence is not to find a reason not to buy a property.

It is to give you a clearer picture of the property, the obligations that come with it and any issues that could affect your plans.

For most buyers, the safest time to ask questions is while the agreement still gives you the ability to investigate them.

Once you have gone unconditional, your position changes considerably.

Doing the right checks before that point can give you a much clearer picture of what you are buying.

Buying a property?

Blackhawk Law helps buyers and sellers across Franklin, Auckland and beyond. We can review your agreement, help with property due diligence and guide you through the legal process from contract to settlement.

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This article provides general information only and does not constitute legal advice. The legal considerations will depend on the particular property, the terms of the agreement and your individual circumstances.