As Property Conveyancers we act for Buyers and Sellers of a broard spectrum of property and business transactions. Many flow through quite smoothly and proceed to settlement with little stress to the clients who have no after settlement issues. However there are some that have a high potential for grief and heartache. Those that repeatedly crop up are; loss of equity, construction problems, unapproved additions, and  misdescription.

Loss of equity is a much discussed fact by most buyers of property in the middle or end of a boom time followed by a readjustment

of the market. The reality is that they just paid over the real value of the property and were caught up in the market hype. Over time property is an excellent investment and will have substantial rewards. One of the major problems faced by “amateur investors” in the recent climate is accessing equity in the family home to purchase an investment property that is highly geared and may well have been with as little as 20% input. As we know the Banks shifted position very quickly and some investors were required to have their properties revalued and the equity in the investment property topped up to 30%. If the properties valued substantially less, common, and the total equity didnt meet the new Bank criteria then we have a totally stressed out investor with a potential forced sale and a compounded loss with few buyers on the scene. The one bright light is for people who are upgrading to a more expensive home, eg. if the family home was worth $500k in the boom and is now worth 20% less and the new home is 20% less than  its previous value of $800k then its a paper profit win for the Buyer, with the added bonus of a lower commission to sell.

 Post purchase construction problems can be an absolute nightmare. The leaky home situation is an absolute disgrace and reflects badly on the construction industry and the socalled council experts who like to hold court over home construction. It adds a large cost to any project, and if the want to rule the roost then the need to take much more than a 25% responsibility when it all turns to custard. Our local council head of building inspections came from either a medical or catering background. Go figure. Our neighbouring house is only a few years old and would have cost a couple of million to construct. About 9mths after moving in the roof had to be redone costing approx. $300k and now only a few years later the whole house is wrapped in plastic while the exterior frames and cladding is being replaced. The stress for the owner let alone the cost must be devastating. Somewhere along the line we will all pay for 50% of that with either tax dollars or in rates, That is if they are covered. When buying a property get some professional advice as to the structural integrity of the building. We can recomend someone in your area who can do this.

Unapproved additions are a nightmare. New Zealand must be the DIY centre of the world. If buying do your research, if selling disclose it. If done to a high standard this issue may be resolved, if not it is just a continueing drama. Check the Council Property File, get a LIM report. If it doesnt look right it probably isn’t. Be wary of crosslease properties when your property has a recent addition, make sure the Flats Plan has been updated.

Don’t rely totally on what the Real Estate Agent tells you about a property. They are marketing and sales experts. They are not structural engineers or investment advisors, nor can they predict the future. The information they supply you will come mainly from the Seller. The Seller will tell you lots of stuff you want to here and nothing about things that may be relevant but you wouldn’t like. Once again lots of research required. Getting some compensation out of a Seller post settlement is almost impossible.

We offer to check any contact for our clients at no cost to make the inclusion of conditions to alleviate some of these risks and give the protection required to add some “peace of mind” to the process.

Happy and safe investing. Jim