All sorts of buyers are active in the Auckland property market; first-time buyers, Mum and Dad investors, new immigrants, property developers and foreign nationals, to name just some. Whatever your make up, your interests need to be well protected, otherwise the buying process can get ugly in a hurry. Hometopia talked to Akarana Legal's, Phil Sheat, about some of the pitfalls.
Hometopia: You've been an Auckland property lawyer for over 30 years, how have things changed in that time?
Phil Sheat: Three areas in particular are unrecognisable from the past; technology, buyer competition and building integrity. Technology has changed everything for the better, from property search to conveyancing, while increased buyer competition has seen the advent of sales by auction and the need to be agile and to act fast. Building integrity is a less welcome change, unfortunately. The fact is, there are thousands of properties in Auckland that represent a substantial risk to unwary buyers - it's important that their interests are protected.
HT: You mean leaky buildings?
Yes, and even if the one that you are looking at has never shown signs of moisture, that doesn't mean you won't be negatively affected. All sorts of issues need to be taken into consideration. Are you buying at a price that reflects the potential cost of recladding? What if it takes many months to sell the house when you want to move on? It's all about knowing what you are getting into and the possible consequences. I'm a stickler for making sure my clients go into transactions with their eyes wide open.
HT: One of the areas where we often see buyers struggling is understanding property titles and their implications, especially the distinction between freehold and cross lease. Is that your experience too?
PS: Definitely and there are an enormous number of cross lease properties, especially in Auckland.
HT: Why is that exactly?
PS: In the 1960’s and 70’s developers resorted to cross leases as a way to subdivide cheaply by putting two or more homes on a single title. That meant they only had to pay one contribution to the council and so could build more cheaply and maximise their profit.
HT: What are the implications for home buyers?
PS: They will vary and it’s critical that buyers have a lawyer go through the terms of the lease and flats plan in order to get the full facts. The one common limitation is that any owner must get the approval of all other owners on the cross lease before they can undertake any significant alteration to their property.
HT: Any other danger areas for home buyers?
PS: Far too many unfortunately. Whether it is analysing the LIM report for unpermitted works, flood paths, soils instability and aircraft noise, or reviewing body corporate rules and titles for covenants and restrictions, the lawyer is a key part of any buyer's professional team. The risks are just too great to not have top advice.
HT: Agreed, we have seen too many home buyers suffer because they were not adequately represented, the other party has walked all over them. Thank you Phil.
Contact Phil at [email protected] or call 027 275 2122.