Buying a House
An overview of the conveyancing (legal) process
Buying a house can be stressful, especially if the process is new and unfamiliar. To help you better understand what will happen and to ease any concerns you may have, these notes give a basic overview of the steps involved:
Step 1 Talk to us first. You should have your lawyer check the Agreement for Sale and Purchase (“contract”) to confirm it is in order before you sign it. Good agents will happily email it to us. If there is no agent, the normal protocol is for the buyer’s lawyer to prepare the contract. The process is more involved if you are buying an apartment. We can advise you further on that if required.
Step 2. Once the contract has been checked you can sign it. We will receive a copy after your offer is accepted. We then send you more detailed information about the purchase process. If you are using KiwiSaver funds, this is the time to make your withdrawal application. That includes a letter from us to your KiwiSaver provider. You may also qualify for a First Home Grant from Kainga Ora.
Step 3. Most contracts are subject to conditions such as arranging finance and insurance, our approval of the title, or a search of Council records. A conditional contract stops the owner selling to anyone else while you make further enquiries before being fully committed to buy. We will work with you on this, as required. Sometimes issues arise at this point that can add to the legal costs. For instance, your building inspection may reveal problems and you want to negotiate a lower price before proceeding with the purchase. Sometimes the agent resolves this, but if a problem is referred to us, we will discuss the cost implications with you first.
Step 4. Once the conditions are satisfied, a deposit is usually payable to the agent. This is part of the purchase price, and it may or may not be the same as the full amount of cash you are contributing.
Step 5. We receive from the seller’s lawyer a “settlement statement” showing the exact amount to be paid on settlement. This sets out the price, less any deposit paid, and an adjustment of Council rates.
Step 6. We will receive mortgage documents from your bank and arrange for you to sign them a few days before settlement (“Settlement” is explained below). The bank will pay the mortgage funds to our trust account.
Step 7. Near the settlement date we send you our draft invoice and let you know the final amount of money you will need to pay into our trust account (if any) to make up the total we require to complete settlement.
Step 8. The standard purchase contract allows you to make a final inspection of the property before settlement. If there has been any damage to the property since you first viewed it, or any other issues that entitle you to claim compensation, you need to advise us before the settlement date.
Step 9. “Settlement.” This happens when we receive your mortgage and any other funds from you or your Kiwisaver provider, and pay the balance of the purchase price to the vendor’s lawyer. From that time, you own the property and are entitled to move in. We arrange for the title to be transferred to you and advise Council for rates purposes. We will notify you as soon as settlement has happened. This is often around the middle of the day, but the exact time is outside our control. The vendor may be still moving out as you begin to move in. Everyone should try to be patient and work around each other in that case.
Step 10. After settlement we will send you a detailed statement showing all receipts and payments through our trust account, including our fees and expenses.
Please note this is only a basic overview of a purchase. It is not a complete description of the conveyancing process. Not every transaction will follow these steps exactly. Part of our role is to identify any problems at an early stage and take appropriate steps to help you resolve them.