The problem arose due to the fact that the house being purchased had much of its original TRS (Tough Rubber Sheathed) wiring, which was flagged in a building report as a potential fire hazard.

Due to the potential fire risk involved with TRS wiring, the client’s insurance company would not offer the usual ‘full replacement and reinstatement’ insurance. Instead they offered indemnity insurance with a condition that the house be re-wired within 90 days. Once re-wiring was completed and certified the insurance company would upgrade the insurance to ‘full replacement and reinstatement’. While indemnity insurance is reasonably common in such situations, the introduction of a time period for compliance with re-wiring, is a recent requirement by many insurance companies.

Thinking all was well the client approached the bank to confirm that indemnity insurance would be sufficient, until the re-wiring was completed. However, the bank’s lending services department rejected the insurance. The bank was concerned that if the re-wiring was not completed within the 90-day requirement period, then the insurance would lapse. As such it could potentially have a loan secured over an uninsured property.

This meant that the client was without insurance, could not drawdown the loan facility and would therefore default on settlement. In such cases the defaulting party is not only subject to penalty interest until settlement is completed, but they are responsible for the costs/penalties incurred by other parties who default in turn – this can occur where there is a chain of sale and purchase transactions.

Thankfully we were able to organise acceptable insurance prior to settlement and the purchase was completed without issue. Nevertheless, this story serves as a warning to home buyers as to the importance of consulting a solicitor, prior to entering into Sale and Purchase Contracts. As a rule of thumb we would almost always recommend obtaining a building report (especially for older properties), or at least have an electrician check the wiring. With the new 90-day policy discussed above now becoming commonplace, it may also be prudent to add a condition, that the house be approved for insurance satisfactory to the bank’s requirements prior to confirmation.

If you are contemplating entering the residential market please do not hesitate to contact one of our Conveyancing experts to discuss your options.

The Residential Tenancies Act 1986 sets out the rights and obligations of people who rent their homes and those from whom they rent. On 22 July 2010 the Government gave the green light to implement changes to the Act, with a view to modernising it. It is anticipated that these changes will come into force later this year.

 Proposed changes to the Act include: 

-                      Providing a clearer and fairer process for terminating and renewing tenancy agreements.

-                      Introducing penalties for tenants harassing neighbours. 

-                      Introducing penalties for landlords providing substandard housing. 

-                      Extending the Act to cover boarding houses. 

-                      Clarifying what happens when a fixed term tenancy expires. 

-                      Clarifying the process for terminating a tenancy due to non payment of rent or other breaches. 

-                      Providing measures to encourage compliance by landlords and tenants with their obligations under the Act. 

-                      Increasing the monetary jurisdiction of the Tenancy Tribunal to enable more tenancy disputes to be resolved efficiently and cost effectively. 

-                      Providing more clarity with regard to liability for outgoings. 

-                      Provide for disclosure requirements by landlords, where a premise has been cleansed under a statutory order (i.e. because the premise was contaminated due to methamphetamine manufacture). 

Whether you are a landlord or a tenant the impending changes will affect you significantly.

When purchasing a section, it is always important to investigate whether any documents supplied or agreed to be supplied in relation to the property are current. 

Recently clients looked into buying a section on which they intended to build a new house. As part of the purchase negotiations, the Vendor agreed to provide the client with a set of building plans which they advised had been approved by the local authority.

Being provided with building plans represented a significant benefit to the client, as preparing and submitting such plans to the City Council for approval can be a costly and time consuming exercise. Having reviewed the plans, the client instructed us to draft a sale and purchase agreement incorporating the plans as part of the package.

However, as part of our pre-drafting investigation, we discovered that the Building Plans had been approved by the City Council in 2008. City Council rules require you to commence building within one year after Council approval and you have a further year from commencement, within which to complete the job. The reason for these timeframes, is to ensure that the plans stay current, as rules and requirements within the building industry are constantly updated and changed.

As the plans were approved in 2008, they had now lapsed. While the client had the option of resubmitting the exact same plans, this would not negate or reduce the cost of seeking approval, which in this case was estimated to be in the vicinity of $7,000.00.  

When buying a section we recommend contacting one of our conveyancing experts to ensure your needs and expectations with respect to your purchase are met.

If you are renting, and you don't have liability insurance, you are flirting with financial ruin.

The current "economic crisis" has seen a dramatic increase in the number of properties on the market, under the ominous sign of "mortgagee sale".

Agreements for the sale and purchase of property are frequently subject to conditions relating to finance, builder's report, LIM report or inspection of council records.

There are serious potential pitfalls with taking possession of your new home, before the Code of Compliance Certificate issues

There is no shame is not being able to afford something.  In fact recognising our limitations is cool and wise

We are aware of cases where a person has owed a unit for years, blissfully ignorant that the external alterations (carried out by the previous owner with a building consent) were not reflected on the flats plan for the unit.