Legal contract vital

Press, 20 October 1981, Page 23

Legal contract vital

A solicitor should be the first person you consult when considering buying or building a house. He can provide valuable general information and guide you as to your buying range and. therefore, it is important that the solicitor be involved right from the start.

The Canterbury District Law Society stressed that it was vital that clients were candid with their solicitor. At the first interview with the solicitor, the client should bring evidence of earnings (a pay-slip is helpful) if finance is sought.

In most cases, the solicitor is asked for advice on finance. In his professional capacity; the solicitor is often niore aware of the true rates of interest available from lending institutions. In dealing with a private sale, each party should consult. their own solicitors. The purchaser’s solicitor will then draw-up a contract which will be sent to the vendor's solicitor.

When a land agent is involved. the solicitor should conduct a search of the title and enquire as to the other relevant factors and ensure that the contract is in order. This includes checking for easements, restrictions, road widening, zoning and the future development of the area.

Generally, a solicitor is familiar with local conditions and is aware of any geographical problems, such as low lying areas or if any filling’ has taken place. This is not the solicitor's, responsbility but the solicitor's background knowledge can assist.

The solicitor will also explain to his client what chattels are included in the sale.

This is particularly important with property that has -been rented. The" client may assume shouse complete with curtains and drapes only to discover., at a later date, that these- belong to the tenants;' .

This is what the solicitor is being paid for — to iron out

any possible misunderstandings.

Another common pitfall was for clients to be unaware that drice the contract had been made unconditional. then, in the absence.of specific provision to the contrary. the risk of fire or any other damage was at the risk of the purchaser. A solicitor will include a provision to ensure there is adequate im surance.

In major renovations this insurance would be in the form of a builders' risk cover.

An unconditional offer (sometimes called a cash offer) means you are bound to buv the house after the vendor has accepted. If there is anything outstanding — a valuation report. the title may not have been searched or mortgage finance has not been obtained — a conditional offer should he made. This means that the offer to buy" the bouse is dependent bn all conditional clauses being satisfied.

Standard solicitors fees are set by the New Zealand Law Society on a semi-slid-ing scale on the value of the property. The fees are also based bn the number and nature of mortgages required.

Additional fees are charged when there are unusual circumstances which require further' negotiations between the parties involved. These difficulties may take various forms, such as a forced sale (if the vendor refuses to move) or temporary finance problems.

In buying an ownership flat, there are several different types of titles’. One extreme" examnle is when a proper land "title in not issued, it simply may be shares in a company.

This, of course, affects resale value. The nature of the titles is so varied that the solicitor is the best person to advise of the rights and duties associated with each title.