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6 September 2018

Tick All the Boxes

Ray White Damerell Group’s General Counsel, Elizabeth Rabier, talks about the common legal matters you should cross off your list ahead of putting your property on the market.


Delaying or omitting to obtain the pertinent information or documentation required to sell your home can drastically slow up or, in some cases, completely derail the sales process.

So, way before you even start to think about weeding the garden, or what colour cushions to put on your settee, we suggest you begin to prepare your property legally and financially for its upcoming sale.

When you list your property with Ray White Damerell Group, you will not only have chosen to work with one of the most successful real estate sales teams in Auckland and remove the possibility of your campaign being derailed by a purchaser who identifies a legal or compliance defect, but you will also have the reassurance of having the services of our in-house legal expert, Elizabeth Rabier, should you need her. Hopefully that won’t be necessary, as you will have done all your homework in advance.

“If you’re a vendor and you want the best possible price for your property, then you need to present it in the best possible light both cosmetically and legally,” says Rabier. “What you need to ask yourself is what can I do in advance that will save me time and stress when it comes time to selling my property? This will make life easier for yourself, and most importantly any potential buyer.

First and foremost, if you have ever done any work on your house that needed consent, you will need to check with council that it has been signed off and has a Code Compliance Certificate (CCC) – that’s most important, says Rabier.

“On a number of occasions we’ve received a LIM report on a property that’s scheduled to be put on the market and there’s an outstanding CCC on it, and that will inevitably delay the sales process, sometimes by weeks or even months, if an issue needs to be fixed,” she says. “A vendor may have gone through all the correct Council processes and applied for building consent and used a licensed building practitioner to complete the building works, believing that the final CCC automatically issued. However, that is not the case. A vendor still needs to arrange a Council inspection before Council will issue the final CCC, so we recommend that best practise is to check the status of your building consent with Council prior to listing your property for sale to avoid any unnecessary surprises.”

If you are at all unsure of the legal status of a property, you can pay a visit to council and ask to look at its ‘property file’. Here, you can check whether everything is in order before spending the current charge of $400.00 for an urgent LIM, then discovering that there is a pending CCC on the property.

Also, if there are outstanding compliance issues that relate back to the time before you owned the property, then you will need to apply for a Certificate of Acceptance (CoA). A CoA provides a limited assurance that Council is satisfied, on reasonable grounds, that unconsented building work complies with the current New Zealand Building Code. You can apply for a CoA only if building work was constructed without a building consent from 1 July 1992 onwards, or in specific circumstances, when a CCC can't be issued.

“In this current market it is important for vendors to understand that they may have purchased their property in a time where historical outstanding issues were not considered high risk, but that has now changed, so it may be worth getting a CoA if you have any historical compliance issues with your property.”

If your property is on a cross-lease and you have expanded the enclosed size of the dwelling, no matter how minor, then it’s doubly important that you have all the plans and legal requirements signed off and up to date. “The plans need to be agreed by all cross-lease owners in writing and updated. If they haven’t, it can become an expensive and drawn-out process, as lawyers and land surveyors will need to get involved,” says Rabier.

Two words that will have potential buyers running for the hills are ‘leaky’ and ‘building’. And once a property has been identified under the Weathertight Homes Act, it will be put onto the LIM, and it will stay on there forever. However, if the issues have been successfully resolved, the important thing from a vendor’s point of view is to ensure the property has been issued with a new CCC and that it is shown on the LIM report. Again, this can be easily checked with a look at the ‘property file’ kept at Council.

“In the case of a Unit Title property, any remedial work should be identified on the body corporate’s AGMs,” says Rabier. “When preparing to sell a Unit Title property I recommend you contact the Body Corporate and obtain the AGM reports for at least the past five years, plus a copy of the Long Term Maintenance Plan, and request the pre-contract disclosure statement for the vendor to sign.”

Finally, there are subdivisions, and with the new Unitary Plan now partially in place, there are more of these subdivided sites coming onto the market. “If you’ve recently commenced subdividing a property, but titles or CCC are yet to be issued, we recommend that you contact your lawyer and your surveyor to get your documentation in order regarding the new titles yet to issue and any interests that will be registered against the titles, e.g. easements. If it is a new build, we will also need information on the new build including the maintenance period and any warranties and guarantees that will be assigned to the new purchaser,” advises Rabier. “It is important for a purchaser to understand what they are actually buying.”

So endeth the sermon on compliance.

Other legal matters that should be looked at in advance surround your personal circumstances, says Rabier. “If your property is in a trust, for example, then you need to understand the terms of your trust and who can legally sign the Agency Agreement and the agreement for sale and purchase, e.g. the Agreement for Sale & Purchase of Real Estate, Auction Agreement or Tender Agreement. That’s important,” she says, “to ensure the agreement is legally binding.”

If the property is being sold as part of, or because of a relationship separation, then check whose name is on the title, because that’s who has the authority to sign any sales agreements or documents. And if you’re selling a deceased estate, then probate has to be granted before anything can be done.

Hot on the heels of death is the only other certainty in life, tax; in this case the recently updated brightline tax. “If the property you’re selling is your main home, or transferred as part of an inheritance, or transferred to you as an executor/administrator of a deceased estate, then the brightline test should not apply to you,” says Rabier. “But, if it’s an additional property – holiday or investment – then it may be subject to tax.”

In a nutshell, the brightline rule applies to the sale of any residential property you’ve bought on or after 1 October 2015 as follows; If you bought a residential property between 1 October 2015 to 28 March 2018, inclusive: the two year brightline rule applies. If you bought a residential property on or after 29 March 2018, then the five-year brightline rule applies. So, if you have purchased a property during these periods, with the intention of reselling it, you may be required to pay tax on any profit you make when you sell that property.

Virtually all of the above can be easily investigated and checked off well ahead of putting your property on the market. So, if you know you’re going to be selling your home, or any other property in a few months time, you should start crossing the t’s and dotting the i’s, now, to make sure that your home is compliant and that you, personally, are legally allowed to sell your property.

For further information or assistance, do not hesitate to contact one of Ray White Damerell Group’s experienced salespeople who will be more than happy to assist you in getting your property ready for sale.

Buying Not Selling?

People often buy and sell property at the same time. Even if you haven’t got a specific property in mind right now, it pays to tie up any legal loose ends, so that when the time comes you are ready to act. When it comes to buying a property, time is often of the essence, so you do not want any avoidable hold ups, especially when going into multiple offer scenario.

Rabier says another matter to bare in mind is the Anti-Money Laundering legislation which now requires lawyers to verify the identity of all their clients. Without this verification, your lawyer will not be able to act for you. A vendor (and likely a purchaser) will need to provide some form of ID to their lawyer such as their passport, driver’s licence, letter from the customer’s bank, or from the IRD as part of their verification.

“Ownership structure can be another area you need to think about when buying a property; whether to set up a trust or a company, for example,” says Rabier. “I would recommend getting advice from your tax accountant and lawyer for pros and cons of each. Again, it’s certainly worth thinking about in advance and to allow time to set things up, depending on the complexity of the structure.”


Useful links:

Certificate of Acceptance (CoA)

Code Compliance Certificate (CCC)

Brightline Tax

Anti Money Laundering Legislation


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