Your will sets out your instructions on how you want your property, known as your estate, shared out when you die and how you want your dependants, such as your partner or children, to be looked after.

Having a valid will in place when you die can reduce the amount of financial and emotional stress on your family, and can reduce the possibility of a dispute arising over your estate.

If you are over 18 years of age and of sound mind, then you are able to make a will. There are a few instances where you can make a will if you are under the age of 18, including if you are or have been married or in a civil or de facto relationship, in the military, or approved to make a will by the Family Court.

If you have a will in place, it is important to make sure your will is valid. There are a number of factors that can make a will, or part of it, invalid. These factors include entering into a marriage or civil union, the will not being signed or witnessed properly, undue influence to distribute your estate in a particular manner, or if you were underage or not of sound mind when the will was made. If parts of your will are deemed invalid as they are unclear or uncertain, the Court will use external evidence of your intention to determine its meaning. It is also important to correctly identify what property will be included in your estate. Should you make a distribution or give a life interest in property which does not make up part of your estate, then that distribution or interest will fail. A common error when identifying what property will make up an estate concerns trust property. Any property once personally owned and transferred to a trust, or trust property to which you are entitled as a beneficiary, does not make up part of your estate and cannot be distributed through your will. Your will deals with the distribution of your “personal” property and property held in a trust does not constitute this. When property is transferred into a trust, the trustees of that trust become the legal owners of that property. Additionally, if you are a beneficiary of a trust, the trust property will not form part of your personal estate as the trust property has not been transferred or distributed to you. Another common misunderstanding surrounds the distribution and/or life interest in land that is owned by more than one person. When making a distribution or giving a life interest in land you own with someone else, it is important the land ownership is held as tenants in common. If the ownership is held as joint tenants, then your share of the land is automatically transferred to the surviving owner, rather than into your estate. If this were to happen, then the distribution or life interest would fail.

If you die without a will, it is known as dying intestate. Should you die intestate then the Administration Act 1969 (the “Act”) will determine how your estate will be distributed. The Act will apply and your estate will be distributed to your surviving partner, your children, and/or your parents in set amounts. Failing that, your estate will go to the Crown. This distribution may not reflect your wishes or the wishes of your friends and family. Legal expenses and time delays are usually larger where there is no will in place.

Your will could be one of the most important documents you sign. If you have any questions about the validity of your will or if you would like to put a will in place, then contact us at Arnet Law.

As you probably know, if you are in a relationship of three or more years duration you will be subject to the equal sharing provisions of the Property (Relationships) Act 1976 (unless you enter into a “Contracting Out Agreement” or “Prenup.”)

This applies to marriages, civil unions and de facto relationships and in the case of marriages and civil unions any immediately preceding de facto relationship between the parties will be counted as part of the marriage or civil union.

Whilst the date of marriage or entry into a civil union will be obvious, it is not always obvious when a de facto relationship starts. In fact, two people in a relationship can have different ideas as to when their relationship started. As this can impact upon the relationship property at issue on separation and even whether the Property (Relationships) Act 1976 applies at all, it is not unusual for the Family Court to be asked to determine the start date of a relationship for the purposes of the Act – and for that matter the date at which it ends.

So how does the Family Court decide? Do the parties need to live together under the same roof full time? No! Not necessarily! Do they need to be in a sexual relationship or share a bank account? Again, no, not necessarily. Whether a de facto relationship exists (and when it began and/or ended) is determined on a case by case basis. The Act sets out a list of factors that may be relevant, including the nature and extent of a common residence, whether or not a sexual relationship exists, financial dependence or interdependence, whether they are known to others as a couple. There are other factors listed too and importantly none of these individual factors are necessarily crucial. There may also be other factors not listed that are deemed to be relevant in a particular case.

So what does this mean?

It means that there is no absolute test that determines whether or not you are in a relationship, when it starts and when it finishes. It may also mean that despite thinking you are not in a de facto relationship, it may be found in the future that you were. That may mean you are subject to equal sharing under the Act when you didn’t even think you were in a qualifying relationship. Alternatively, you may think you are currently in a relationship and later be proved wrong! If you are married or in a civil union, the start date of your relationship may likewise be debatable.

The consequences of any of these scenarios can be significant. Given you may be found to qualify under the Act earlier than you may have thought, if you are thinking about getting a Prenup, you should consider talking to your straight talking lawyers at Arnet Law now!

Are you leasing the premises from which you run your business? The Landlord may require you to enter into a commercial lease recording the terms on which the premises are leased.

Typically the following details are included in a commercial lease:

The name of the landlord and the tenant.The name of the guarantor. The landlord may require you to personally guarantee the lease.A description of the premises to be leased.Whether car parks are included in the lease.The term of the lease.The date the lease starts.Whether you have the right to renew the lease and for how long, for example, the lease may state that you have three rights of renewal of three years each.The date the lease ends.The annual rent for the premises and the car parks (base rent). GST is payable on top of the base rent.The date the rent must be paid.The dates on which the rent is to be reviewed.The outgoings which you are liable for, for example, you may be liable to pay a proportion, or all of the rates, utilities and body corporate fees, as well as the rent.The default interest rate if you default on payment of the rent or other moneys payable under the lease.If the landlord is required to spend money on any alteration to the property, the landlord is entitled to on- charge a percentage of the cost of the improvement.The business use, for example, retail, office, restaurantThe insurance you and the landlord are required to have in place.

For the term of the lease you will be required to maintain the premises to the standard they were in at the start of the lease, less fair wear and tear.

It is usually the tenant’s responsibility to:

Repair all glass breakages and damage to all doors, windows, light and power fittings.Paint and decorate as required.Keep all floor coverings clean and replace any worn or damaged floor coverings.

In most cases you can put up a sign for your business, provided that you have the prior written consent of the landlord.

You can make additions or alterations to the premises but you must obtain the prior written consent of the landlord. You must also comply with all statutory requirements including obtaining a code of compliance certificate. On the expiry of the lease, you may be required to reinstate the premises to their original condition, at your cost.

Weve got a Lawyer for that!

We have experience acting for both landlords and tenants. Before you sign a lease or an agreement to lease, bring it to us and we can read it over with you and advise you.

Many people take comfort in having a will that expresses their final wishes, believing that upon their death the instructions they have set out will be followed. Therefore, it may come as a surprise to some that your will can be challenged after you die and if successful, a Judge may decide how your estate is divided.

The legal validity of the will may be challenged if, for example, it does not comply with procedural requirements such as witnessing or if the deceased was not of sound mind when they signed it. If the will is found to be invalid, either an earlier will can be reinstated or the estate will be distributed under the rules of intestacy.

Pursuant to the Family Protection Act 1955, a defined class of relatives can make a claim against an estate if adequate provision was not made in the will for their proper maintenance and support. To establish a claim under this Act, the claimant must show that the deceased had a moral duty to provide for the claimant, and that they have breached that duty by failing to provide for the claimant in the will or providing inadequately. The court will consider several factors in assessing a claim, including whether the decreased had a legal or moral duty to maintain the claimant and whether the claimant was left anything in the will.

Claims can be made under the Law Reform (Testamentary Promises) Act 1949 if the deceased promised to leave the claimant something in their will in return for services rendered or work performed, and failed to do so. The claimant must establish that they rendered services to the deceased during their lifetime and the deceased made an express or implied promise to make some provision for the claimant in their will, then failed to fulfil that promise.

A surviving spouse, civil union partner or de facto partner can elect to inherit what is left to them under their deceased partner’s will or to apply for a division of relationship property under the Property (Relationships) Act 1976. The property division rules that apply on death under the Act are largely the same as those that apply on separation.

While there are never any guarantees that your will might not be challenged after your death, there are things that you can do to reduce the chances of a challenge and/or reduce the likelihood such a challenge will be successful. If you would like to protect your will from challenge or if you need to make a claim against an estate, contact the team of experts at Arnet Law today.

With the desire to provide for their children long after they are gone, we are often approached by clients wanting to know the “safest way” to give assets to their child without it potentially becoming relationship property. In a qualifying relationship, relationship property is divided between the parties when the relationship comes to an end. When transferring an asset to your child who is in a relationship, it is highly likely that the asset will be converted into relationship property and in the event the relationship ends by separation, your child’s estranged partner will entitled to a half share.

To protect an asset from future claims, we will often advise a client to establish a family trust through which to hold the assets for the benefit of their child.

The robustness of this arrangement was recently affirmed in a New Zealand High Court case. In the 2016 High Court case of Da Silva v Da Silva, Mrs Da Silva’s mother (Mrs Perris) established a trust for the benefit of herself, her daughter and, her daughter’s children. The trust was established to the exclusion of the daughter’s husband (Mr Da Silva), even though the pair had been married for some time. The Court held that the trust was not a “post-nuptial settlement” and that section 182 of the Family Proceedings Act 1980 (“FPA”) did not apply. As such, the husband was unable to intercept the trust’s wealth. Had section 182 of the FPA applied, then the Court would have the power to rewrite the post-nuptial settlement and the husband could potentially have become entitled to a share.

If you are considering transferring wealth to your child then talk to us first, your straight talking local lawyers.

Having a family trust used to be considered the be all and end all for asset protection. For many asset holders, establishing a family trust and transferring their assets meant they lessened the risk of having their wealth consumed by rest home care fees and allowed them to avoid tax implications. These days, however, it’s not that straight forward.

Now that gift duty has been abolished in New Zealand, the maximum amount of debt a person or couple can gift to a family trust before it is seen as a deprivation of assets is $27,000 per year, or $6,000 per year in the 5 years preceding the application for the Residential Care Subsidy. This is half the amount it was prior to the abolishment on 1 October 2011. This often means people are unable to forgive much of the debt owed to them by their family trust before rest home care is needed. When applying for the Residential Care Subsidy, Work and Income will include any unforgiven debt owed to the applicant by the family trust when completing a financial means assessment. What some people don’t realise is, the threshold is set at a new level each year on 1 July and differs depending on your relationship status and the care requirements of any spouse. Now, there are a lot of New Zealanders who would fit within this threshold, allowing them to maintain their family home and cash assets without the ongoing administration costs of a family trust.

Additionally, family trusts were also often established as a tool in tax minimisation through trust income being disbursed to beneficiaries at a lower tax rate. This allowed the wage earner to enjoy the benefits of being paid a higher salary without having to pay the increased level of tax. Due to the overuse of family trusts in this manner, New Zealand has responded with the appropriate legislation. Therefore, the family trust entity no longer represents itself as the powerful tax minimisation tool it once did.

There are a number of new rules affecting family trusts and how they operate – the issues addressed in this article are just the tip of the iceberg. If you think your family trust is no longer needed or maybe isn’t working how you want it to, then contact us for a no obligation trust review. We’ll help you identify where your family trust is falling short and how we can help you achieve the optimal asset protection.

A second mortgage is a loan which is secured by mortgage to the title of a property behind another mortgage (known as the first mortgage). The second mortgage comes second to the first mortgage in priority, meaning that, in the event the mortgagor (the borrower) defaults and the property secured by the mortgage is sold, the second mortgagee will only receive payment if there are funds left over after the first mortgagee is paid.

While the popularity of a second mortgage saw a decline due to the first mortgagee meeting most of a borrower’s needs, the new loan-to-value ratios has restricted the bank’s ability to lend to investors and owner-occupiers alike, resulting in a second mortgage comeback.

A second mortgage is normally engaged as a short-term solution and is often used as a financial resource during a new business start-up, for a home owner who has fallen on short-term economic hardship, or for people nearing retirement who have been declined further borrowings from their bank. The costs associated with a second mortgage is higher than a (regular) first mortgage, meaning it is usually uneconomical to have a second mortgage over a long period of time.

Your first mortgagee will need to consent to the registration of the second mortgage on the title of your property. Registering the second mortgage without the consent of your first mortgage is a breach of your mortgagee’s terms and conditions.

A second mortgage isn’t the perfect fit for everyone so the choice shouldn’t be taken lightly. If you would like more information as to whether this is the right choice for you then contact us at Arnet Law.

A house purchase is often the biggest asset (and debt) a person will take on during their lifetime. Rising house prices in Auckland mean that first home buyers looking for a foot on the property ladder often need to consider alternative options such as purchasing a property with a friend or asking a family member to guarantee their borrowings.

Buying property with friends or family is becoming increasingly common. In this instance, two or more people are registered as tenants-in-common, either in equal or unequal shares. The advantages of purchasing in this way include the sharing of costs, including the property price and ongoing costs such as loan repayments and maintenance. Buyers thinking about purchasing a property in this manner need to consider entering into a Property Sharing Agreement. Among other things, the Agreement should include a record of each party’s separate contribution, each party’s obligation to contribute to ongoing costs and the terms of onselling shares in the property.

Many parents or family members may wish to help first home buyers without having to write a cheque. One way to do this is by guaranteeing the borrowings the buyer. The essence of being a guarantor is that you’re making a promise to pay the mortgage if the borrower is unable to. Buyers with small deposits often require a guarantor before banks are willing to advance funds. Going guarantor can be risky for family members but there are several things which can be done to reduce the risk. Guarantors should consider limiting the extent of the guarantee and should re-visit the guarantee with the bank as the value of the property increases and the mortgage is reduced. Guarantors should also consider getting an indemnity from the purchaser, which should be recorded in a separate document.

Regardless of the option chosen, it is imperative that first home buyers and guarantors seek legal advice prior to entering into property transactions to ensure their legal rights are protected.

A dry Summer is a timely reminder to consider the importance of water easements, particularly for rural properties.

An easement grants a right for the owner of one property to do something on someone else’s property. There are several types of easements including the right to convey electricity, a right of way and the right to convey and drain water from one property to another.

An easement instrument records the existence and description of the easement. Once the document is created and signed, it is registered on the titles to both or either property.

It is important to be clear about the terms of each easement when purchasing a property or granting an easement to a neighbouring property. The Land Transfer Regulations 2002 imply certain rights and powers into easements unless they are specifically altered in the easement instrument.

With respect to the right to convey water, this includes the right to take and convey water in free and unimpeded flow from the source of supply. It also includes the use of pumps, pipes, storage tanks and water purifying equipment. The Regulations prevent the grantor of the easement from doing anything on their land which may cause the purity or flow of water of water to be diminished or polluted.

The rights and obligations implied by the Regulations are couched in fairly wide terms and grantors of easements may wish to consider altering the rights in the easement instrument, particularly if the water supply on their property is limited. The grantor could regulate the water supply by liming the amount of water that can be taken or specifying the uses to which they water can be put.

Many rural property owners have informal or “gentlemen’s” agreements regarding access to neighbouring water supplies. These agreements may persist over several years however it is important to note that they do not amount to easements and are not legally binding. If the property enjoying access to the neighbouring water supply is sold, the new owner has no right to access the water supply in the absence of an easement.

For more information on easements, contact one of the property law experts at Arnet Law.

A vendor is required to sell a property with vacant possession unless the particulars of the tenancy are included in the agreement for sale and purchase.

Vacant possession includes:

Giving title to the property free from any tenancy or right of occupation; andGiving physical vacant possession.

Except in the case of a fixed term tenancy, where a vendor agrees to sell a tenanted property with vacant possession, the vendor is legally required to give the tenant at least 42 days notice to vacate the premises. Therefore, vendors need to ensure that settlement occurs at least 42 days after the date on which the agreement becomes unconditional, to give sufficient notice to the tenant. In the case of a fixed term tenancy, unless the term expires before the settlement date, vendors will need to sell the property "subject to existing tenancies”.

Impediments to vacant possession are not confined to tenants or owners remaining on the property after the settlement date. The obligation to give physical vacant possession to the purchaser requires the vendor to remove from the property any goods not included in the sale, unless the purchaser has consented to them being left on the property. This means that a vendor would be in breach of an obligation to provide physical vacant possession if rubbish, furniture or other chattels are left in or on the premises at settlement date.

Prior to the purchaser conducting a pre-settlement inspection, it is advisable that vendors ensure that all chattels not included in the agreement for sale and purchase and any rubbish left behind by tenants are removed from the property.

Lawyers and real estate agents can assist vendors to meet their obligation to provide vacant possession by advising vendors on the appropriate notice periods for different types of tenancies and arranging inspections of tenanted properties before settlement.

In our life time we all manage to establish something whether it be a property, a business or simply even savings, we still have interests that we would like to see protected. The easiest way to do so is to make sure you have a valid Will. Your Will is one of the most valuable legal documents you’ll create.

Your Will sets out your wishes for how your affairs are to be managed after you are gone. A Will provides for the executors who are nominated by yourself to carry out wishes that you specify. These can be things such as whom you would like to provide for and the guardians of your children if anything was to happen to you and your partner.

In most cases people don’t get a Will because they are busy with day to day priorities rather than planning for the future. At the worst, dying without a Will results in the law determining how your estate is divided up and this could leave your family facing lengthy court action to deal with your assets.

Wills are important but they only take effect after you die. What do you do if you want someone to help you look after your affairs while you are still alive and your health deteriorates or if you go overseas or are otherwise unable to handle your own affairs? A power of attorney gives someone (the attorney) the authority to act legally on your behalf to the extent specified in the power of attorney.

There are two main types of powers of attorney: “ordinary powers” and “enduring powers”. Ordinary powers are often used for temporary purposes for example, if you’re going overseas and want someone to pay your bills. Ordinary powers are only valid while the donor has mental capacity. Enduring powers are recommended for long term protection. Enduring powers of attorney can relate to property or your personal care and welfare. The donor can elect when the enduring power of attorney for property comes into effect whereas enduring powers for personal care and welfare only come into effect when the donor loses mental capacity.

A good time to arrange powers of attorney is when you are making your Will, especially as an attorney may have to make decisions affecting property dealt with in your Will. Like a will, a power of attorney can be revoked, replaced or varied by you at any time before you become mentally incapable. This should be done in writing and be properly signed and witnessed while the donor still has mental capacity.

Contact the team at Arnet Law for more information on wills and enduring powers of attorney.

Planning a funeral used to be a taboo subject, but let’s face it dying is a part of life and it happens to all of us at some point in time.

Have you ever thought “what if?” What if I were to pass away suddenly? Would my family know what to do? Who would take the lead and organise my final farewell? Who knows all my personal details - date/place of birth, parents’, spouse’s, children’s details? Who needs to be contacted?

Having recently been involved in the organising of a funeral for my dear friend’s spouse I can say it is an intense time dealing with grief, differences of opinions and personalities, and the funeral arrangements. We were fortunate, we had warning, we had the discussion and we knew what he wanted.

So let’s think about burial or cremation? It would be a difficult decision if half the family believe you are to buried, whilst the other half believe you wanted to be cremated. Have it written in your will and tell your family.

Do you have specific people you would want to be pallbearers? Do you have any music/hymn/song preferences? Do you have any religious formalities that you would observed? Maybe there’s a special reading or poem you would want included in the service? Are there people you might want to speak at your funeral?

And then there’s the cost issue. Not all funeral package costs are all inclusive. Think about the extras like flowers or catering. Maybe there are people who can help with these things to minimise costs or maybe you would prefer to have that taken care of.

Your local funeral home or the Funeral Directors Association of New Zealand (Inc) http://www.fdanz.org/planning-your-own-funeralcan provide you with a helpful booklet “My Life, My Funeral”. In it you can record your personal information and preferences for your funeral, a great help for your loved ones.

Tenancies in New Zealand typically fall into two categories - residential or commercial. It is important for a landlord to understand the difference between the two.

A residential tenancy refers to a tenancy where a property is being rented to live in. Residential tenancies are governed by the Residential Tenancies Act 1986 (“RTA”). The terms of a residential tenancy are ideally recorded in a Residential Tenancy Agreement signed by the landlord and tenant.

In contrast, a commercial tenancy refers to a tenancy where the premises are rented to carry out business activities. A commercial tenancy is usually recorded in a Deed of Lease signed by the landlord, tenant and, in some cases, guarantors. Commercial tenancies entered into from 1 January 2008 are governed by the Property Law Act 2007 (“PLA”).

Recently, there have been a number of instances where landlords have rented out premises using the wrong documentation. This is particularly so where residential and commercial tenancies operate from the same premises e.g. a residential unit is located above a commercial premises. In that situation, it is important that both a Residential Tenancy Agreement for the residential part and a Deed of Lease for the commercial part are signed between the landlord and tenant. Failure to do so, instead attempting to include both tenancies within one document, can lead to major problems. It can also have accounting and taxation issues.

Both the RTA and the PLA regulate the relationship between the tenant and the landlord, and set out the rules as to how events arising from the tenancy are to be resolved. The rights and obligations under both the Acts can be very different, as are the procedures they implement for management of the tenancy and resolution of any disputes. This means events arising from each tenancy need to be dealt with in a manner consistent with Act applicable to that type of tenancy. As such, it is important for a landlord to understand the type of tenancy they are dealing with and adhere to the applicable rules and procedures. If not, then it could lead to further issues for the landlord. Recently a Landlord was required to refund all rental paid and pay a fine for having rented out a converted garage to a family.

If you’re about to sign up a new tenancy, in a tenancy dispute or concerned as to whether you are fulfilling your rights and obligations, then contact us at Arnet Law. We have a lawyer for that!

This is not an unreasonable question to ask given the growing number of New Zealand homes which have tested positive for methamphetamine or “P”. The risk of a contaminated property affects property owners, buyers, sellers and tenants.

If P is manufactured or used even once inside a property, this would be enough to produce a positive test result. It has been suggested that the level of toxicity and health risk posed to an occupier of the property is higher if P was manufactured on the property rather than smoked.

There are several types of contamination tests available to detect the levels of P. These include at-home test kits, laboratory tests and professional test-kits.

If you are considering purchasing a property, it is advisable to engage a professional Tester to examine the property first. Also, ask the Vendor or real estate agent whether the property may be contaminated as they are legally obligated to disclose this if they are aware of any contamination. Any Agreement for Sale and Purchase of Property should include building report, LIM report and toxicology report conditions as an added safeguard.

Similarly, a seller who suspects their property may be contaminated should get their property professionally tested before putting it on the market.

Under the Residential Tenancies Act 1986, landlords who are renting their property have an obligation to provide a property in a reasonable state of cleanliness. Renting out a contaminated property is in breach of this obligation as well as other obligations owed under the Building Act 2004 and the Health Act 1956. Landlords should carry out routine inspections on their rental properties and keep an eye out for suspicious activities or items found on the property.

An owner of a contaminated home can find themselves facing a decontamination bill which could run into the tens or hundreds of thousands of dollars. For more advice on contaminated properties and what it means for you, contact the team at Arnet Law.

When purchasing a property, it’s advised a purchaser obtains a Land Information Memorandum Report (also known as a LIM Report). A LIM Report can be obtained from the local authority for a fee, and contains valuable information about the property such as soil contamination, plumbing, drainage, consents, licences, permits, rates, and zoning.

When a property is being sold at auction, the real estate agent will often obtain a LIM Report and make it available to potential buyers. While this is common practice, relying on this LIM Report rather than obtaining and paying for your own, may leave you unable to sue the Council for suffered loss should the LIM Report omit information or contain information which is incorrect.

This was seen in a recent case where the purchaser, Monticello Holdings Limited, purchased land and obtained a resource consent to subdivide it. It was soon discovered that the land purchased was once used as a dump site and the land was contaminated. Knowledge of the contamination existed in the Council’s archives but the information wasn’t readily available. Monticello sued the Council in negligence but the Court was unwilling to establish that a duty of care was owed between the Council and Monticello. After delivering its findings on other issues, the Court ruled that a Council does not hold a duty of care to the world at large in regards to its records, but a duty of care would be owed to a person who applies and pays for a LIM themselves. If Monticello had applied for and paid for a LIM Report before completing the purchase of the land and the LIM Report failed to reveal the existence of the dump, then it is likely the Council would have been found liable for the financial loss suffered by Monticello.

Don’t end up like Monticello. If you are purchasing a property and want to rely on the contents of the LIM Report, then you should apply and pay for the LIM Report yourself.

In 2009, tenants Kenji and Tieko Osaki caused substantial damage to their rented home when Mrs Osaki left a pot of oil unattended on the stove, resulting in a fire breaking out through the property. The property was repaired through the landlord’s insurance, but the insurance company decided to take action to recover the cost of the damage from the Osakis.

The case went through the Tenancy Tribunal, which held the Osakis liable. The Osakis appealed to the District Court where it was held that tenants should be protected by the Property Law Act, which says commercial tenants won’t be held liable for damage they’ve caused if the landlord has insurance to cover the damage. The insurance company then appealed and took the case right through to the Court of Appeal, which upheld the District Court’s decision.

As a result of the Osaki case, the current legal position in New Zealand is that a tenant won’t be liable for unintentional damage if the landlord is insured.

The implications of this ruling have most recently been seen in a Foxton case where the Tenancy Tribunal ruled that a tenant, who let her dog urinate and defecate in the house she was renting, was not liable to pay damages even though there was a no pets policy in place. The Tribunal said that, while it was accepted that the tenant intentionally breached the agreement by allowing a dog onto the property, the landlord had not established that the tenant intended to damage the carpet.

While it is understandable that the Court would want to safeguard tenants who cause unintentional but severe damage from financial ruin, it is questionable as to whether they have achieved this or whether they have just increased the risk of rental property damage and placed the financial burden for tenant damage onto the property owner.

The continuing flow on effect from this ruling is uncertain.

Auctions are now becoming a more popular method of selling property. However, vendors have a lot to consider before agreeing to go to auction. For example, vendors need to determine a reserve price, bidding increments and what happens if the reserve price is not met.

Before the auction, the real estate agent will usually prepare the “Particulars and Conditions of Sale” (which, once signed, becomes the agreement for sale and purchase of the property). It is advisable to have a lawyer review this document and the certificate of title prior to the auction.

As part of this review, vendors should confirm with their lawyer that the chattels list on the front page of the document is correct. The chattels also need to be in reasonable working condition, but in all other respects in the state of repair as at the date of the agreement (apart from fair wear and tear). The Particulars and Conditions of Sale contain a warranty by the vendor to this effect. If any chattel is not in reasonable working order, the vendor’s lawyer can request that such chattel be excluded from the warranty.

There are further warranties contained in the Particulars and Conditions that lawyers should make their clients aware of.

A default settlement date is often set out in the Particulars and Conditions of Sale prior to auction but can be varied by negotiation between the vendor and the purchaser on or before the auction date. If the vendor is selling the property with vacant possession, the vendor will need to ensure there is an adequate length of time for the vendor to move out of the property or give their existing tenants sufficient notice.

If the highest bid is accepted at the auction and the auctioneer’s hammer has fallen, the sale will be unconditional and the buyer is required to pay an immediate deposit of 10% of the purchase price. If the reserve price is not met, the highest bidder is offered the first right to purchase the property immediately after the auction at the vendor’s reserve price. If after negotiations, an agreement is not reached, the property will be offered for sale to all other interested parties.

Auctions are now becoming a more popular method of selling property. Purchasing a property through auction is a little different to purchasing through other methods and purchasers have a lot to consider.

Sales by auction are unconditional. Once the hammer falls and the agreement is signed, both the buyer and seller are legally obligated to complete the purchase.

Buyers considering purchasing a property at an auction should do their homework and conduct their own due diligence procedures beforehand. This may include the following:

Obtaining a LIM report;Obtaining a building report; andAsking a lawyer to review the auction documents to confirm details such as the deposit amount, settlement date and list of chattels. Your lawyer should also review the certificate of title.

Buyers need to ensure their finance is approved prior to the auction and that they can pay the 10% deposit if they are the successful bidder. It is important to note that buyers are not able to use their KiwiSaver funds to pay for the deposit on a property purchased at auction.

Prior to the auction, buyers will have the opportunity to inspect the property. If a buyer would like to purchase the property before the auction, they can make a pre-auction offer. Pre-auction offers must be made according to the terms and conditions of the auction. If the offer is acceptable to the seller, the auction will be brought forward.

If the property does not sell at auction, the highest bidder is offered the first right to purchase the property immediately after the auction and negotiations may then follow. If agreement is not reached, then the property will be offered for sale to all other interested parties.

If you are thinking of purchasing a property at an auction, contact the team at Arnet Law and let us help you through the process.