Legal News

1. Buying at Mortgagee Sale - Things to look out for
2. General Damages For Leaky Homes
3. Dealing With A Bad Builders Report
4. Purchases From Plans Carry Potential Pitfalls
5. Unit Developments - Important Things To Know
6. Don't Get Stuck With A Lemon
7. Be Prepared When Buying Or Selling
8. Don't Lose Half Your Property In A Relationship Breakup
9. Fences, Trees, Retaining Walls - Neighbours At War!
10. Landlords Get Your Rent Paid Promptly
11. City Living vs Eco-Friendly. They Can Co-exist

City Living vs Eco-Friendly - They Can Co-Exist!

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By Kirsten Ferguson

Have you been wanting to do your bit for the environment, despite living an urban existence, but have been put off by the potential bureaucratic minefield you might have to navigate to make some positive changes?   We provide four tips for living a more sustainable and/or eco-friendly life without moving to the country.

1. Composting - Be Considerate

There are no legal requirements affecting your ability to compost your organic waste, including food scraps, grass clippings and similar.  However, general rules relating to causing a “nuisance” will apply.  So if your compost is causing a nuisance to your neighbour such as being smelly, not contained or is otherwise unpleasant, you may have to remove it.  Any complaint by a neighbour will need to be confirmed by a council officer. The key point is that your local council can provide you with lots of information to help you compost correctly which will hopefully assist in preventing a neighbour complaint.

Have you thought about composting but it seems impossible because you’re an apartment dweller? Well, perhaps not.  Some councils, for example Wellington City Council, run a Kai to Compost (or similar) initiative which involves using a separate plastic-bin for food scraps. They do the composting for you! The bin is collected from you each week for a minimal charge and they even clean it for you! Contact your local council to see whether it is available in your area.

2. City Chicks - Check with your local Council

You may have already established a vegetable garden and are getting a taste of being self-sustainable.  Are you now thinking of taking it to a new level? How about fresh eggs for breakfast from your own chickens? Even if you’ve thought it, you may have discarded the idea because you live in the city. Good news! You may not need to. 

The extent of the regulation in relation to keeping chickens differs between cities.  For specific information relating to your area check out your local council’s website. 

In general, the rules do not get more cumbersome than limiting the number of chickens you can have and/or governing the distance from your house (and your neighbour’s) that they can reside. 

Some councils in fact have no rules.  In these cases nuisance rules still apply which, as already mentioned, includes noise, smells and free ranging on to neigbouring properties without permission, they may be removed.    If you have tolerant neighbours (an egg or two from time to time may assist) and/or apply commonsense city chicks may be for you. 

3. Solar panels - Beware the Building Code

The slightly more serious amongst you might even be considering installing solar panels.  Solar panels not only benefit the environment by cutting greenhouse emissions, but by all accounts they’ll benefit you as well - by slashing your power bill. However, if you are thinking of installing them you need to be aware that there are rules relating to their installation and use. 

Regardless of what type of system you choose and who you engage to install it you will need to comply with the New Zealand Building Code and that means you will need a building consent from your local Council.  Further, once installed, the Building Code contains other requirements regarding its operation. You need to be aware of and comply with those requirements.

Your system’s efficiency will directly correlate to how well it has been installed, so use an accredited supplier/installer listed at www.solarsmarter.org.nz.  However if, once installed, your system does not perform well, do not hesitate to ask that any issues be fixed. Even if it’s after the maker’s warranty has expired you’re still covered by the Consumer Guarantees Act for both manufacturing defects and lack of skill by the installer.

4. Know the Rules and Go For It!

There are many other things you can do to help preserve our clean, green existence for future generations.  However there are often rules governing how you go about it.  Remember to check your local Council’s website, and if in doubt contact your legal advisor, to make sure you are within your rights to make the changes you want to.

Landlords, Get Your Rent Paid Promptly!

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by Claire Coe 

A landlord client of ours recently came to us because tenants in his building were continually paying their rent late.  Since the tenants had signed up he had had to follow them up with phone calls and letters each month until they finally got around to paying the rent.  If this sounds familiar, then read on …

A new legal process is available to enforce payment of rent by tenants.  Previously, when tenants had breached the lease by not paying rent, the landlord could take possession of the premises, sue the tenants, or enter the premises to uplift the tenant’s chattels to pay for the rent.  These options were not always practical and were difficult to follow through.

Now the landlord can give notice of the breach as soon as the rent is overdue, and ten days after that can cancel the lease.  A notice under the new Property Law Act that the landlord requires the rent to be paid is a quick and relatively easy way of getting tenants to pay outstanding rent. 

There are specific requirements under the Act as to what the notice must spell out including exactly how much is owing and how long they have to pay the rent. 

The landlord must give the tenant not less than ten working days to pay it.  Once the period specified in the notice has expired, then the landlord is entitled to cancel the lease.  A tenant who will happily ignore letters seeking payment may sit up and pay attention if a formal notice under the Act is received that stipulates cancellation if the outstanding rent is not paid.

The notice period (of at least ten days) can start running prior to the rent being in arrears for ten days, so you do not have to wait a whole month until you can do anything about non-payment of rent.

Many landlords, like our client, will no doubt find that this new addition to the law surrounding leases will be a helpful tool in ensuring their tenants abide by their agreement under the lease to pay the rent on time.  It is better for tenants too!

Now, instead of facing the inconvenience and cost of being locked out without notice (as could happen before the new Act) they now receive notice of the risk of having their lease cancelled.  However, if the tenant still does not pay and the landlord follows through and cancels the lease, the tenant will be liable to the landlord for damages (generally the total losses to the landlord arising from the cancellation of the lease).

Did You Know …?

On the subject of landlord remedies, the law has also abolished the right of “distraint”.  The right of distraint allowed the landlord to enter the premises and take the tenant’s goods if rent had not been paid. 

There were strict rules regarding the process and the landlord had to follow in using this self help remedy.  Many landlords have been tripped up over the years for not carrying out the process correctly.  Landlords need to be aware that they no longer have this right.

Fences, Retaining Walls And Trees - Neighbours At War! 

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By Claire Coe, 

Paul’s neighbours decided to build a new fence between their property and his, and he let them know he was happy for this to happen.  While they were at it, they removed a small retaining wall on their side of the fence.  They forwarded the builders’ bill to Paul and demanded that he pay half of the total bill.  

Paul came to us wondering what he was legally required to pay for as he had agreed to pay half of the fence, but didn’t know that that would include removal of a retaining wall!

Issues between neighbours are unfortunately a certainty for a lot of people at some point in their life.  Whether it’s trees blocking your sun, your neighbour damaging your fence, or simply contributions to a new fence, the likelihood of problems arising when people live in close proximity to each other is high.  We clarify what some of your obligations are below.

My Neighbour’s Trees Are Starting To Block My View

A landowner has the right to the ordinary use and enjoyment of land as long as this does not unreasonably interfere with neighbours.  There is normally no legal right to a view, so a neighbour allowing trees to block your view is probably not acting unreasonable so you would be unlikely to be able to have the trees removed or topped. 

My Neighbour’s Trees Are Starting To Block My Sun

You might be able to have the trees trimmed because the shading, if serious, could very likely amount to an unreasonable interference with your enjoyment of your property.

I’m Worried My Neighbour’s Tree Might Fall Onto And Damage My Property

Again you are likely to be able to have it removed because it is likely that it amounts to what legally constitutes a nuisance.

Can I Prune Branches That Overhang My Property?

Yes, you are entitled to cut overhanging branches and roots back to the boundary.  However, in some cases trees are protected under district plans so you should check with your local Council first.

Who Owns The Cuttings?

Your neighbour owns the cuttings, and you are entitled to ask them to remove them.  You are also entitled to put them back onto the neighbour’s property but if you do this you should be careful not to cause any damage.  Having a discussion with your neighbour beforehand is always best if it is practicable. 

Who Pays?

Without agreement otherwise, you will have to pay for cutting back branches on your side.  Where a tree on your neighbour’s property actually damages your property, the neighbour should pay for making good the damage. 

Does My Neighbour Have To Contribute To The Cost Of A New Fence?

Yes, in many cases they do.  You should always try to reach agreement with your neighbour before you go ahead and have a new fence built.  However, if your neighbour will not agree to what you propose you must follow the requirements of the Fencing Act.  These are as follows: 

• You must give your neighbour a Fencing Notice.
• This must set out clearly the boundary to be fenced, the type of fence, who will build it, what it will cost and when the work will start.
• The Notice must also explain that the neighbour has 21 days to object or to make any counter proposals.

What If My Neighbour Doesn’t Want A New Fence?

The neighbour will have to give you a Cross Notice saying why they object to the new fence being built.  Then if agreement cannot be reached the matter will have to be dealt with by the Disputes Tribunal (if the cost is less than $7,500.00) or the District Court.  

My Neighbour Has Damaged The Fence And Wants Me To Contribute To The Cost Of Repairs

You do not have to.  The neighbour who caused the damage is liable.  The same is obviously true if you have damaged their fence.

What Sort Of Fence Can I Build?

The Fencing Act sets out specimen types of fence for both urban and rural boundaries.  Urban fences include post and rail fences, close bordered fences, paling fences, panel fences and masonry walls.

What About Paul In The Above Example?  Does He Have To Pay For The Retaining Wall Given That He Agreed To The Fence To Start With?

No he doesn’t.  The removal of the retaining wall was not Paul’s decision and was solely for the neighbour’s benefit.  He agreed to pay half of the fence and that was all.  He is not liable to pay for the removal of their wall.

These are just some of the many issues that can arise between neighbours.  Usually some civilised and reasonable discussions between you should result in some kind of solution or compromise, but it pays to know what your rights are before you agree to anything.

Don’t Lose Half Your Property To A Relationship Break-Up
By Rachel Vokes

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Unless you protect your property with an agreement before you have been in a de facto relationship, civil union or married for three years you may lose half of your property if you split up. You can lose property that you had before you got together as well as property that you acquired together.

A recent divorce settlement between Heather Mills and Paul McCartney, the topic of much public debate, highlights the importance of separation agreements in relationships.

Paul McCartney and Heather Mills did not have a relationship property agreement in force that was able to be utilised at the time they separated. Not only did that issue make for expensive legal bills but Paul McCartney ended up having to part with £24.3m. This could have well been avoided if he had sought legal advice and had a relationship property agreement drawn up protecting his property.

Do you want your collection of classic cars to have to be sold to pay out half of their value? What about your art collection? Your jewellery? Your superannuation? Your savings and investment properties?

What Will Happen To My Property?

If you have been married, in a de facto relationship or civil union for more than three years (in broad terms), all relationship property will be divided 50/50.

Relationship property includes the family home and chattels, and all other property gathered during the course of the relationship or used as relationship property even if it was acquired before you got together or came from your inheritance. Relationship property will be divided 50/50 regardless of when it was purchased or whose name it is in (subject to some rare and hardly ever satisfied exceptions).

It is possible for couples to contract out of the Act by agreeing to what will happen to your property if you split. A Court cannot overturn an agreement unless it is extremely unfair to one of the parties.

Even if you and your partner have reached an agreement, you both must get independent legal advice and the agreement must be signed by you and witnessed by the lawyers. If you do not do so the agreement will be useless and unenforceable. There have been cases where parties have agreed to a different split (1/3rd and 2/3rds) but a failure to get legal advice resulted in a 50/50 split. This was an unintended consequence with substantial financial loss.

Be Prepared For Perhaps The Biggest Transaction Of Your Life - Buying Or Selling A Property!

How to get the really important information about the property you are buying - don’t get stuck with an expensive lemon …

By Alan Knowsley

In a recent example a client entered into an unconditional contract to purchase a property that we subsequently discovered had internal alterations including the addition of an en-suite, for which no building consent had even been applied for, let alone signed off. On further investigation it was revealed that the alterations needed further work to make them compliant with the building code costing in the vicinity of $8,000.00.

While there is a warranty in the standard Agreement for Sale and Purchase that makes it the vendor’s responsibility to get works carried out during their period of ownership that require a building consent, signed off under the Building Act, in this case the works had been carried out by a previous owner which meant the vendor warranty was of no assistance. This left our client with two unattractive options - either:

update the works at their cost; or

ignore the works, but take on the risks associated with them.

These risks include a requirement to disclose the existence of the works when they sell the property at a future date as they now have specific knowledge of the situation, which is likely to have an effect on resale. There is also a risk of long term damage if the works are faulty, which may not be covered by insurance because they resulted from non-compliant work.

So how could this have been avoided? Carrying out a reasonable level of enquiry prior to committing to a purchase contract or prior to going unconditional in the case of a conditional contract, is a must for prudent purchasers. This not only includes allowing an opportunity for your Solicitor to check the title search, but also includes the purchaser investigating the status of buildings on the property.

The most important enquiry we recommend a purchaser making is to check the building consent records at Council. The purpose of such an enquiry is two-fold:

To match the building plans held at Council with what is on the property
To check whether the buildings on the property have had any work carried out on them under a building consent, during the period of the vendor’s ownership.

Nearly all building works on a property require a building consent and it is essential to ensure those works were carried out in accordance with the building code, with the necessary consent and have received code compliance sign off from the Council. A breach of this requirement may not only have a negative impact on the value of the property, but could also impact on the ability to finance it and insure it. In the current climate following the problems associated with leaky buildings, many financiers and insurers are now asking for evidence that the buildings they are financing and insuring are compliant, especially where they have been recently built or altered

If as in the above situation it is ascertained the works were carried out by a previous owner, then finding this out before being committed to perform the contact gives the purchaser options. These include:

negotiating with the current vendor to take on the responsibility to get the work signed off;
negotiating an appropriate price reduction for taking on the responsibility themselves,
pulling out of the contract, assuming it has the appropriate condition to make it conditional on a satisfactory enquiry in this respect.

Important Things to Know When You’re Thinking of Purchasing Into a Unit Development

By Alan Knowsley

If you are thinking of purchasing into a Unit development, for example buying an apartment that has a unit title, you may have some questions you need answered.

What is a Body Corporate?

A Body Corporate is made up of the owners for the time being of all the units. The Body Corporate is created on the deposit of the unit plan for the particular development. Often the Body Corporate is initially the developer and then as units are sold the new unit owners become members. The early period when there are very few units sold can be a very difficult time when responsibilities and obligations can be misunderstood, and when the interests of the developer and the new owners can be in conflict.

There are a number of things that a Body Corporate is required to do in relation to the units.

These include:

Insuring buildings against damage.
Keeping the common property in a good state of repair. Lifts and entranceways are examples of common property.
Establishing and maintaining a fund for administrative expenses.
Determine the amount necessary to undertake the Body Corporate duties and levying the unit owners to raise this amount.
If there are up to three unit owners, the powers and duties of the Body Corporate will be exercised by them. Where there are three or more three unit owners, the powers and duties of the Body Corporate are exercised by a Body Corporate committee.

What role does a Body Corporate play if I am purchasing property?

The Body Corporate is required to issue a Section 36 certificate which shows whether any levy has been made by the Body Corporate on a unit owner, whether that amount has been paid by the owner and any further amounts recoverable by the Body Corporate under the Act.

Another reason this certificate is important is because it shows whether the Body Corporate has entered into a contract to undertake repairs under which the owner would be liable for payment.

It’s essential that a vendor obtain a Section 36 certificate from the Body Corporate before settlement and give it to the purchaser. Lending institutions also often require that lenders give them a copy of a Section 36 certificate to satisfy their requirements.

You may also wish to obtain information from the Body Corporate regarding the administration and management of the development. For example, you could obtain copies of recent Body Corporate Committee minutes to enable you to see how the development is being run. Similarly, a Body Corporate is required to provide owners with accounts. Such accounts will indicate how the Body Corporate is being run and you may wish to ask the vendor for copies of these.

Future Changes?

The Government is currently reviewing the law relating to unit developments. One proposal being put forward is that a Body Corporate be required to disclose certain information to purchasers. This would help purchasers make informed decisions.

In the meantime, your Solicitor will be able to assist with any queries or concerns you have regarding purchasing into a Unit development.

Correctly Signed Agreements - Don’t Get Caught Out

By Holly Drummond

Trevor and Alison were parties to a Sale and Purchase agreement that went unconditional. However, just before settlement date it was discovered that Trevor was only one of the owners and therefore was not the only vendor signature required on the agreement.

For there to be a valid agreement the other owner’s signature was also required. The Real Estate professional at the 11th hour tried to get the signature but the other vendor refused to sign and declared that the agreement was invalid. He was right, and Alison lost the property she had contracted for.

What Are The Consequences For Me?

This kind of mistake has potentially disastrous repercussions for you. Not only will you lose your commission on the sale and tarnish your business reputation, but you are also likely to face disciplinary measures from the Real Estate Institute of New Zealand and possibly a lawsuit.

The new President of REINZ has pledged to be much tougher on those real estate professionals who don’t maintain high standards of conduct, acknowledging that “the privilege of self-regulation… carries a responsibility.”

Failing to ensure that an agreement is correctly signed is negligent and can be expected to result in referral to the Real Estate Agents Licensing Board which may cancel or suspend your licence, and impose a fine of up to $5000.

Failing to exercise due care and skill could also result in an action in negligence being taken against you for compensation for any pecuniary loss the purchaser or the vendor may have suffered, including the loss of a chance to profit.

Covering Your Bases
To cover your bases you need to ensure that:

You know who all of the parties required to sign the agreement are. This includes knowledge if there is more than one vendor who must sign, as well as checking to confirm that the person signing actually has authority to act, in the case of a company or a trust; and The agreement is in fact correctly signed by all the parties involved.

Taking the very simple measure of checking can avoid a mistake with potentially far-reaching implications.

Call us Toll Free on 0800 733 424

Don't Lose Those Sales - Purchases From Plans Carry Potential Perils

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In what is currently described as a tightening property market it is very important that Agents hang on to those precious sales. While any conveyancing transaction potentially has difficulties, those where the Real Estate Professional is selling property off plans have a far greater potential to go “pear shaped” with the loss of your commission.

We recently acted for purchaser clients, who had sold their family home in order to buy an apartment in the city as a change of lifestyle. The apartment was a purchase from plans and the purchasers signed up a contract with the Agent, paid a deposit into the vendor’s Solicitors Trust Account, and then moved into rental accommodation eagerly awaiting completion of their apartment.

Eight months later the developer cancelled the contract, using a clause that enabled it to do so if the property was not completed by a certain time.

Of course the developer was the one who had control of the timeframe and there is no doubt the cancellation was because the market value of the apartment had increased in the meantime.

For our purchaser clients, receiving a refund of their deposit was not much consolation when they had missed out on the capital growth on their previous property during the wait, and now had to enter the market again to find a replacement property.

For the Agent, the situation was even worse as the contract was not deemed unconditional until the timeframe had passed, and hence they were not entitled to commission notwithstanding all their upfront work to secure the purchaser.

Other ways in which Agents marketing property from plans may lose their commission are:

1. The developer going under financially before completing the project. This leaves the sales in limbo and unless the deposits were initially payable to the Agent, they may disappear into a mortgagee sale void.


2. Purchasers exercising a right to pull out of the contract if it includes a sunset date, which the developer or builder has failed to meet. This will entitle the purchaser to a refund of deposit and unless the Agent has included a written provision for commission to be payable in this event by the vendor, there will be no automatic entitlement.


3. The Purchaser exercising a right to escape the contract because amendments have been made for replacement materials or design changes that substantially effect the overall value or desirability of the property. Again in this situation the Agent needs a specific clause protecting their commission if the sale is lost for this reason.

Perils such as those outlined above can be avoided by including contractual provisions that protect the various parties at the commencement of the Vendor/Agent and Agent/Purchaser relationships. We strongly suggest the involvement of a lawyer on behalf of all parties before documentation is signed up, not only to protect the interests of the vendor or purchaser but also to protect the agent’s entitlement to commission where some of these perils arise.

Dealing With The Bad Builder’s Report

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With more and more purchasers requiring a builder’s report, problems are now much more likely when a report reveals defects.

To start with, it is important to realise that there is really no point in criticising the report. The builder is acting as a professional advisor, and could therefore be liable for damages if any defects were not picked up.

Instead, concentrate on dealing constructively with the matters that are disclosed.

Where these are only minor, they should not be a problem. Either the vendor will agree to remedy them, or the purchaser will accept that they are only trivial, and that the price that has been negotiated already makes adequate allowance for the existing condition of the property.

Serious defects however, will inevitably cause difficulties. In some instances the purchaser will want to withdraw completely. Even if this is so, further negotiation should always be attempted. To keep the transaction alive the vendor might have to agree to a price reduction, or to have remedial work carried out. After all, the defects will very likely remain a problem on any attempted re-sale, so it is obviously better that the vendor faces up to them and tries to hold onto the existing purchaser.

Sometimes a builder’s report is used purely as a lever to renegotiate the price. If this is suspected, it is sometimes better for the vendor to adopt a take it or leave it attitude. This usually quickly reveals whether the purchaser has genuine concerns, or is merely trying to take advantage of the situation.

In summary:

If there are genuine and serious problems, these should be addressed.

If they are only minor, negotiation should resolve things.

With the large number of sales we act on all the time, we are very familiar with the many and varied issues that can arise. We are always available to help in a constructive and practical way if there are problems. Almost always these will have happened before, so we will know what to do.

General Damages for Leaky Homes

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Parliament recently passed an amendment to clarify that leaky home claimants can be awarded general damages by the Weathertight Homes Tribunal. This overturns a High Court decision in March 2007 that general damages could not be awarded by the Tribunal. General damages are damages for mental anxiety and stress caused by the events rather than costs of repairs

Buying at a Mortgagee Sale – Four Things to Watch out for

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Every year in this country hundreds of properties are sold by mortgagees. Buring a property under such a sale can give you a great deal, but there are some pitfalls you need to watch out for.

1. Where the mortgagee enters a conditional sale and purchase agreement with an outside buyer, there are certain cases where the defaulting mortgagor can still redeem the mortgage and purchase the property back before the sale is settled. As a purchaser you should ensure the terms of your sale and purchase agreement specifically exclude this event.


2. Where the property is security for debt under one mortgage it can often be securing further debt under second and third mortgages, as well as charging orders and the like. While the mortgagee sale will generally extinguish all these claims, there are some claims or burdens on the property that will not be extinguished. A good example of this is where the previous owner has entered a ‘restrictive covenant’ with the local council as a condition of resource consent not to develop a certain part of the property. A purchaser should make all the necessary enquiries with local councils to find out if a property is affected in this way, before they purchase at a mortgagee sale.


3 If you have loaned money to any person which is secured by a mortgage and you are later put in a position where you have to proceed with a mortgagee sale the odds are that you will probably instruct a real estate agent to conduct a private sale. But if you want to bid at the auction the law will not allow it. If you have any interest at all in preserving your right to bid in your own mortgagee sale you should get advice about conducting a sale through the High Court Registrar where this right will be preserved.


4. One of the features that distinguishes mortgagee sales from ordinary sales is the fact that the existing home owners interests are not the same as the mortgagee selling the home. The home owners may have finance owing on household appliances and may try to salvage value out of house fittings before relinquishing possession. It is not uncommon to find some homes sold in mortgagee sales literally stripped on the day of settlement. In order to avoid this situation a purchaser should be aware of exactly what fittings and chattels are included and obtain advice on how to conduct an inspection immediately before settlement. In some cases funds may be withheld if fittings and chattels have been damaged or removed.

Mortgagee sales are still a good way to make a property purchase, but purchasers should do their homework in advance and if in doubt they should get advice before they commit themselves to a contract.