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Inheritances and Relationship Property

Have you inherited some money or you are about to? Should an inheritance be shared with your
Partner or kept separate? If you are in a relationship and inherit money, you need to consider
whether you want it to become relationship property, or whether you want to recover it in the event
of separation.

The Law does not require someone to share their inheritance with their partner. Some people could
not imagine not sharing and some might want to protect the inheritance for themselves.
Under the Property (Relationship) Act property an inheritance is separate property, but for it to
remain so, it must be kept separate and isolated from other assets. The only way for it to stay
separate is:

● Not to apply any of the inheritance for relationship purposes. If you keep the inherited
property separate and do not apply it towards or intermingle it with, relationship property,
then it will not lose its character as separate property. Intermingling of funds could be by
way of paying off a relationship debt or a promise to the other person that the funds would
be used for the benefit of them both.
● Enter into a “contracting out” agreement under s21 of the Property (Relationships) Act 1976.
This allows couples to determine by way of a contract, the ownership of certain property.
The contract could provide, for example, that inherited money will continue to be separate
property of the person who has received it, regardless of it use. It can be stated that in the
event of a separation, the person who inherited the money would be paid out the amount of
the inheritance before the property is divided.

If you think this might apply to your situation, contact us now. For any further clarification around
this, please feel free to contact one of our Relationship Property team.

Disclaimer: The content of this article is general in nature and no intended as a substitute for specific
professional advice on any matter and should not be relied upon for that purpose.

Care of Children

When parents or guardians of a child separate, one of the most important issues to work through is
how you will arrange the care of your child. Are you to have an equal share of the day-to-day care or
will one of you have the child most of the time?

It is much better if parents can reach this agreement themselves. This agreement is called a
Parenting Agreement.

The agreement will include:

● Arrangements for day-to-day care. The parents or guardians may agree to share the
day-to-day care equally or one of them may have the day-to-day care most of the time.
● If only on parent or guardian is to have the day-to-day care, then arrangements for contact
will need to be recorded. Also, this will include what happens on special days such as
birthdays and Christmas.
● Other arrangements may the children’s care, development, and upbringing such as
education, travel, and religion.

The Care of Children Act 2004 supports parents and guardians to work through their own
arrangements for the care of children. If an agreement is not working, the Act encourages parents
and guardians to work through the differences themselves. The Family Court arranges free
counselling if it is necessary to assist in coming to a new agreement.

The Parenting Agreement may become the basis of a Family Court Parenting Order if an agreement
between parents or guardians cannot be reached. It is at that time the terms of the agreement can
then be enforced like any other Court order.

The Family Court can also arrange “Parenting Through Separation” courses to help separated parents
(or guardians) understand how the separation affects their child (children) and to help them manage
the process and to deal with each other constructively. Should you wish to be applying for a
Parenting Order from the Family Court you usually will have had to have attended this course within
the last two years.

Disclaimer: The content of this article is general in nature and no intended as a substitute for specific
professional advice on any matter and should not be relied upon for that purpose.

Frequently Asked Questions About Contracting Out Agreements

What is a Contracting Out Agreement?
A contracting out agreement can also be known as a Relationship Property Agreement and
sometimes referred to as a “pre-nup”. The agreement can cover as much or as little as the couple
wish. It can include the family home (even if this was purchased by one partner before the
relationship began or by inheritance, gift or via a trust). The only exception is if the property is on
Maori Land.

Can I prepare my own Contracting Out Agreement?
In theory, yes you can, but for the agreement to be binding and enforceable each party needs to
comply with the following:

● The agreement must be in writing and signed by both parties.
● Each party must have independent legal advice before signing the agreement.
● Each party’s signature must be witnessed by a lawyer; and
● The lawyer who witnesses the signature of the property must certify that they have advised
as to the effects and implications of the agreement.

It is important to be aware that even if the requirements have been complied with, the Court may
have the power to set the agreement aside if it amounts to a “serious injustice”.

When should an agreement be prepared?
At any time during a relationship and agreement can be prepared and signed. Ideally however it
should be signed before the relationship property laws under the Property (Relationships) Act 1976
(“the Act”) applies. This is generally once a couple have been living together in a de facto
relationship, in a civil union or married (or any combination of these) for 3 years or more. There are
limited circumstances where the Act can apply before that point.

What are the benefits?
The common benefits of a contracting out agreement include asset protection and the desire to
achieve certainty about how property would be divided in the event of separation and/or death.
Agreements are particularly common if one person has children from a previous relationship, there
are items of property that one person wants to keep separate from the relationship property (e.g., an
inheritance) or if one person is much wealthier than the other.

It is not an easy conversation to have with a person but the sooner it is discussed the better.

What will it cost?
Consider the agreement as an insurance policy. It takes time to draft, advise on and negotiate the
terms of an agreement. Our view is that a thorough contracting out agreement could save people a
considerable amount in the long run, both in legal fees and amounts of money.

What if a relationship has ended and you and your ex-partner cannot agree?
The Family Court can help divide your relationship property if you or your ex-partner cannot agree,
or negotiations break down. It can also help if the agreement is unfair. You will need to apply to the
Family Court with 1 year of your dissolution (divorce) or within 3 years from the end of your de facto
relationship. If the deadline is not met, you can ask the Court for permission to file.

Do agreements need to be reviewed?
It is important that agreements are regularly reviewed, by your lawyer, to make sure that the terms
do not being unjust and leaving the agreement vulnerable to being set aside by the Family Court.

What information does a lawyer need in the first meeting?
A brief history of your relationship including:

● Key dates
● Names and dates of birth of children (if any)
● A list of assets
● An idea of what you would like to achieve.

If you would like any further information or advice, please feel free to contact one of our
Relationship Property Team.

Disclaimer: The content of this article is general in nature and no intended as a substitute for specific
professional advice on any matter and should not be relied upon for that purpose.

Chinese New Year 2023

Sunday, 22 January 2023

2023 is a Year of the Rabbit according to the Chinese Zodiac. More specifically it is a Year of the
Water Rabbit starting 22 January 2023 and lasting until 9 February 2024.

There are 12 animals in the Chinese Zodiac. The Rat, Ox, Tiger, Rabbit, Dragon, Snake, Horse, Goat,
Monkey, Rooster, Dog and Pig.

The date of the Chinese New Year changes every year and is decided by the Chinese Lunar Calendar.
Although the date changes every year, it always falls between 21 January and 20 February.

Chinese New Year is traditionally a time to honour deities as well as ancestors, and it has also come a
time to feast and visit family members. The Chinese New Year is rooted deep in history and today
remains the most important occasion for many Chinese families.

Investing in real estate can be among the most rewarding and safe investments.  It can be an excellent way to create wealth.

Like any investment, doing your “homework” before you take the plunge could save you from an expensive mistake.  More importantly, don’t expect to become an expert overnight.

Some of the pitfalls can be:

1. Skimping on research

• Check out the market.  Investing in property should be viewed as a long-term investment if you wish to avoid tax implications like Bright-line. 
• Check out the Healthy Home requirements for the area, does the property meet the requirements or will there be a further financial outlay involved. 
• Research the area you wish to buy in.  Is it a desirable area for tenants, are there any land issues, what is the crime rate like?
• Make sure you have a thorough inspection done on each property’s condition.

      2. Failing to make goals

• Create a list of your goals, what do you want to achieve.
• What type of properties do you want to have in your portfolio?
• Where would you like the properties to be?  E.G., tenanted, Air B & B’s, holiday destination ….
• Would you rent the property?
• Who is your ideal tenant?
• Do you want newer properties or fixer-upper properties?

      3. Buying the wrong property

• When buying an investment property, think with your head not your heart.  
• Avoid anxious buying, this can be the quickest way to end up overspending.
• Think like a tenant.  If you want your tenants to be families, check out properties in good school zones, safe neighbourhoods, and multiple bedrooms.  If you are looking for a professional couple, then maybe an apartment or smaller properties.
• Always keep an eye out for cracks in walls, damp basements, pest damage, these could cause you a whole lot of trouble and cost a whole lot of money.
• Invest based on your goals.  Stick with your investment strategy.  Don’t be persuaded to purchase a property that doesn’t fit in with your plan.

      4. Don’t underestimate expenses

• There are always maintenance costs. 
• There will always be tax to pay.
• Don’t forget about insurance for the property.
• Before you make an offer, make a list of monthly expenses to determine the property’s return on investment.  Is it the right investment?

      5. Doing everything on your own

• Do you want to engage the services of a property manager?
• Is there a network of professionals that you can “tap into” for support when purchasing or managing your investment properties?
• Do you need to engage the services of an Accountant?
• We recommend that you seek advice from an investment property advisor before purchasing.

For further information please feel free to contact one of our team here at Kannangara Thomson.  

Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose. We do not give financial, taxation or investment advice and nothing in this article is intended as such.  If you require a referral to an investment property advisor, we can connect you with an appropriate professional.

Anniversary Day

Canterbury Anniversary day was originally held on or around 15 December marking the arrival of the First Four Ships into Lyttleton.  Sometime between 1955 and 1958 the celebration day was moved to the Friday of “Show Week”.

The definition used by Christchurch City Council to determine the Anniversary Day each year is the “second Friday after the first Tuesday of November. North and Central Canterbury observe Christchurch Show day as anniversary day.  South Canterbury observes the fourth Monday in September as its anniversary day.  

Cup and Show Week

This is a huge week for Christchurch.  There is Horse racing, both gallops and harness racing, local fashion shows and the A & P Show.  

The horse racing is all week with the main events being the New Zealand harness racing at Addington on the Tuesday, 8 November and the gallops at Riccarton on the Saturday, 12 November 2022.

The A & P Show is when the country comes to town at the Canterbury Agricultural and Pastoral Association in Curletts Road, Christchurch.  The show runs from 9 to 11 November 2022 with the main family day being Show Day, 11 November 2022.

Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.

The healthy home standards became law on 1 July 2019.   From 1 July 2021, landlords needed to ensure that all rental homes had to comply with the standards within 90 days of any new or renewed tenancy.  By 1 July 2024, all rental homes must comply with the standards regardless of when a tenancy began.

The standards introduced specific and minimum standards for heating, insulation, ventilation, moisture and drainage, and draught stopping in rental properties.

Heating 

Landlords must provide one or more fixed heaters that can directly heat the main living room.  The heater(s) must be an acceptable type and must meet the minimum heating capacity required for your main living room.

Insulation 

Ceiling and underfloor insulation has been compulsory since the introduction of law.  The standards build on current regulation and some existing insulation will need to be topped up or replaced.

Ventilation 

Rental homes must have openable windows in the living room, dining room, kitchen, and bedrooms.  Kitchens and bathrooms must have extractor fans or an acceptable continuous mechanical ventilation system.

Moisture ingress and drainage

Rental properties must have efficient drainage for the removal of storm water, surface water and ground water.  There must be a ground moisture barrier where there is an enclosed sub-floor space.

Draught stopping

Landlords must make sure that the property doesn’t have any unreasonable gaps or holes in walls, ceilings, windows, doors, floors, skylights which cause noticeable draughts.  All unused open fireplaces must be closed off or their chimneys blocked to prevent drafts.

Exemptions

There are some properties which may be exempt from complying partially or fully with the healthy home standards.  You will need to check your options around this.

Compliance statement

All new or renewed tenancy agreements must include the specific information about the rental property’s current level or compliance with the standards.

For further information check out https://www.tenancy.govt.nz/healthy-homes/changes-to-the-healthy-homes-standards/

Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.

For many decades the backbone to a kiwi family’s retirement plan was to own a rental property or properties.  In some cases, the properties have been bought with no money down, having leveraged against equity in their own homes.  For the last decade or so, successive Governments have had political pressure applied to make housing more affordable.  The main tool used by all the main political parties has been to make rental property investment less attractive and encouraging investments in other areas.

The Government announced on 23 March 2021 that there were to be some changes to the rules for Landlords.  The two main changes were:

The extension of the bright-line test from five to ten years

Broken down the key message regarding bright-line is:

• If you bought a property after 26 March 2021, you may have to pay tax on any equity gain if you sell the property less than ten years later.
• If you bought a property after 28 March 2018, you may have to pay tax on any equity gain if you sell the property less than 5 years later.
• If you are thinking of selling your investment property and you are unsure whether you will be subject to the “Bright-line” test or not, please contact your Accountant to discuss.  Our firm does not give taxation advice.

The removal of tax deductibility on interest for rental properties.

Broken down the key message regarding the removal of tax deductibility is:

• From 1 October 2021, interest became no longer tax deductible for money borrowed after 27 March 2021 for rental properties.  This includes new loans for renovations and repairs to existing rental properties.
• Tax deductibility for existing loans on rental properties bought before 27 March 2021 was reduced to 75% from 1 October 2021, then will be reduced further to 50% from 1 April 2023, then to 25% from 1 April 2024 and finally from 1 April 2025 there will be no tax deduction allowed for interest expense on rental property.
• There is an exemption to this rule announced for new builds.  A new build is defined as having a Code of Compliance Certificate dated on or after 27 March 2020.  This includes new Builds bought off the plans from a developer.
• For the best advice, contact your Accountant to discuss.  As mentioned above, our firm does not give taxation advice.

Disclaimer: The content of this article is general in nature and not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose. We do not give financial, taxation or investment advice and nothing in this article is intended as such.  

Thank you, Samuel Parnell, who 182 years ago, who when asked to build a store, said he would do this on one condition, that he would be only required to work eight-hour days. He believed in the slogan created by social reformer Robert Owen, calling for Eight hours’ labour, eight hours’ recreation, eight hours’ rest.

Unfortunately, it took a little longer to have this as standard as the government was reluctant to upset the business owners.

The first Labour Day was celebrated on 28 October 1890 and in 1899 a public holiday was created for the second Wednesday in October. This was later “Mondayised” and has been celebrated on the fourth Monday in October ever since.

Working from home has proven to be popular for some. With modern technology and the desire for
flexible working conditions, it has been increasingly more common for employers to allow employees to work from home on occasion.

Employers need to remember their obligations to staff remain the same, even while working remotely. Under the Health and Safety at Work Act 2015 (Act) an employer has a duty to ensure the employee’s safety so far as is reasonably practical.

There are certain steps that should be considered by an employer such as asking employees to complete a work station checklist at home. There should also be a working from home policy in place. That policy should include, for example, that the employee agrees to take regular breaks, to keep work related information and data secure, that the employee’s workplace is free of hazards and that employees will be expected to return to the workplace when required.

Where possible, employers must ensure that employees who have the ability to work from home have all the proper equipment to do so. At the end of the day, this will depend on each employees’ circumstances and the role that they hold. Best practice is that employers and employees work together to find a fair and reasonable solution.

Disclaimer: The content of this article is general in nature and no intended as a substitute for specific
professional advice on any matter and should not be relied upon for that purpose.

There are several types of employment in New Zealand with the main ones being permanent (full- time or part-time, fixed term (full-time or part-time) or casual.

Permanent (either full-time & part-time)
This is the most common type of employee. Permanent employees have a full set of employment rights and responsibilities. Employees must meet certain criteria to qualify for parental leave, parental leave payments, annual holidays, sick leave, and bereavement leave. Often the employee must work for 6 (sick leave and bereavement leave) to 12 months (parental leave and annual leave) before qualifying for those entitlements. No time limit or otherwise on their employment contract. It carries on until you as the employee or you as the employer terminates the contract.

Fixed-Term Employees
A Fixed term employee is treated the same as permanent staff in term of employment rights and obligations. The fixed term means that they are employed by your business for a specified period. Some common reasons for this are to replace someone who is on parental leave or to work on a particular project. There must be a genuine reason for a fixed term period and the employee needs to be told of this reason.

If you, as an employer want to dismiss a fixed-term employee before the specified term is up, then
there must be a legal reason for the dismissal, e.g., serious misconduct etc)

Casual Employees
There is no set legal definition of what a ‘casual employee’ is, but it generally refers to where the employee does not have any guaranteed hours and no ongoing expectation of employment. Employment rights and responsibilities still apply to casual employees, but the way annual leave and sick leave is applied can vary.

Every time a casual employee accepts an offer of work, it is treated as a new period of employment
and this must be made clear to them in their employment agreement. There is also no obligation on
the casual employee to accept the offer of work.

Know your minimum rights

Disclaimer: The content of this article is general in nature and no intended as a substitute for specific
professional advice on any matter and should not be relied upon for that purpose.

Trial and probationary periods can be used to make sure that an employee can do the job. These must be agreed in the employment agreement. A probationary period cannot be applied after a trial period. These shouldn’t be used instead of a proper recruitment process. Trial periods and probationary periods are used for similar reasons but have different requirements and effects.

Trial Period
A Trial period must:

 Be an express written term of the employment agreement
 State that the employee may be dismissed within a trial period is not entitled to bring a personal grievance or other legal proceedings in respect of the dismissal
 Be no longer than 90 days
 Only applies to new employees

Trial period are currently limited to employers with less than 20 employees.

A duty of good faith still applies but no formal process is required.

A trial period clause places fair greater restriction on an employee’s rights. This clause, if applied correctly, can prevent an employee from bringing a personal grievance for unjustified dismissal at the end of a trial period. Notice of termination under the trial period must be in accordance with the terms of the employment agreement. If the requirements are not met, the trial period will not be effective. This means that the dismissed employee will have grounds for a valid personal grievance.

To rely on a trial period to dismiss an employee, the employee must have been aware of the trial period and had a chance to get advice before signing the agreement.

A trial period enables the employer to dismiss an employee without going through the typical dismissal process like poor performance or misconduct.

A common misconception is that while employees are “on trial” that they are not entitled to the same employment rights and entitlements as the other employees. This is not true. A trial period only affects how you can dismiss an employee. An employee who is “on trial” can still bring a personal grievance for other issues such as discrimination or harassment.

Probationary periods
A probationary period can be used to find out if an employee new to a job or for employees who are changing jobs with the same employer. Probationary periods must be in the employment agreement.

A probationary period:
 Can provide a fair opportunity for an employer to assess an employee’s skills
 Can let a person new to a job show that they have the skills to do the job.

 Can be used when an employee starts a new job even if they already work for the employer but are changing jobs.
 Must be recorded in writing in the employment agreement and clearly state that there is a probationary period and how long it will last. The period can be any length of time, but it
must be recorded in the employment agreement.
 It must be paid; employers can’t use a probationary period to get work done for free
 It doesn’t limit the rights and obligations of the employer or the employee
 Must be negotiated and used in good faith
 Must be a reasonable length of time considering all the relevant circumstances of the employer, the employee, and the job.

A probationary period cannot be applied after a trial period.

During the probationary period
The employ must follow a fair process during the probationary period. This includes:

 Telling the employee if there are any issues with their work and if there is a chance that their employment might not be continued after the probationary period ends.
 Telling them what these issues are, and what good performance in this area looks like
 Giving the employee support, and ongoing and appropriate training
 Giving the employee every opportunity to improve. This means that the employer should be giving feedback, support, and training throughout the probationary period so that the employee knows that there are issues and giving them the opportunity to improve.

It is good practice for employers to tell an employee on a probationary period when they might expect to receive training and feedback at the start of their employment. The employer must follow through on any commitments made.

In some situations, the employer may choose to remove a probationary period and confirm employment early. If this is done, it must be in writing as it is a change in the employment agreement.

At the end of the probation period
If the work is going well then as an employee, you and your employer do not need to do anything to continue your employment. At the end of the probation period, your employer:

 Won’t dismiss you
 Your probation period ends
 Your employment continues automatically on your existing terms and conditions of employment but with no probation period.

If the work hasn’t gone well, an employer cannot just tell the employee to leave their job at the end of the probation period. The employee must have been assessed fairly and if their work was not good enough, they must tell the employee why and that they intend to end their employment.

The employer must give the employee an opportunity to respond. If, after considering any response, the employer decides to end the employee’s employment they must give the employee notice in their employment agreement.

If, as the employee, you are dismissed at the end of a probation period, you can raise a personal grievance on the grounds of unjustified dismissal, for example:

 If you think your employer didn’t have a good enough reason to dismission you
 If you were not given appropriate advice or training on how to do the job effectively, or
 If you were not fairly assessed by your employer.

Disclaimer: The content of this article is general in nature and no intended as a substitute for specific
professional advice on any matter and should not be relied upon for that purpose.

With the COVID-19 pandemic there has been shift in thinking about how we treat those coming to work when they are sick. More people are working from home while sick rather than taking sick leave.

Findings in the fifth Workplace Wellness Report by Southern Cross and Business New Zealand show that close to 90% of businesses have made it clear that staff should stay at home when they were sick, but 62% report sick staff working from home.

People being able to work from home has its benefits but there is a risk that people are working even if they are unwell. With a up to 50% of the population being able to work from home, the lines between work and life are becoming increasingly fuzzy.

For many people, working from home while they are sick is a convenient option, if their employer allows it. It prevents spreading contagious illnesses around your work colleagues and that is something we are all trying to avoid now.

Prior to the COVID-19 pandemic, if people called in sick, they were out of the office until they were well, but now there is a temptation for employees to log in and work. The onus is on the employee to stand firm and not work when they are ill. If you are unwell, you are not focused, not focused leads to mistakes and mistakes can cost – emotionally, physically, and financially.

Employers must accept that staff sickness is inevitable and resist the temptation for ask staff to complete work at home.

Working from home makes it harder for employers to see when employees are ill, so they are less likely to tell people to take sick leave. Employers need to actively encourage employees to take time away from work when they are sick.

As a rule, it is always best to stay home when you are sick. So, the next time you wake up with a runny nose, cough, and a headache. Stay home and rest. By Law you are entitled to 10 working days sick leave. If you need to use it, use it!

Disclaimer: The content of this article is general in nature and no intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.

September is New Zealand Wills month and is a good reminder of the importance of having a Will and keeping it current.

A Will gives you peace of mind and knowing that the people and the causes that matter to you will be taken care of when you have gone. As far as you and your family are concerned, your Will could be the most important paper you ever sign. A Will can relieve the financial and emotional strain on your family after your death and help minimize chances of any dispute about your estate. It isn’t just money you need to think about, but also your possessions (even if they are more of a sentimental value than financial) and your debts.

Even if you don’t own major assets, you can quite quickly build up possessions that have a sentimental or monetary value to you and to others. A Will allows you to decide who gets what. If you have children, it is the opportunity to select guardians (known as testamentary guardians) to help guide your children until the reach adulthood.

Anyone of sound mind aged 18 or over can make a Will. A person under the age of 18 may make a Will if they are (or have been) married, in a civil union or a de facto relationship. Others under the age of 18 can make a Will if approval is given by the Family Court or if they are in the military or are a seagoing person.

If you don’t have a Will see our article regarding how your Estate would be distributed in accordance with the Administration Act.

For more information see https://www.lawsociety.org.nz/for-the-public/common-legal-issues/making-a-will-and-estate-administration/

Get in touch with our Kannangara Thomson team to discuss what you need to do. Our contact details are:

Telephone: 03 377 4421
Email: email@ktlaw.co.nz

Stephen Kannangara was one of the founding partners of Cherry Kannangara, now known as Kannangara Thomson.

Originally led by Stephen, the team at Kannangara Thomson has drawn on life experiences gained from all corners of the globe with the unique personal histories forming a rich tapestry of wisdom, intelligence and practical thinking.

Stephen is of Sri Lankan descent, however, he was born and bred in Singapore. He came to New Zealand to study law and was admitted to the Bar as a barrister and solicitor in 1987. After graduating, and working as a lawyer in Christchurch and Hamilton. He then briefly practised in Papua New Guinea before being admitted as a solicitor of England and Wales in 1992. Stephen later added the Singapore Bar to his list of achievements, where he practised until 1996 when he returned with his family to New Zealand.

Stephen’s favourite thing about Kannangara Thomson is the relaxed nature and the fact they treat their clients as their friends.

Across an accomplished career, Stephen practised in legal areas as diverse as litigation, criminal law, employment, finance, franchising, immigration, mortgaging sales, family trust probate and administration of estates and probably many more areas as well.

Outside of the office, Stephen enjoys cooking, fishing, travelling and of course his family.

Stephen retired at the beginning of February 2021 and we wish him a very long and happy retirement.

If you are buying a home you can usually expect a number of further terms or conditions to be inserted into the contract for your protection. This will typically include conditions relating to finance, a land information memorandum and a building inspection report and if buying in post-earthquake Canterbury, an insurance condition and a clause dealing with the assignment of any residual rights in EQC and/or private insurance claims.

From time to time purchasers and vendors also have a condition inserted making the agreement subject to their solicitor’s approval of the form and content of the agreement. Usually this is requested when a seller or buyer would prefer to have consulted their lawyer prior to signing the agreement but for whatever reason were not able to do so. The idea of such a clause is obviously to enable your lawyer to make sure that all conditions which you need in the agreement for your protection are included in the agreement and, if one were missing to approve only on the basis that it is added.
However you need to be aware (and particularly vendors) that such clauses have been used by a purchaser’s solicitor on occasion to vary a condition with a view to cancelling an agreement. When you have conditions or further terms inserted in an agreement for your benefit you have an obligation to use reasonable endeavours to satisfy those conditions. So you cannot therefore simply change your mind and cancel the agreement without good cause.

At least that is the theory. If you have read the blog post on building reports you will be aware that there is an obligation to have a report prepared in accordance with “accepted principles and methods”. You will also be aware that on request you are required to provide a copy of the written report if you seek to avoid the contract on the basis of your building inspection. On at least one recent occasion we have seen a purchaser’s solicitor approve form and content only on the basis that this standard wording in the fine print be varied. In the particular instance this was because the buyer had already had a friend or relative do the building inspection and wanted out of the contract but had obviously been advised by their lawyer that they had not followed accepted principles and methods. They would also have been advised that their inability to provide the vendors with a copy of the report would be problematic.
Presented with those circumstances the vendor in that situation was left with little choice but to accept the approval of form and content on the basis of the altered building inspection clause. Predictably the contract was then duly cancelled by the purchaser.

One can argue that when acting for the purchaser it is our duty as lawyers representing the interests of our client to use a form and content clause in such a manner if that is to the benefit of our client. However you also need to be aware that as a vendor the use of such a clause in this manner could lead to a cancelled contract as was the case in the instance referred to.

Buying a home is the largest investment most of us will make in our lifetimes. There is no substitute for sound legal advice from an experienced conveyancing lawyer at the time of your purchase.

In post-earthquake Christchurch in particular there is no longer anything such as a “simple conveyance”, if indeed there ever was such a thing! Add to that the complicated new tax laws for the taxation of property purchases and you need expert legal advice more than ever.

In this article we are going to look at why you need to obtain a Land Information Memorandum (LIM) and in particular, why are you should order and pay for it yourself.

 With the great proliferation of sales by auction and deadline sale these days it is increasingly common to be provided a LIM which has been ordered by the agent on behalf of the vendor’s or by the vendor’s themselves.

 The problem with this was highlighted in the recent case of Selwyn District Council v Monticello Holdings Ltd. In that case it was held that a council only owes a duty of care to the party ordering and paying for the LIM and not anyone else seeking to rely on the content of the LIM.

 Furthermore, as the time lag between listing, ordering the LIM and subsequent sale can sometimes be quite long, the LIM can often be some months old by the time your lawyer looks at it. This highlights the other factor with LIM’s namely, that the content is only warranted to be correct as at the date of issue.

What’s more, the standard contract for sales other than by auction provides at clause 9.3 (1) (a) (Tenth Edition (2019)2 ADLS form) that the LIM has to be obtained by the purchaser at the purchasers cost.

You might well think (and it may not be unreasonable to assume in some cases) that if the time between the issue of the LIM and the sale is small that there is a little chance of anything of material importance changing in relation to the property. However there is always a chance, however small that there might have been a requisition notified or a change to the content of the LIM however slim that chance might seem.

 A large number of buyers to choose to simply rely on the LIM provided but the message to be taken from this article is that if you want to be able to rely on the content of the LIM you should order and pay for it yourself.

Are You Looking at Buying a Business?

In this video Brent Selwyn from Kannangara Thomson shares 7 key points to consider when buying a business.

1. Stock Adjustments Clauses
2. Staff
3. Restraint of Trade
4. Tangible Assets vs Non Tangible Assets
5. The Lease
6. Vendor Assistance
7. Franchise Systems

Please contact Brent on 03 377 4421 if you have any questions or if you would like more information on buying a business.

THE ROLE OF YOUR LAWYER IN A PROPERTY TRANSACTION

New Zealander’s have a love affair with property and during our lifetimes most of us will own property either for our own occupation or as an investment or both. It is a widely held misconception that conveyancing (the legal aspects of transferring ownership) of property is a straightforward task. In Christchurch in particular since the earthquakes of 2010, 2011 and beyond there is now no such thing as a “simple” conveyance if indeed there ever was! Buying your home is likely to be the most significant contract you ever enter into and it stands to reason therefore that having an experienced property lawyer on your side as your advocate and advisor is the logical thing to do.

In this article we take a short look at what your lawyer does in the background to assist you in completing that all-important sale, purchase or refinance. The role of a lawyer in conveyancing matters is largely misunderstood by the public and it is our hope that this article will dispel a few myths.

THE CONDUCTOR

One of the principal roles of your lawyer in any property transaction is to act as a point of contact for various important parties in the transaction. In particular your lawyer will likely liaise with your mortgage advisor, bank or lender extensively during the due diligence phase. If you are a first home buyer your lawyer will also manage with you the process of dealing with your Kiwi Saver provider and if you are eligible, Housing New Zealand in relation to a home start grant.

And it doesn’t end there. Your lawyer will also be the principal point of contact for the real estate agent, your insurer or insurance broker, the local authority, quotable value and on occasions any number of other professionals including your property manager, valuer, surveyor, engineers and of course your building inspector. In the event that any issues arise during your due diligence investigation of any property, you can also expect your lawyer to be the enforcer of your rights under the contract, a negotiator on your behalf and a key advisor in the whole process.

THE COLLATOR

Behind the scenes, your lawyer will receive and collate all of the relevant information relating to the property you are buying. This might include the land information memorandum from the local council, the building inspection report from your building inspector, the details regarding the earthquake claims and the scope of works, details of any earthquake repairs completed, details relating to insurance on the property and all matters relating to title and interests affecting the title. A fundamental part of your lawyer’s role is to keep you informed of the key dates and deadlines which are to be met during the course of your contract. In the event that a deadline cannot be met your lawyer will be the negotiator on your behalf to secure additional time to fulfil any conditions.

THE ADVISER

Having collated all the information relating to your purchase, your lawyer will advise you on all matters relating to or arising out of an investigation of the land information memorandum, the title to the land any insurance claims and of course the building inspection report. If necessary your lawyer will play a key role in assisting you to exit the agreement. Furthermore, should issues arise following your final inspection then your lawyer will be a key negotiator in managing any remedial work required of the vendor or on occasion negotiating the retention of funds pending any repairs being affected or on occasions, a reduction in the price if appropriate.

Another key role of your lawyer will be to advise you on the structure of your property ownership which will almost always depend on the nature of the relationship between the purchasers (if more than one) and might on occasion involve advice around ownership structures such as companies, partnerships or family trusts and in some circumstances, advice around relationship property considerations. Your lawyer will also guide you through the lending process and explain your obligations to the bank.

COMPLETION AND SETTLEMENT

One of the vital roles of your lawyer in completing your purchase is to see to it that all funds required are gathered into the lawyer’s trust account in a timely fashion so that settlement is completed on time. This will include communicating with your lender and ensuring that all of its requirements are met so that loan monies are available on settlement day. Your lawyer will ensure that any Kiwi Saver withdrawal, home start grant (if applicable) or personal contributions of yours are also received in time for settlement.

Your lawyer will prepare and execute the electronic documents authorised by you which see the legal title to the property transferred into your name and any new mortgage registered in favour of your lender. Following the completion of settlement your lawyer will attend to registration of the property into your names and thereafter, report to you and the lender with an up-to-date copy of the certificate of title and the registered mortgage. Finally, following settlement your lawyer will have the pleasant task of calling you to congratulate you on the purchase of your new home and advise you where the keys may be collected.

IN THE ENGINE ROOM

Lawyers rely on experienced solicitors, registered legal executives and legal secretaries to assist them with some aspects of your purchase so don’t be surprised if during your purchase you have contact not only with your lawyer but also his or her supporting solicitor, legal executive or secretary. We hope that after having read this you will appreciate that the role of your lawyer in any property transaction is one which is hugely important to the overall success of your sale or purchase. At Kannangara Thomson we have an experienced team of property lawyers and support staff available to help you with your property requirements.

Brent Selwyn shares a brand a new video on “7 Things You Need To Know About Making A Will”. If you are thinking about getting a Will then watch this video first.

If you’d like help with setting up a Will then please contact Brent Selwyn on 03 377 4421.

Thanks for watching – Brent.