LIMs, Building Reports and checking titles
By Rachel Lee
Howard and Hannah wanted to purchase a property. They were nervous about facing the open market as they were first time buyers. Luckily Ian, Howard’s brother, was selling his home and the opportunity seemed too good to pass on.
The couple decided that Ian’s property would be perfect for them as it was a short walk from the beach. They also liked the fact that by buying from a family member they would not have to compete in the property market. Howard and Hannah assumed there would be no issues with the property, as they were simply buying the property from a family member.
The parties signed a private sale and purchase agreement with no conditions. They did not bother to get a LIM, Building Report or have the title checked. These seemed unnecessary costs. Settlement proceeded without any issues.
While living in the home, Howard and Hannah had no difficulties. However, five years later, they were facing pressure to sell the property as Hannah had been offered a new job in Hamilton. When they went to sell the property on the open market, they learnt that the property had significant issues which made it unattractive for potential buyers.
They were told by a potential buyer that the extension to the house that Ian had carried out some years ago did not have Council consent. Due to the change to the building outline, the cross lease title was now defective.
Had Howard and Hannah obtained a LIM Report, a Building Report and had the title of the property checked they would have been aware of these issues and discussed their options with their solicitor.
The combination of the pressure that the couple were facing to sell the property and the substantial issues with the property meant that Howard and Hannah had to sell the property at a loss after clearing their debts.
It is important to remember that when buying a property, even if you are buying from your most trusted and dearest, there are certain steps you must take to ensure that your investment is protected. Howard and Hannah’s investment would have been protected had they sought specialist advice in respect of the property.
Rachel Lee, Legal Executive.
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