Is it legal? Doing your pre-purchase homework

August 26, 2019

Buying a new property is a big investment. Whether it be for a home, business or an investment property you need to do your homework and make sure you’re spending your money wisely. Its usually too late once you’ve bought the property- its really a case of buyer beware.

 

There are a lot of checks you should complete, including checking the certificate of title (have a look at our other blogs on land covenants and consent notices too) and get a building inspection completed. You should also take advice from your lawyer about what else you should be reviewing. 

 

Land Information Memorandum (LIM)

A LIM report is a pretty standard document to obtain when buying a property. Its an overview document, summarising the information that the Council holds on your property. It could include information on potential erosion, subsidence or slippage, flooding of any type and possible presence of hazardous substances, private and public stormwater and sewerage drains, rates and any overdue rates. It’s a good first step in your investigations but remember it’s a summary. If there’s something unusual on the site, or a building/ activity on the site that’s not noted on the LIM you should investigate this further.

 

Also take note of consents and past uses; is there potential for contamination? This could trigger the need for additional resource consents in the future if you develop or change the use of the site. Do the plans accurately show what’s on the site now? Has someone extended it?

 

Property File Search

We would also recommend undertaking a Council Property File search. ​A property file provides documents not included in a LIM report, such as building and resource consent documents and correspondence with the Council about the property. In a planning context, it will tell you what has consent and help you to confirm what’s legally established. If there are things on the site, such as a business, second dwelling or minor dwelling, that you’re relying on in terms of financial return, you need to be satisfied that these are legally established. The property file is an important part of this.

 

Planning Review

You may want to confirm that something on the site is legally established in planning terms. Typically, we are asked this question when a site contains another dwelling or a minor dwelling, usually because clients are relying on the income these will provide. The purchase price usually takes these uses into account; making sure its legally established will also help you make an informed decision on purchase price.

 

Until recently, having more than a single dwelling on a site often required resource consent. A business outside a business zone would also often require resource consent. If you note something “unusual” like this on a property you’re looking to purchase, we highly recommend you getting planning advice to ensure its legally established. This requires a planner to review the building and resource consent history, check that there is a resource consent for what’s present (and that it hasn’t been altered since then), or confirm it was a permitted activity at the time and can rely on existing use rights. There are specific tests in the Resource Management Act to confirm existing use rights, and we do recommend getting professional advice.

 

Relying on advice from a real estate agent, old photos or old rates bills is not enough to prove existing use rights. It requires a planning assessment, review of historical records for the site and historical planning rules. Considering the level of investment, spending the time and money on a professional to do this is a wise decision.

 

More information?

If you’re looking to buy a property, and want information on what’s legally established get in touch. We know this can be a stressful time, and we can help make this process easy for you. You can contact us on hello@planningplus.co.nz or 09 427 9966.

 

Disclaimer
As with all our blogs, the information detailed here is general in nature and meant as a preliminary guide only. This should not be substituted for your own investigations or use of your own professional’s. Planning Plus is not liable for any errors or omissions.

 

 

Hannah Thomson is Director of Planning Plus and has over 17 years of resource management experience working in both local government and the private sector. Hannah has a wide range of experience including commercial, rural, residential and coastal development and subdivision on small to large scales and appearances at both Council and Environment Court as an expert witness for mediation and hearings. Hannah has assisted Councils with policy development and has also assisted private individuals with submissions to Council.

 

email Hannah

 

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