Our Partner, Steven Moe had first met Panapa back in 2017 when they were both on a panel about legal structures at the Social Enterprise World Forum held in Ōtautahi Christchurch.

When we first spoke with Panapa Ehau from Hikurangi Enterprises about their social housing plans for their people we knew this would be a special project. Based on the beautiful East Coast of the North Island in Te Tairāwhiti, the heart of the idea was to enable their people to gain access to housing. He says:

“Anything we do or engage in is founded upon high trust relationships and kaupapa. Parry Field is part of our wider network that share a similar vision of doing great work to increase the wellbeing of people and the environment around us. The network are outcomes focused on intergenerational change. The partnerships that evolve are pono (true) and tika (true) in all aspects bringing together knowledge, skills and experience of many for the benefit of all involved”.

We discussed possible legal structures that could be used ranging from companies, incorporated societies or limited partnerships but eventually settled on setting up a charitable trust. The reason for this was the initiative is all about reduction of poverty with an addition of education thrown in as well. A charitable trust is a stable legal vehicle to use for an initiative like this (for more on legal structure options, read our free guide “Charities in New Zealand: A Legal Handbook”).

There was a lot of thought put into what the governance framework would look like and also how this new entity would interrelate with other entities that were already existing. Fortunately there were several other groups who want to see this succeed including the Tindall Foundation and Community Finance who each offered support in different ways.

One challenge which is worth others considering was what name to choose – the original name selected was already used by another entity so another was chosen: “KAENGA HOU TRUST”.

Drafting the Trust Deed, we next spent considerable time to really think about how to express the charitable purposes and how they really summarise what this is about:

Subject to clause 3.1 and without in any way derogating from it, the Trustees may also devote or apply both capital and income of the Trust to further charitable purposes by:

Providing education in the form of courses, seminars and written information for whanau and community housing providers about providing housing for whanau who are disadvantaged or poor and would otherwise not have access to housing;
Providing education and developing wrap around services to support whanau who are disadvantaged to access housing;
Providing support for whanau who are disadvantaged to be able to have access to housing; and
Participating in systematic change initiatives that increase knowledge and pathways for disadvantaged whanau access to housing including advancing education about homelessness and housing issues.

Another feature of the Trust Deed which is worth mentioning is the inclusion of principles (mātāpono) that we often suggest to clients to include. These are not purposes themselves but they help to set the “tone” for the new charity and its focus so it is worth including here:

3.4 In carrying out the Charitable Purposes, the Trustees will be guided by the following principles (Mātāpono):

respecting and implementing the dual heritage of the partners of Te Tiriti o Waitangi (the Treaty of Waitangi);
respecting the cultural diversity of people and communities and encouraging people from all whakapapa and backgrounds;
inspiring and enabling people and communities to reach their full potential and take ownership of their future;
maintaining high standards of professionalism, integrity and ethical conduct; and
enabling positive social change from within, by building capable communities with the belief, the means, and the opportunities to create sustainable positive outcomes for all stakeholders and future generations.

It was a happy day in January when the email came in saying “I am pleased to advise that KAENGA HOU TRUST is now a registered charity.”

A successful registration as a charity has meant the project can continue forward and funding partners have stepped up with significant contributions. Watch this space and lets see what comes next!

There is a big need for more community housing in our country – but how do Community Housing Providers get set up? What is the process to actually become a registered Community Housing Provider? These are the common questions we get about Community Housing Providers, and we will provide answers to the first question in this article, and then set out how to register in a second article.

What is a Community Housing Provider?

A Community Housing Provider (CHP) is defined as an entity who provides housing for the purpose of either community rental housing or affordable rental housing, or both.[1] Tenants of these homes will be those who have registered themselves as in need of a home on the Ministry of Social Development’s Public Housing Register, provided the CHP is registered by the Community Housing Regulatory Authority (CHRA).

There is some good news in that there is flexibility when it comes to the legal form these can take. A CHP can be set up using various structures, such as a company, a charitable company, a trust, or a limited partnership, provided their purpose satisfies this definition.

We can provide you with advice as to what structure best suits your situation. You may also wish to look at our Community Housing – A Legal Guide for more information.

Why would an entity want to become a Community Housing Provider?

One clear benefit of being a CHP is knowing that you are helping those in need by building and providing housing. Rather than investing in a term deposit or other ventures which may be purely focused on return on investments, providing rental housing for those facing difficult situations helps to better the community.

There are other benefits if you are registered as a CHP by the CHRA. Financially this can be beneficial because:

By being a registered CHP, the Ministry of Housing and Urban Development (HUD) provide an Income-Related Rent Subsidy to registered CHPs through reimbursement agreements and tailored agreements.[2] This covers the difference between the amount of rent the tenant is to pay (as determined by the Ministry of Social Development) and the market rent of the property. This ensures that you will not be disadvantaged by providing affordable rental housing to those in need.
A registered CHP may also get an income tax exemption. To do so, they must meet the eligibility criteria (which is discussed below), are a trust or company, and are not carrying out activities that are for profits or personal gain. The registered CHP must also not have more than 15% of its beneficiaries or tenants with an income or total assets that exceed particular amounts. These amounts are specified within Schedule 34 of the Income Tax Act 2007 (ITA). It must be noted that only the income limit will apply to the tenant if they have not owned land before, meaning their asset value can exceed the limits stated in the ITA.

We help many community housing providers and could help you as well – check out our information at our information hub here.

If you would like to discuss further, please contact one of our team on stevenmoe@parryfield.com, judithbullin@parryfield.com or paulowens@parryfield.com at Parry Field Lawyers.

This article is general in nature and is not a substitute for legal advice. You should talk to a lawyer about your specific situation. Reproduction is permitted with prior approval and credit being given back to the source.

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[1] Public and Community Housing Management Act 1992, s 2.

[2] Public and Community Housing Management (Community Housing Provider) Regulations 2014, s 4(1).

There is a big need for more community housing in our country – in our first article here we talked about what Community Housing Providers (CHPs) are. In this article we will talk about how you can register to become a CHP.

How do I become a Community Housing Provider?

Anyone can be a CHP, but the Public and Community Housing Management (Community Housing Provider) Regulations 2014 (the Regulations) sets out the criteria that must be met to become a registered CHP. An entity must first meet the eligibility criteria, which requires an entity to meet the CHP definition mentioned above, its governing body supports the application for the entity becoming registered.

After having reviewed the performance standards, if the Community Housing Regulatory Authority (CHRA) is satisfied on reasonable grounds that the entity has the capacity to meet the performance standards it may be registered.[1] However, an entity cannot be eligible for registration if they are a council-controlled organisation, a local authority, or are subsidiary of these organisations unless they operate at an arm’s length away from them.[2]

The performance standards set out in the Regulations and by the CHRA are relevant for the eligibility criteria.[3] These standards for registration are put in place to ensure that the CHP does have the capacity to become a registered CHP, as well as to ensure the CHP can continue to comply with these standards once registered. The performance standards focus on five key principles, which are:

Governance
Management
Financial viability
Tenancy management
Property and asset management.

One we often provide assistance with is the governance aspect of the performance standards. This is to ensure your entity is governed in the appropriate manner with the correct systems and processes in place.

For more information on the performance standards, please have a look at the CHRA document on the performance standards: https://chra.hud.govt.nz/assets/Uploads/performance-standards-guidelines.pdf

If an entity meets the eligibility criteria, it can then meet with the CHRA and discuss particular matters such as the entity’s circumstances, and it provides a chance for the CHRA to discuss the expectations of a CHP, the entity’s suitability for registration, and any other information they may require. Following the meeting, an entity must complete an application form. This includes providing mandatory supporting information and evidence which demonstrates the entity’s capability to meet the processes and policies required of a CHP as set out in the performance standards.

An application for registration will be reviewed by the CHRA, who aim to make a decision within 60 working days of having received it (provided the application was fully complete). The CHRA will focus on whether the tenants will be housed appropriately, as well as reviewing whether the five performance standards are met by the entity. Throughout the review, the CHRA consider the principles of proportionality, transparency, fairness, and consistency.

If an entity is successful in their application, the CHRA will still provide feedback as to what can be improved to further meet the performance standards. The entity will then be added to the Public Register on the CHRA website and published in the New Zealand Gazette. The Ministry of Housing and Urban Development (HUD) will also be notified that your entity is now registered, meaning the entity and HUD can then proceed to provide community housing to those in need.

We help many community housing providers and could help you as well – check out our information at our information hub here.

If you would like to discuss further, please contact one of our team on stevenmoe@parryfield.com, judithbullin@parryfield.com or paulowens@parryfield.com at Parry Field Lawyers.

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[1] The Public and Community Housing Management (Community Housing Provider) Regulations 2014 s 5(a), (c), (d).

[2] The Public and Community Housing Management (Community Housing Provider) Regulations 2014 s 5(b).

[3] The Public and Community Housing Management (Community Housing Provider) Regulations 2014 s 5(d).

Case study of Collaboration: Home and Parry Field Lawyers

Business is about relationships. One that we’ve enjoyed growing is with Home. A building company with a difference, Home specialises in community and affordable housing developments where there is much more than just quality houses being constructed – but an additional focus on creating communities.

Every team from within our firm provides support in some way. This ranges from helping with drafting contracts, purchasing land, arranging financing, structuring, intellectual property and as Home’s vision has grown, even recently helping with the creation of Home Foundation: a charitable trust focussed on ending homelessness.

Those are just some examples of a deep relationship across the core areas where businesses like Home can use our legal support.

Home co-founder Israel Cooper says: “The team at Parry Field are a unique group of legal experts. Their approach to any legal situation is both strategic and relational, recognising that business is fundamentally about preserving relationships as much as possible. It is their character and the values to which they hold themselves that is their best attribute. People you want to have your back in any difficult situation. “

One of the reasons we enjoy supporting Home is that we can play a part through our legal services in addressing a pressing social need in our wonderful country: housing. This sense of purpose and a shared alignment of values has been essential to the relationship growing.

Chair of Partners at Parry Field Kris Morrison adds: “We have loved putting our skills and legal knowledge to use in supporting a for-purpose company like Home. Contributing to their work coincides with the social justice motivations which led many of us to become lawyers in the first place.”

Paul Nanai, the CEO of Home, comments: “The team at Parry Field have provided exceptional service and expert intervention across many facets of our Business. We can say, outcomes and success achieved are because of them. We honour and value the true partnership we have and their heart and approach with resolving issues. For us the journey and ‘how’ we get to a destination is just as important as the result itself. And Parry Field have made the journey a lot better for us”.

Partner Steven Moe remembers talking with co-founder Israel Cooper for his podcast seeds here and says: “The clear focus and vision that Israel shared for Home is inspiring and shines through – it makes me proud that we can be involved in that kaupapa”.

We participated in the creation of a video which tells the story of Home over the last 10 years which can be seen here:

This video emphasises how we started this case study – relationships, and how critical they are to good being done in our world.

While the housing crisis continues it is nice to know Home is working to do their bit to contribute solutions. Supporting them in what they do brings us satisfaction too.

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About Parry Field Lawyers: With 80 staff in four offices (Christchurch City, Riccarton, Hokitika and Rolleston) we have three main teams: Commercial, Property and Disputes. Within each of those areas we offer deep experience in areas like Employment, Family, Charity, Immigration, Estates, Subdivisions, Litigation, Leasing, Business sale and purchases and more. We welcome the chance to discuss how our team might support yours.

There are many business structure options in New Zealand, including companies, partnerships and Trusts, and you want to be sure you are picking the right one. We frequently assist clients who are considering starting a business navigate the different business structure options to find what best suits their needs. The various business structure options each have their own pros and cons. What the best structure is for you will depend on your particular circumstance, desire and purpose.

The simple and easy structure which are well understood, such as a Company or Sole Trader, will work best for most businesses. If you are purpose driven, a Charitable Trust or Incorporated Society may be more appropriate. Increasingly we are also working with clients who want to merge both purpose and profits and for these clients we assist by creating unique dual structure approaches. In this article we have summarised the key points for the most common structures that are used in New Zealand. We are happy to meet and discuss options with you.

Two other critical points before we look at the options:

Get your strategy and purpose right before you decide on a legal entity type to use. Each one has positives and negatives so know what your end goal and the impact you want to see is first – after that look at which will help you get there. They are each just tools for empowering you to have impact.
Second, we are offering legal thoughts on key elements of these structures but there are other considerations too – in particular always ensure you get great accounting and tax input on the financial side of these alternatives.

Now turning to the options:

Company
Who	Owner = Shareholder Manager = DirectorThe owners may also be the manager
Liability	Is a separate legally recognised entity
Laws	The Companies Act 1993 governs companies
Who signs	The Director
If things go wrong	Companies limit liability for the owner*
Key documents	None required. Can choose to adopt a constitution or shareholders agreement
Visibility	Ownership and management is publicly visible on Companies Register
Difficulty to start	Moderate

* There are certain limited circumstances when the owners of the company may be liable. If the owners are also managing the company as directors, they are exposed to certain liability as managers.

Sole Trader
Who	Owned and managed by ‘sole’ owner
Liability	Not separate from entity
Laws	No specific law governs sole traders
Who signs	The owner
If things go wrong	The owner is personally liable
Key documents	None required
Visibility	Private and not registered
Difficulty to start	Easy

Partnerships
Who	Owner = the Partners Manager = the Partners manage
Liability	Not separate from entity
Laws	Partnership Law Act 2019
Who signs	Partners
If things go wrong	Owners are personally and jointly liable
Key documents	None required Can choose to have a Partnership Agreement
Visibility	Private and not registered
Difficulty to start	Moderate

* One owner can bind all owners.

Limited Partnership
Who	Owner = Limited Partner Manager = General Partner
Liability	Is a separate legally recognised entity
Laws	Limited Partnership Act 2008
Who signs	The General Partner
If things go wrong	The General Partner Limit liability for the owner**
Key documents	Requires a Limited Partnership Agreement
Visibility	Private for the Limited Partners, public for General Partner
Difficulty to start	High

* Each Limited Partner will account for tax in accordance with its individual tax position.

** If the owner participates in the management of the business, they will be liable.

Unincorporated Joint Venture
Who	Owners = Partners Management determined by the Joint Venture Agreement
Liability	Not separate from entity
Laws	Contract law, but no specific law governs Unincorporated Join Venture
Who signs	Each partner
If things go wrong	Partners separately liable or as decided by the Joint Venture Agreement*
Key documents	None required Can choose to have a Joint Venture Agreement
Visibility	Private and not registered
Difficulty to start	High

* Owner will account for tax in accordance with its individual tax position.

Trading Trust
Who	Owner = settlor/donor gives assets (trust fund) to the Trading Trust on trust for the benefit of the beneficiary Management = the Trustee Company, manages the trust fund and pass on benefits to the beneficiary
Liability	Not separate from entity, creates an equitable relationship
Laws	Trusts Act 2019 and Companies Act 1993
Who signs	The Trustee Company
If things go wrong	The Trustee Company
Key documents	Trust Deed
Visibility	Private and not registered
Difficulty to start	High

Charitable Trust
Who	Owners = settlor/donor gives property (trust fund) to the Charitable Trust to benefit the community through charitable purposes Management = Trustees manage the trust fund to advance the charitable purposes
Liability	Is a separate legally recognised entity
Laws	Trusts Act 2019 and Charitable Trust Act 1957
Who signs	The Trustees
If things go wrong	The Trustees
Key documents	Trust Deed
Visibility	Registered on Charitable Trust Register and if a registered charity on Charities Services
Difficulty to start	Moderate

Incorporated Society
Who	Management = the Committee manages the funds to advance the purpose
Liability	Is a separate legally recognised entity
Laws	Incorporated Society Act 2022*
Who signs	The Committee, but this depends on the Constitution
If things go wrong	The Committee
Key documents	Constitution
Visibility	Registered on Incorporated Societies Register and if a registered charity on Charities Services
Difficulty to start	Moderate

* This is a new Act which has recently come into force, for more information on the new Act and requirements see our Incorporated Societies Act 2022: Information Hub.

Co-operatives Companies
Who	Owner = Members/shareholders Governance = Directors
Liability	Is a separate legally recognised entity
Laws	Co-operative Companies Act 1996 and Companies Act 1993
Who signs	The Directors
If things go wrong	Companies limit liability for the owners
Key documents	Constitution
Visibility	Registered on Companies
Difficulty to start	Moderate

For lots more information on co-operatives visit Cooperative Business New Zealand – https://nz.coop/

If you would like to discuss or set up the above-mentioned business structure or other commercial matters, you can contact:

Steven Moe, Partner – stevenmoe@parryfield.com
Michael Belay, Solicitor – michaelbelay@parryfield.com
Yang Su, Law Clerk – yangsu@parryfield.com
Sophie Tremewan, Law Clerk – sophietremewan@parryfield.com

The most recent Government amendments to the bright-line test now makes the bright-line rules applicable to many more individuals. In this article, we will touch on the rules you need to be aware of when purchasing residential property and whether the bright-line test will apply to you.

What is the “bright-line” test?

The bright-line test is a rule in the Income Tax Act 2007 aimed at taxing financial gains made on residential investment properties that are sold within the bright-line period.

On 23 March 2021, the bright-line period was extended from five years to 10 years. This means that many residential properties, if disposed of within 10 years of acquisition, will be subject to income tax on any profit made.

Any property acquired before 27 March 2021 will still fall under the previous rules, with tax potentially being imposed on properties disposed of within 5 years of acquisition.

Will my Property be Subject to the Bright-Line Rules?

It is important to be aware of whether your property will be subject to income tax under the bright-line rules, as well as consider the implications so that there are no surprises when you come to sell.

We list the following which are common exemptions/exclusions to the bright-line rules:

When a property is a main home;
When property is inherited; or
If you are an executor or administrator of a deceased estate.

Old Rules – Main Home

Under the old rules properties will not be subject to the bright-line rules if they have been your main home for more than 50% of the time you have owned the property within the relevant bright-line period.

Inland Revenue has clarified that a main home is where you have lived most of the time. Therefore, you must actually had to have lived at the property for this exemption to apply.

For residential properties that were acquired between 29 March 2018 and 27 March 2021, a bright-line period of 5-years applies.

New Rules – Main Home

Properties acquired after 27 March 2021 will be subject to the extended bright-line period of 10 years, unless the main home exemption applies. However, the rules for the main home exemption have changed. Where the property is not used as your main for one or more periods of 366 days or more, while you own it, you will be required to pay tax on a proportion of the increase in the value of the property that matches the proportion of time that you owned the property and (for 366 or more consecutive days) were not living in the home as your main home.

Do the same Rules Apply to Newly Built Properties?

Newly built properties are still subject to the bright-line rules, however Government has excluded new builds from the most recent law changes. Therefore, new builds continue to be subject to the 5-year bright-line rules as discussed above. Government has provided some clarity regarding what constitutes a ‘new build’ by confirming that property which clearly increases residential housing will qualify as a new build.

Who can I Contact for Assistance with my Property Matters?

Our team at Parry Field have designed a helpful flow chart to assist you in determining whether your property will be subject to the bright-line rules. For further clarification, we suggest that you engage a tax specialist or one of the property lawyers at Parry Field Lawyers who would be more than happy to provide personalised advice.

For more information you can contact Luke Hayward lukehayward@parryfield.com or Maria Hayes mariahayes@parryfield.com at Parry Field Lawyers.

The End of Life Choice Act 2019 is now in force. This means that a person with a terminal illness who meets the eligibility criteria can ask for medical assistance to end his or her life.

In this article we talk about the key provisions and also consider what that might mean for certain situations such as for landlords and managed accommodation.

Who is an eligible person?

An eligible person means a person who:

Is aged 18 years or over; and
Is a New Zealand citizen or permanent resident; and
Suffers from a terminal illness that is likely to end the person’s life within 6 months; and
Is in an advanced state of irreversible decline physically; and
Experiences unbearable suffering that cannot be relieved in a manner that the person considers tolerable; and
Is competent to make an informed decision.

The Act states that a mental disorder or illness, disability, or advanced age alone does not make a person eligible for assisted dying.

Where might a person choose to end their life?

An eligible person can choose where they wish to be when the medication is administered to end his or her life. It is expected that assisted dying services will generally be provided in a patient’s home or a community setting such as a hospice or rest-home, as opposed to a hospital.

While section 8 permits health practitioners to conscientiously object to providing assisted dying, the Act is silent as to whether any other organisations or individuals outside the healthcare sector can object to and prohibit assisted dying.

Managed accommodation facilities

The Ministry of Health has stated that managed accommodation (such as aged care facilities) can conscientiously object to assisted dying and prohibit it from taking place on the premises.[1] However, managed accommodation facilities that object to assisted dying must still adopt policies that allow for appropriate arrangements to be made elsewhere.

A landlord’s obligations

A landlord who objects to euthanasia may question whether he or she has a right to prohibit a tenant who is eligible under the End of Life Choice Act, from exercising the option of receiving assisted dying, in the rental property.

It is unlikely that a landlord can interfere with a tenant’s choice to receive assisted dying under the Act.

This is because under the Residential Tenancies Act 1986 (RTA), discrimination is declared to be unlawful when granting, varying, terminating or renewing a tenancy agreement. A landlord is also prohibited from stating an intention (by advertisement or otherwise), when granting a tenancy agreement, or when advertising to prospective tenants, to discriminate against any person.

It is also unlawful under the RTA to, on the basis of a prohibited ground of discrimination, treat any person who is seeking accommodation differently to others in the same circumstances, deny any person accommodation, or impose a condition which limits the class of persons who may be tenants.

Could there be discrimination under the Human Rights Act?

The Human Rights Act 1993 outlines the unlawful grounds of discrimination. Ethical belief is one of these grounds.

While there is no authority on this, ethical belief may encompass a person’s conviction to end his or her life by euthanasia. This means that the following may be discriminatory on the grounds of ethical belief:

A prohibition on assisted dying in the property as a condition of a tenancy agreement;
A verbal statement to prospective or existing tenants to this effect;
Denial of a rental property to a person who has expressed support for assisted dying;
Termination of a tenant on the grounds that he or she has expressed a desire to receive assisted dying.

Even if the termination of a tenancy on the above ground is not considered discriminatory, it will likely still be unlawful, as there are limited circumstances in which a tenancy can be terminated. It is unlawful for a landlord to act to terminate a tenancy without a valid ground.

Finally, there is also a practical point – there is potential for adverse publicity if a tenant wanted to take these steps and a landlord refused.

As a landlord, housing organisation or another organisation altogether, it is critical to consider your obligations under the End of Life Choice Act.

If you need further clarity you can contact Grace Watson gracewatson@parryfield.com who would be more than happy to talk with you about your particular situation.

[1] Ministry of Heath “End of Life Choice Act – Funding and Delivery Model for Assisted Dying Services” (July 2021) <www.health.govt.nz>.

Buying a house is a huge step in your life but it can be a daunting process. This article discusses key issues that you will need to think about. We recommend engaging a lawyer early on in the process to ensure that everything runs smoothly.

Where do I start?

The first step of buying a home is saving for a deposit and planning your budget. Contact your bank or a mortgage broker to see how much you are able to borrow and whether you can get pre-approval for a loan. Throughout this process it is good to keep in mind how you might like to structure you loan and to investigate different interest rates. Make sure to check your eligibility for withdrawing KiwiSaver funds or obtaining a first home grant by contacting your KiwiSaver provider and Kāinga Ora. You can also get pre-approval for these but you won’t be able to apply for the funds until you have a fully signed agreement. Your lawyer will need to help you with the final application and the funds will eventually be deposited in the law firm’s trust account.

All lawyers in New Zealand need to comply with anti-money laundering legislation (AML) so you will need to supply your lawyer with some ID and a proof of address that can be verified. This is also required for your bank so it is good to get it all sorted early in the process.

The next step is searching for your home, think about the location and specifications that suit your needs. It is a good idea to inspect the property yourself to look for things that may not have been apparent in the listing photos.

Sale by auction

At auction, a bid is an unconditional offer. This is why you must have all of your due diligence done before auction to know exactly what you are buying. This can include a valuation report, building or engineers report, finance, toxicology report, EQC checks, Land Information Memorandums (LIMs) and a title check. It is important to go through these things with your lawyer to ensure that everything is in order. You also may find that it is necessary to enter into a pre-auction agreement with the vendor to include further terms that would apply if you were successful at auction.

If you are the successful bidder, you typically need to pay a 10% deposit on the day of the auction. Keep in mind that you will not be able to use KiwiSaver funds as a deposit at auction as a fully signed agreement is required to apply for a full withdrawal and this can take up to 10 working days to be processed by your KiwiSaver provider.

Sale by offer and negotiation

If you want to make an offer on a property, get in touch with your lawyer so that a sale and purchase agreement can be drafted. Real estate agents will sometimes draft the agreement but we strongly recommend showing it to your lawyer prior to signing. The agent may try to assure you that a Solicitor’s Approval clause will satisfy your lawyer, but the reality is that there are limited changes we can make under this.

Your offer can be a conditional one, where you include conditions that must be met before the agreement goes unconditional. A standard agreement provides the option for it to be conditional on you being satisfied with a building report, Land Information Memorandum, toxicology report and obtaining suitable finance. Further Terms can also be added to the agreement such as;

obtaining suitable insurance
assigning EQC claims to you
changing the settlement date if there is a COVID-19 lockdown
a sale condition that makes your purchase conditional on the sale of your current property.

The conditions need to be met in the time frame specified in the agreement. Once all conditions have been met, the agreement becomes unconditional.

The vendor may counter-offer in which case you would be able to negotiate, they may also reject the offer or not accept some of your conditions. If the vendor accepts your offer they will sign and date the agreement.

When do I get the keys to my home?

The last step in the process of buying your first property is settlement where you get the keys and your name goes on the title as the registered owner. Between confirmation and settlement you will need to visit your lawyer to sign documents. You are also entitled to a pre-settlement inspection of the property that allows you to make sure that everything is working and there hasn’t been any damage to property since your last visit. Your lawyer can negotiate with the vendor’s lawyer for a price reduction or ask the vendor to fix damage if there are any problems.

Settlement date is when the rest of the money is paid to the vendor. The funds to purchase the property will be in your lawyers trust account (which may be transferred by you, your bank, Kāinga Ora and your KiwiSaver provider) ready to be sent to the vendor’s lawyer. Make sure you are contactable throughout the day, your lawyer will call or email to check that you’re ready to settle. When the vendor’s lawyer has confirmed that they have received your funds, your solicitor will transfer the title to you by registering the property in your name in the online system (Toitū Te Whenua Land Information New Zealand). After settlement is complete you will be notified by your solicitor and you can pick up the keys to your new home!

Buying a property is a huge step and a great achievement. It is a good time to think about making a Will and how your assets would be split in the event of a relationship breakdown. This article covers the general process of purchasing a property but keep in mind that your situation may be more bespoke. One of our experts at Parry Field would be happy to chat if you have any questions or would like to take the next step in your home-ownership journey.

If you would like to discuss this you can contact Luke Hayward lukehayward@parryfield.com Maria Hayes mariahayes@parryfield.com or Cora Granger coragranger@parryfield.com at Parry Field Lawyers.

A Land Information Memorandum (LIM), is a report containing current information that the local authority has about a property. LIM reports can include:

Storm water and sewage drains information
Special characteristics of the land such as potential erosion, falling debris, hazardous contaminants or slippage that is known to the authority
Information regarding drinking water supply
Any permits, consents, certificates, orders or requisitions that affect the land issued by the local authority or the building consent authority
Whether any rates are owed on the land or if it is subject to a levy
Whether there is any Heritage New Zealand protection
Any conditions or information regarding the use of the land
Or any other information the local authority considers relevant.

LIMs are useful documents but you should keep in mind the report only includes what is in the current records of the local authority. LIMs do not contain information regarding cross leasing or development of the property, conditions imposed on developers, information on what can be built on the land, services available to the land and any changes to town planning provisions or whether the land is subject to a government right of acquisition. As part of your due diligence process you should strongly consider obtaining a copy of the title, a building report, EQC information and a toxicology test.

How much will a LIM cost?

The fee for obtaining a LIM report is generally between $250 – $450 depending on which council the property falls under and whether you use a fast track/urgent service or a standard service. Fast track services are useful if you don’t have much time before an auction or confirmation date. We recommend paying the one-off cost for a LIM, it may alert you to something fundamentally unsound about the property and save you from the costly exercise of purchasing a problematic property. Note that if you do not obtain the LIM yourself (perhaps the agent has supplied one) you will not be able to pursue the council if it contains any errors.

How do I get a LIM?

One of our property experts can order a LIM for you or you can get one directly by applying through your local council or district’s website. We can review your LIM to help identify any issues.

If you would like some more information on the above, contact one of our property team experts at Parry Field Lawyers.

Entering into agreement and contracts is a crucial part of business. It is important to ensure that these transactions take place without hiccups, as disputes in contract can be costly, time consuming and damage relationships. In our line of work, we see similarities in the hurdles that trip people up when they are entering into contracts. To help with this we have created this list of 7 useful tips to assist and point out the hurdles to avoid when entering into contractual agreements.

Contract Formation

The basics required for the formations of a contract are: Offer, Consideration (usually money) and Acceptance. If those exist a contract may be in place – even if it is not written down.
Make sure you receive a signed copy of the final version of the contract. We often see issues arising where one party signs and send the contract to the other party, on the understanding that the contract is finalised, but the other party makes further changes before signing or doesn’t sign the contract at all.
It is essential to ensure you receive a finalised contract which is signed by all parties/ which incorporates all agreed changes.

Record Keeping

Save important emails, relevant folders, keeping written records of conversations (follow up email recording what was agreed; meeting minutes etc).
Tailor a system that works for you personally, works for your team and your organisation. Be disciplined and stick to it, making sure the process is clear and being followed by all relevant people.
Take time to review your process every now and again, to ensure they are still fit for purpose.
There are some legislative and contractual requirements for documents and records that must be kept for a specified time. Know your obligations and abide by them.

Language

If you have a few people in your business who enter into contracts for your business then when they are sending an email or making a phone call they have the potential to commit your business to something.
If that’s you, ensure that you do not use language that can commit the business to transactions unless you are 100% sure that what you are doing is acceptable, and achievable. To avoid this use “less binding” phrases that do not commit the company, i.e.
- “I will seek instructions”
- “I will confirm in writing”
- “I will talk to the leadership team and confirm”

Good Faith Transactions

While it is important to maintain good relationship it is hard, expensive and time consuming to get money back once it is paid, so if you are making a payment make sure there is an agreement in place.
To ensure a smooth transaction it is good practice to keep a record of the circumstances of good faith payment with an emphasis on recording when it would be repaid if no agreement was reached.

Variations

Changes to contracts are common practice in business. Variations offer much needed flexibility to agreements and allow contracts to be useful even in changing circumstances. However, poorly managed variations can present more bad than good. Poorly managed variation can be time consuming, expensive and strain the relationship between parties. They can result in misunderstanding or confusion between the parties or end up in lengthy and costly litigation.

Practical Tips:

Ask whether a variation to the contract is necessary, or if it can be dealt with some other way.
Check the processes for variation in agreements.
Clearly specify the terms of the contract that are being varied.
Consider the flow on effects on other clauses.
Minimise as much as possible oral variations and if they occur, record them in writing.

Reviewing Documents

If contract documents are not standard, are new/unfamiliar, have substantial variations to them, or carry the potential for increased liability, we recommend having the documents reviewed. Reviews might be internal, with a colleague or supervisor, or you could let a lawyer review documents.
Make sure you give the person reviewing the documents all relevant paperwork (the full contract) etc; so they can ensure consistency and understand the context when they review.

Confidentiality

Have a system in place to ensure confidentiality is kept and there is a process for dealing with breaches, as they may occur.
Make sure documents are marked as confidential.
When sending sensitive emails, double check who you are sending to and who is copied in to the email. Check long email chains for sensitive material.
Check your legal and contractual requirements. Are their specific requirements in your contracts to keep material confidential, or are there individuals you have to notify if there is a breach?

We hope that these tips are helpful in your negotiation of contracts. If you’d like to discuss then our team of experts would be happy to do so.

This article is not a substitute for legal advice and you should consult your lawyer about your specific situation. Please feel free to contact Steven Moe – stevenmoe@parryfield.com, Michael Belay – michaelbelay@parryfield.com at Parry Field Lawyers

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