How to buy a property section within New Zealand

Introduction

It is a common dream for people to want to buy a section and to build their dream home or holiday home on it. However, buying a section is not as simple as it may sound, and it will always pay to do your homework on the section before putting in an offer, regardless of how attractive the section may look in a real estate advertisement.

As with buying a house (see How to buy a house), it is advisable to have a lawyer involved throughout the process of buying a section.

Doing your homework

A few basic checks for one to perform can avoid a great deal of problems in the future. Ask around to compare the price you are paying with similar sections in the area. Check with the seller or developer what sort of financial packages they might be offering to assist you in buying the section; compare these with other options – for example, those offered by your bank.

All the way through the initial consultation process with the seller or developer do not be afraid to ask what he or she might do for you. If there are any promises these will need to be set out in the contract you sign if you do decide to buy the section.

Check out the "LIM" report on the property

You have every right to ask the seller to provide a property report, known as a Land Information Memorandum (LIM), and all of the legal documents that may affect the section in question, especially the title to the property.

The LIM report is particularly useful as it will provide a variety of important information, including drainage records, the rates, any hazardous soil issues and the road access. The LIM report will also alert you to what is going on around your section and in the area – for example, the size of any adjacent housing plans and any planned recreational areas. For more information on LIM reports, see How to obtain a Land Information Memorandum (LIM).

Are your building plans feasible?

If you are intending to build on the section you will need to consult an architect, draftsperson or builder to look at the section before you buy it, to check the feasibility of your building plans.

It is always important to remember that there may be substantial extra costs and difficulties with sections on hillsides, or with difficult access, or with soft soil or hidden rock, or with DDT residue.

Make sure the purchase is conditional on your lawyer's approval

It is important that at the time that you enter into any contract to buy the land you make sure that the purchase is subject to your lawyer approving the title to the property and a LIM report.

In any case you should ask your lawyer to review any contract that you might be entering into, as the purchase of a section is an important decision and one that can contain many pitfalls for an unsuspecting buyer.

Cautionary notes

• If buying a section in a new subdivision, be aware that many will include restrictive covenants on the new titles. These are designed to ensure that all of the houses in the subdivision are built to an equally high standard and a specific design using specific materials. These covenants are often very strict, and you should ask your lawyer to examine them carefully.