Do your homework before buying property
If you are looking to buy a property, or a bare section, it’s strongly recommended that you thoroughly investigate the property and make sure you are aware of any risks that you are taking on.
Compliance and Development Group Manager Jane Donaldson said it was still apparent that many people were skipping some important steps in due diligence when purchasing properties.
Council staff have observed that increased demand, including the rising cost of building and finance, had encouraged some to start building before titles are issued, but purchasers need to consider that there are things which may not be apparent from a high level review of a section in a new subdivision and there might be changes from the initial plan to when engineering designs for services like wastewater and drinking water are finalised.
“In most cases this is not a problem, but sometimes things need to change from the concept plan presented by the developer at resource consent stage. It may be that a geotechnical report identifies a soil issue, or a pipe needs to be laid in a different direction and an easement running through your section is required.
"Final services designs are about protecting the town’s entire infrastructure networks on behalf of ratepayers. If an issue arises, we do our best to help, but section owners need to be aware that this is a risk and that they should do their own due diligence.”
Council staff met with local lawyers and real estate agents recently to talk about property issues, including the number of section buyers that had begun building work before land titles had been issued.
Ms Donaldson said getting a Land Information Memorandum (LIM) was strongly recommended when making a purchase and this view was supported by the legal profession.
A LIM report contains all relevant information the Council knows about a property or section. Some people think a LIM is unnecessary for an empty section, but it will provide important information such as if the property is in a flood zone or registered as a potentially contaminated site.
A LIM is not the same as a property file request, which has become more common with buyers recently. These only provide partial information and may be out of date.
Many people think that because they are buying a “serviced” section the connections have been paid for, however that is not usually the case in the Ashburton district because the Council charges for these connections when the building consent is issued.
These charges are called Development Contributions and are levied in accordance with Council policy. A LIM will tell you whether or not the water and wastewater connections have been paid for and what the cost is as well as any other contributions owing.
Ms Donaldson said people should get all information available before purchasing a property.
“A property inspection, carried out by an independent specialist, is also a good idea and tells you about building work listed in Council records.
“We often see examples of problems emerging where LIMs or property inspections haven’t been part of the purchase process. People shouldn’t bypass standard checks and it is always advisable to speak to a solicitor before making an offer.”
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