DIY Conveyancing in New Zealand
I've posted this information so that
if ever again I sell or purchase land in New Zealand I can find
everything I need in one place.
Use it for your own purposes at your own risk - I'll try to do a thorough job of explaining it all and providing the necessary documents or sources for them but I have some experience in reading and interpreting legislation and I have some experience in land information systems and I have some experience in buying and selling real estate so I am not a beginner. There are many pitfalls for the hasty, the ignorant or the foolish and even solicitors practiced in conveyancing can make mistakes - that's one of the reasons they carry such hefty insurance.
So proceed only if you are by nature careful, are committed to reading a LOT of material (not mine, mine's quite brief compared with what you will have to read), and are sure you will not come to me with complaints about my information. It's your risk. Entirely.
Who can do their own conveyancing?
Basically, anyone can - as long as any
third party involved with the sale or purchase of the property
permits it. If you have a mortgage on property you wish to sell then
unless you can first pay off and have the mortgage discharged you
will have to have a solicitor. If you are buying and wish to have a
mortgage you will need a solicitor. This is not a legal requirement
so much as it is a policy requirement of the holder of the mortgage –
i.e. the bank.
( Note
If you are selling your mortgaged property and you have the money to pay off the mortgage prior to a transfer you can just go to the bank and pay off the mortgage in return for an Instrument to Discharge the Mortgage. They might try to lumber you with their costs to draw up the discharge (depending on the small print in the mortgage you carry) though you can draw it up yourself for them to sign (which they will balk at but if it's valid they can't charge you for one) but in general there's not much too it - you give them money and at the same time they give you a discharge - which you must of course check before you hand over the money).
end note )
( Note
If you are selling your mortgaged property and you have the money to pay off the mortgage prior to a transfer you can just go to the bank and pay off the mortgage in return for an Instrument to Discharge the Mortgage. They might try to lumber you with their costs to draw up the discharge (depending on the small print in the mortgage you carry) though you can draw it up yourself for them to sign (which they will balk at but if it's valid they can't charge you for one) but in general there's not much too it - you give them money and at the same time they give you a discharge - which you must of course check before you hand over the money).
end note )
If you are buying and do not require a mortgage then you do not need a solicitor.
If you are selling and you are mortgage
free then you do not need a solicitor.
The simplest case is where there is a
willing seller without mortgage and a willing buyer with enough money. In
such a case not only do you not need a solicitor, you do not even
need a contract or a deposit – a hand shake will do (proof? The contract is
never used as part of the conveyancing, it is not lodged, recorded or
otherwise saved by any authority involved - if it exists, it's only true value is how it supports intention to be legally bound).
Those of you who believe in Game Theory will immediately leap to the logic of a contract but I assure you, you only need a contract to deal with people you maybe would not like to marry your sister. If you wish to understand the law that covers Contracts for sale of land see the Property Law Act 2007.
My purchasing example includes a contract because the purchase this example is based on had a contract but in the end, I see that it was unnecessary. Both of us accurately measured the other to be completely trustworthy. Wow.
What about real estate agents?
Here in NZ at this time (2015) the only
reason you might use a real estate agent is if you have more money
than time or if you are, quite simply put, stupid (and here). These days you can
sell your own property quite easily – you just put a sale listing
on TradeMe. No real estate agent's fees or commission and no risk of
them doing the dirty on you behind your back (it happens,
frequently).
Real estate agents ALWAYS want a
Contract for Sale of Land & Buildings to be used. This is not to
protect the buyer or the seller – this is ONLY to protect their
interest in the sale, i.e. their commission. That is why a real
estate agent will ALWAYS push, and push early, for a deposit. They
will tell you it is for your own protection but it is not. It is for
their commission.
Even if both a solicitor and a real
estate agent are involved and there is a contract and a deposit, as
long as the seller accepts the buyers offer, he or she can do their own
conveyancing.
The process is quite straightforward –
here is the most simple version:
- The Buyer discovers the property and contacts the Seller
- The Buyer and Seller agree on a price and any chattels
- The Seller provides the buyer with the signed and witnessed transfer documents and keys etc
- The Buyer gives the seller money and a signed Notice of Sale
- The Buyer signs the Transfer Instrument and deposits it at LINZ
- The Seller sends the Notice of Sale to the local council
That's it! There are some finer details
I'll go ever as we progress through this but that's really all there
is.
Of course there can be variations –
here is the process that I went through to learn all of this:
- The Seller listed the property on TradeMe
- The Buyer saw the TradeMe listing and contacted the seller
- The Buyer inspected the property and the Buyer and Seller agreed on a price
- The Seller then requested a Contract from the Buyer
- The Buyer bought a standard Sale of Land & Building Contract from a stationary
- The Buyer filled in all the details with Land Description provided by the Seller
- The Buyer did a Title Search to confirm the Seller owned the property and that the property was unencumbered
- The Buyer passed the signed Contract to the Seller
- The Seller passed the contract to his solicitor
- The Seller's solicitor then replaced that contract with a different standard contract and crossed out the section that protects the buyer should the Transfer be invalid
- The Buyer spotted the change and brought it up with the buyer
- The Seller contacted his solicitor who told him that the change to the contract was “standard” and that the Buyer must have a solicitor
- The Seller contacted the Buyer with this information
- The Buyer explained that the Seller's solicitor was wrong on both counts and requested a corrected Contract
- The Seller got back to his solicitor with evidence from the Buyer at which point the Seller's solicitor acknowledged that the Buyer was correct
- The Seller's solicitor provided a corrected contract but with added clauses including one that stipulated the Buyer had to provide the Transfer Instrument
- The Buyer accepted that change but added his own clauses stipulating that the Seller's solicitor must accept a bank cheque along with some other details pertaining to the transfer
- The Contract was signed by both the Seller and the Buyer and the Seller waived the deposit on the basis of an early settlement
- The Seller passed rates details to his solicitor
- The Seller's solicitor drew up a final Full Amount and passed that to the Buyer
- The Buyer passed a prepared Transfer Instrument to the Seller's solicitor
- The Seller's solicitor had trouble printing the Transfer Instrument so he drew up another
- The Seller's solicitor couriered the Transfer Instrument and Statutory Declaration forms to the Seller
- The Seller signed the Transfer Instrument and Statutory Declaration in the presence of a Justice of the Peace
- The Seller couriered the Transfer documents to his solicitor (actually they made a mistake and had to repeat steps 22 to 24) and notified the Seller of the signing
- The Buyer contacted the JP to confirm she had witnessed the transfer
- The Buyer did a final Title Search to ensure the property was still unencumbered
- The Buyer had a bank cheque drawn up to the agreed amount
- The Buyer met with the Seller's solicitor and examined the Transfer documents
- Satisfied with the documents the Buyer exchanged them for the bank cheque and Notice of Sale
- The Buyer then counter-signed the Transfer Instrument
- The Buyer took all Transfer documents plus Lodgement forms to LINZ and deposited them
- The Seller's solicitor sent the Notice of Sale to the local council
Quite complicated wasn't it. And that's
without a LIM, building inspector or real estate agents involved.
Afterwards the seller agreed that the
whole process would have been cheaper, quicker and smoother had there
been no solicitor involved. Maybe. This was a simple property – no
mortgages involved and a very straightforward title. More complex
situations require more care and at some point it becomes so
complicated that just giving it all over to professionals saves a lot
of headaches and potentially expensive mistakes.
In my next post I'll introduce my fictitious buyer and seller and show how a contract might be drawn up.
I employed your documents to do my own conveyance and it works. Thanks a lot and they are very helpful. I did my own legal research and they are quite in line with your paper. It will be great if you include transaction with mortgage as well in the future. For whoever interested in DIY conveyance, try to avoid moving house on settlement. For my own experience, exchange transfer documents and bank cheque can only be done on settlement, not a day earlier unless you put forward the settlement. And you might want to do a final inspection on your property to make sure.
ReplyDeleteI used your method and am pleased to say it works.
ReplyDeleteAll you good people out there buying a house - please use a Law Society Agreement. For many reasons, but primarily because it contains a section called Vendors Warranties. A WRITTEN guarantee that things like the heat pumps, stove, dishwasher, etc, all work; that all improvements - retaining walls, decks, extra bedroom, pool, etc - carried out on the property during the vendor's ownership have (where necessary) local and regional Council approval; that the house is insured till Settlement, etc. Far easier in a court of law if you have a signed document, rather than just "....he said, she said". And a GOOD/sincere agent will get you more for your home than selling privately, nine out of ten times.
ReplyDeleteHi PoP, thank you for your blog, outlining for the most part, the role of the purchaser.
ReplyDeleteI am selling privately to a developer who has his solicitor prepare the agreement/contract. The property is now in the phase of 15-working-day due diligence as requested by the purchaser.
I have opted to not use a solicitor, thinking that the purchaser's solicitor would provide the necessary documents for me to sign off my property but their solicitor insisted that I got my own solicitor for them to deal with.
I have done it once before on another of my property sold privately and the purchaser's solicitor did not object to my acting on my own. The property was transferred seamlessly.
What do I actually need to produce on my part as the vendor. My property holds no mortgage and nas no tenancy or anything that I see would complicate settling.
Please advise. Thanks.
You just deal with their solicitor - he can not refuse to deal with you. If we are talking a large amount of money then maybe it would be wise to but it's down to your own confidence in yourself and your ability to do the necessary homework required. I'm a bit out of touch though am looking at both a sale and purchase in the not too distant future. Good luck. P
DeleteI have contacted the LINZ office and the lady at the office strongly discouraged the manual lodging as she said it was very troublesome and complicated. The sum of money is quite large.
DeleteNo one can tell me, not even my lawyer friend who said he had never heard of anyone doing it manually and he could not even tell me how to.
I am not sure as I have no recent examples to refer to.
What do you think?
I had the same problem - i was told i needed a solicitor. I said I did not. They relinquished. They fought constantly but in the end they were the shoddy ones. When it comes down to it it is an exchange of money for a transfer - they are going to write the transfer yippee - their requirement is to ensure that when you completed it that it was done so legally - which means basically they have to phone your witness - the JP or other who witnessed the transfer (so maybe find one near their solicitor). Just the same as your job is to phone the bank while you are still with their solicitor and check that the bank cheque is valid before you hand over the transfer. One checks the goods and one checks the money :-)
DeleteYes, this system is made for people who don't bother doing the leg work and those are most of the people. As a result, they end up paying whatever the exploiters demand.
ReplyDeleteIn my case, the purchaser pleaded to go easy and decided to cover the cost of my solicitors. I decided to let it go at that.
There should be more like you and I, challenging things that we should be able to do on our own.
Thank you for your time, mate.
i don't think it's really exploitation although i'm sure there's been plenty of that too. These days conveyancing is cut to the bone and is relegated to junior staff. Legal firms can charge a lot but they carry a lot on insurance and sometimes conveyances can come back to bite them. The problem really is that the land information system that records titles was written as if only law firms would have accounts. Anyway, glad it worked out. And thanks.
DeleteThe problem is that most people don't care to learn how to do things themselves. A case of over reliant on others to do things.
ReplyDeleteThe system is pretty much attuned to what people are more inclined to accept.
Wow, after all these years, while preparing again to sell and buy property, reading the comments and realising there were people who gained some benefit. Very humbling. Cool! Thanks for all those lovely comments.
ReplyDeleteHi, I'd be interested in any comments you or others contributing to your blog have on the following circumstance, where we are contemplating a DIY conveyancing of one particular step in a transaction: My wife and I have Resource Consent and a LINZ approved LT Plan for a set of boundary changes to our property. The property currently has 3 titles; 2 in my name and 1 in my wife's name. Per the approved LT plan the property will be reconfigured into 3 new titles that we wish to issue in our joint names. The new titles comprise lots some of which derive from the existing titles in my name and some from the existing title in my wife's name. I understand as a preliminary step we first need to effect transfers (of half shares to each other) on the existing titles so that they are all in joint names, consistent with what we want on the new titles. My lawyer has advised we should do this via a Relationship Property Agreement to avoid needing to enter into Sale and Purchase contracts with each other which would, amongst other things, require valuations of the property being transferred to each other. It appears to me however that my wife and I can get the existing titles into our joint names simply by completing paper Transfer Instruments (transferring half shares to each other on the existing titles) and submit this in person to LINZ with the required supporting witnessing and ID evidence. I don't see the need for a sale and purchase agreement or to define the value of what is being transferred as the property concerned is already 'Relationship Property' (because it was purchased after we were married) and therefore in effect my wife and I already have equal beneficial interest in the property irrespective of the names on the titles. The Land Transfer law and Regs don't seem to require the value of what's being transferred to be defined in order for LINZ to process a transfer. Do you see impediment to proceeding with such a DIY conveyancing?
DeleteMy first thoughts are that you'd have no problems with just lodging the required transfer documents. The only reason you might need contracts and valuations is where you are dealing with tax consequences or are covering yourselves in the event of a separation. I'm not a solicitor. My rule of thumb is that if it is too complicated for me to work through all the issues myself then i'll get a solicitor to do it. So far i've not needed a solicitor for anything but this is Aotearoa where the property market is tied up by real estate institute and the legal profession and they are not very supportive of DIY. If the transfer is between people who are totally trusting each other then why would you need a solicitor? Double check all your document requirements. If we are talking properties worth many millions the cost of a solicitor hardly matters.
DeleteThanks for the advice and please keep us informed with your progress this time around. It's nice to know that there are like-minded people out there.
ReplyDeleteI'm currently selling to a person that I trust implicitly and I've decided to transfer the title ahead of settlement. This way the conveyancer for the purchaser only has to lodge the new mortgage instrument. That's the theory anyway.
Incidentally, for those who are interested, it is possible to obtain a mortgage discharge from the bank and lodge this as a manual dealing. I had to make a formal complaint when they initially insisted on the involvement of a solicitor, but that's all part of the fun, right?
I'm just about to sign off on a separation agreement. We currently have 2 properties and both of us on each title. The separation means we get 1 house each and simply (in my mind anyway) need to remove 1 name from each title. I've been quoted silly money for what I perceive to be a straightforward form-filling process. No mortgages or money changing hands.
ReplyDeleteCould you please advise where I start to work this process out? I've looked at the LINZ site but it is a bit impenetrable....no surprises there!
start here:
Deletehttps://www.linz.govt.nz/guidance/land-registration/land-registration-guide/transfers/transfer-share-remaining-owner
https://www.conveylaw.co.nz/change-of-ownership/
AFAIK you need to each do a transfer instrument, NoC and LTTS. Total cost will be lodgement fee for each transfer.
The issue of consolidation of shares will need to be thought through - after the transfers of half share each you will each own 2 half shares in your respective property where those shares are tenancy in common. It may or may not be to your advantage to consolidate those half shares in to a single share. Once you have prepared your documents you just submit them with the lodgement fee to the nearest LINZ office.