Page updated on: Friday April 23, 2010
A contract is formed when there has been an offer, acceptance of the offer and when there is consideration, that is, compensation is promised for the thing which was done or which has been promised will be done.
Section 6(1) of the Act states that (subject to the provisions of the sections) contracts made by minors (those under 18 years old) are unenforceable against the minor, providing they are not contracts of life insurance or employment contract. However, a minor may enforce the contract against the other party.
Section 9 provides that a minor or their guardian may apply to the District Court for approval which would give a contract entered into by that minor the effect as if the minor were of full age.
Conveyancing is the formal term used to describe the legal work involved in property transactions. Usually it refers to buying and selling houses. Members of the public are not allowed to complete the documents for transferring properties. This must be done by a lawyer or landbroker. There are very few landbrokers in New Zealand.
People buying or selling houses will sign an agreement for sale and purchase of real estate. This is a binding contract, so people should ensure they do not sign it without fully understanding the implications.
Agreements will generally be conditional initially. This means that a purchaser, for instance, may be given the opportunity to obtain finance or to sell their current house. However, once an agreement has been signed a purchaser must proceed with the contract unless one of the conditions specified is not met. Even though the contract is conditional, purchasers cannot bring it to an end simply because they have changed their minds or found another property they like better.
Most people buying properties will require a mortgage. The mortgage will be registered on the title of the property to protect the bank’s interest. If the property is later sold again, the bank loan must be repaid out of the funds.
As part of the conveyancing process, the lawyer will check the title of the property. This involves checking whether the property has a separate title or is owned by way of a cross lease or unit title. The lawyer will also check whether the property is subject to rights of way or drainage rights, or whether there is a restrictive covenant which may, for example, prevent an owner from building another storey.
It may be useful to get a Land Information Memorandum to obtain information about zoning, building consents, public works and payment of rates.
A builder’s report will provide specific information about the state of the house and repairs likely to be required.
When buying or selling property, people should think about how the Property (Relationships) Act may affect them and their partner. That legislation applies to couples who are married or have been in de facto relationships for three or more years.
People who do not wish to divide their property equally should consider drawing up an agreement spelling out how they wish to divide it. This means that both parties are clear about their rights, and should avoid disputes if the relationship ends. However, if agreements are very uneven and provide for one party to walk away with little property, they may not stand up to challenge.
It is also a good idea to update your will when buying or selling property.
People buying property together will need to decide whether they want to hold it as joint tenants or tenants in common.
With joint tenancies, if one person dies the other gets full ownership of the property. With a tenancy in common, each person holds either interest separately.
For more information visit www.lawyers.org.nz
A mortgagee sale describes the process when people fall behind in paying their mortgages and the bank eventually sells the property.This is generally quite a slow process, so anyone having trouble keeping up with mortgage payments should speak to the bank or finance company as soon as possible.
It may be possible to make an agreement to reduce payments or pay off the mortgage more slowly.
The most important thing is to communicate with the creditor, so they know your circumstances and understand that you are trying your best to sort matters out rather than simply not paying for no good reason.
Under the Credit Contracts and Consumer Finance Act which came into force in April 2005, people facing financial hardship have a new statutory right to approach the lender and ask for their payment schedule to be rejigged provided they are not in arrears. Situations in which this might apply include losing your job, a relationship break-up, illness or injury.
However, the law only allows people to do this if they have not already fallen behind within repayments.This means it is important to act quickly if you think you may be getting into financial difficulties. Once you are already in arrears, the provision does not apply.
If matters cannot be sorted out at this time and arrears continue, the bank or finance company will issue a Property Law Act notice.This gives the debtor a specified period (of not less than 4 weeks) to pay the whole amount outstanding.
If the debtor cannot do that, the bank can take steps to sell the house.
Houses sold at mortgagee sales are often sold for low prices, so it may be better to sell the house yourself if it is impossible for you to hang onto it. The mortgagee will be liable to the mortgagor if the house is sold for less than its value.
Refinancing is another option, but you are unlikely to be able to get another loan from a bank. This will mean approaching second tier lenders, which will charge far higher interest rates and may also have expensive loan fees.
Bankruptcy is the last resort for people who have debts they cannot pay. Debtors can apply for bankruptcy themselves, or may be bankrupted by creditors.
Bankruptcy wipes most of a person’s debts, but means that they will be subject to restrictions for three years. It will also have an extremely adverse effect on a person’s credit rating.
If you have debts piling up, try and sort them out as early as possible.
Contact your creditors and inform them of your situation and see what compromise might be possible. It is important to let creditors know that you are trying to deal with the situation, rather than simply just not paying.Advice can be obtained from Citizens’ Advice Bureaus, Community Law Centres or budgeting services.
Alternatives to bankruptcy included selling assets, a creditors’ pool combining all debts and setting regular sums for repayment, or refinancing. Think carefully before refinancing, as if you have many debts you are unlikely to be able to get a loan from a bank. This will leave you facing high interest rates and significant loan fees, thereby adding to the overall debt.
If you have decided bankruptcy is the only option, you can file a Debtor’s Petition for bankruptcy at the High Court. This costs $40.
Alternatively, one of your creditors may apply to the High Court to bankrupt you. If you are bankrupted, the Official Assignee will take over management of your financial affairs. Ownership of your property will also be transferred to the Official Assignee.
Most of the debts you have incurred prior to bankruptcy will be included in the bankruptcy. They are frozen at the date of bankruptcy and creditors can no longer pursue you for payment.
However, court orders for reparation, fines, maintenance, child support payments and WINZ debts are not included in the bankruptcy and you will remain liable for payment of these.
Bills such as overdue power or phone bills will be included in the bankruptcy.If you have items on hire purchase, the Official Assignee may require you to surrender these to the finance company.
People who have been bankrupted can retain up to $400 cash, tools of trade worth up to $500, and furniture and personal effects totalling $2000. The Official Assignee will decide in each case what is appropriate as far as taking possession of your assets. Household effects will not normally be taken.
Your car may be sold for the benefit of creditors.
The Official Assignee will also decide whether or not to sell your house. If the you have paid off more money than you owe, the Official Assignee may sell the house for the benefit of creditors. Where there is more money owing than has been paid off, the Official Assignee may not take any action.
If you are considering bankruptcy, you should ring and speak to the Insolvency and Trustee Service about your situation – 0508467658 or go to www.insolvency.govt.nz
In the past, peoples' properties were considered their own to do with as they wished. That is no longer the case. If you wish to carry out activities on your land that may affect others, permission may be required.
This applies in the case of extensions or alterations to a home, which may need a building permit from a local council.
In the case of more ambitious plans, a resource consent may be necessary. This can be a complex and expensive process, and it may not be easy to find out exactly what is required.
Generally, regional councils deal with broader policy issues and environmental issues, while district councils handle the specifics of issues such as subdivisions and new buildings. However, if roading is an issue, Transit New Zealand may be the agency to contact.
District and Regional Plans will set out general rules about what is permitted in particular areas.
Resource consents relate to rules set out in district or regional plans, of the Resource Management Act. There are five main types of resource consents: land use, subdivision, coastal, water and discharge. Failure to obtain the proper resource consent can result in a fine being imposed.
A resource consent must be sought is a proposed activity is not permitted "as of right" under district or regional plans. There are five categories of activities:
Cases in which a resource consent might be required would be if the owners of a lifestyle block planned to build a new home, construct a packing shed or operate a roadside produce stall.
Moving a house from one part of a property to another is likely to be a controlled activity requiring a resource consent.
For more information contact your local council. Most councils have web pages.