Purchasing at auction or entering into a pre-auction offer means that you are purchasing the property unconditionally and should your offer be accepted you are committed to completing the purchase. Given this, it is important to note the following will apply:
- You will have no ability to object to the title to the property or any documents that may be registered on it. It is particularly important to check the title documents if the property is a cross lease as any defects in the title could have a significant impact on your ability to obtain finance.
- You are deemed to have accepted the Land Information Memorandum Report (“LIM”) if provided to you by the real estate agent. A LIM Report contains information regarding consents and permits that may be applicable. Absence of any consents or permits can impact your ability to obtain full insurance and therefore finance to complete the purchase.
- You are also deemed to have accepted the condition of the dwelling and any structures that may be on the property.
- You need to have your finance in place. That means, your offer of finance cannot contain any conditions relating to the bank providing you with lending to complete the purchase. We strongly recommend that you provide a copy of the draft auction agreement to your bank or broker so they can approve it prior to you attending the auction or entering into a pre-auction offer.
- You need to have 10% of the purchase price available to be paid to the real estate agent on the date of the auction. These funds cannot be comprised of Kiwisaver withdrawal*. If you do not have these funds available there is ability to request the draft auction agreement be varied to provide for a lesser deposit – this must be undertaken well ahead of the auction day.
Due to the above, we encourage our clients to find out as much regarding the property as they can prior to entering into any agreement of this nature.
We offer the following services with respect to auction reviews:
Brief Overview
We provide a brief telephone review of the documents contained in the auction pack (this can take up to 20 – 30 minutes dependent on the documents to review). This is designed to give you a basic and overall insight into the documents that may be registered on the title, any conditions that you may need to be aware of contained in the auction agreement and briefly discuss the consents and permits that the council has noted in the LIM report (if supplied).
Full Auction Pack Review (Recommended)
We search any interests registered on the title to the property and provide you with an explanation of the documents registered contained in a full report setting out the obligations of both the owner of the property and yourself as purchaser in relation to the auction agreement together with a summary of the information contained in the LIM report.
Review of an auction agreement and associated documents falls outside of the scope of a free agreement review we offer due to the time required to complete. Please get in touch with us if you would like pricing details of the services we provide for review prior to attending auction.
* A letter from your Kiwisaver provider confirming you can withdraw your funds for your first home is not formal approval. In order to obtain formal approval, you must complete an application form and have your proof of identity documents certified as being true and correct.
Once your Kiwisaver provider has received your completed form it takes approximately 10 – 15 working days to receive full withdrawal. In order to start this process, your kiwisaver provider will require a signed agreement for sale and purchase. If you intend to withdraw kiwisaver to complete your purchase by auction, you need to use this for payment in part of the purchase price at settlement. For this reason its important you allow enough time from the date of auction until settlement to work with your provider’s timeframes for withdrawal. This is something we help with when reviewing an auction agreement.