There are a number of legal issues you must consider before buying property. Levi Joule chats with Tony Walker from LawWorks to discuss the issues that you will likely encounter when buying together.
Buying property may be the biggest financial decision they will make. Rarely will the process be a straightforward matter, meaning there are a number of considerations that will need to be made before any paperwork is signed.
First Things First
Tony Walker from Auckland firm LawWorks says the first legal consideration should be the type of title which will be purchased. “There are numerous kinds of titles each with their own little characteristics that you need to be very familiar with.”
Seeking legal advice early on in the process is important. “First thing to do would be to have a chat with us about the type of property you’re looking at so we can give you some tips to deal with these issues and tell you which property title may best suit your needs” Tony says.
There are also special considerations to be made when buying together. “If you’re buying with your partner there are all sorts of issues to consider.”
“Do you have Wills, how long have you lived together? Does the Property Relationship Act apply to you?” Tony says. “If you have been together for a long time you may want to consider some sort of property agreement between the two of you.”
Property Ownership Structures
The type of property ownership entered into as a couple can be critical to your future financial security.
Putting the property into a trust can also be a good option if buying as a single person, as it may provide protection to property from any possible future relationships which may be entered into.
For the couples however, the two most likely ownership models will be joint ownership and tenancy in common.
Joint ownership means on the death of one of you, the ownership passes to the survivor” Tony says.
Tenancy in common, means you own your share independently of each other. Tony says the tenancy in common is a particularly good model for new couples who have lived together for less than three years as the Property Relationship Act wouldn’t yet apply.
If Things Go Wrong
Even though most couples don’t like discussing it, it is very wise to prepare for the possibility of a split in the relationship in the future.
It should be written in the contract how they’ll get their money back from the house. Three years into a relationship the relationship act will then kick in, meaning, “in very simple terms the house you live in and the chattels in it” will become relationship property to be shared equally between you, Tony says.
Put simply, if a couple has lived together “in the nature of marriage” in the same property for three years or more the property is considered relationship property, regardless of how much either partner has contributed to the purchase or maintenance of that property.
A contract between 2 or more owners of property before they buy, can deal with all of the issues that are likely to arise in the future if one of the parties wishes to leave the property sharing relationship.
For that reason, a chat to LawWorks before purchasing a property is a very good idea.
Nothing in this article should be regarded as legal advice. Readers should seek professional legal advice before purchasing property, particularly if purchasing with another person.
Contact Tony Walker firstname.lastname@example.org
Article & Photo | Levi Joule.