Preparing for Settlement

If it was a conditional offer, you have to sort all due diligence first:

• Apply for house insurance (and activate the policy)

• Get unconditional finance

• Get a building report

• EQC check

• Get lawyer to check LIM, title, S&P

If it was an auction, then you should have done all this stuff already.

If doing finance with Simplicity, they require you to pay for a professional valuer to come around to value the house.

Once you've gone unconditional:

1. 1. Finalize your loan with your bank/mortgage broker.

   2. Lawyer will handle paperwork with you - you usually go in to sign.

   3. Arrange a pre-settlement inspection with real estate agent to confirm all’s as expected—dispute issues if not. Usually it happens in the few weeks before settlement date.

   4. Organize electricity and internet service for your home.

   5. Most things are organized before settlement day (the day the house is officially handed over to you).

   6. On settlement day, lawyer confirms it has gone through, and you go to grab the keys from the agent.

Checklist

☐ Check power works, incl all power points and lights (we had the very simple idea of using a phone charger - if the power point works, an indicator should turn on to say the phone is charging)

☐ Oven hob or gas burner working, dishwasher

☐ Check ventilator in kitchen working

☐ Check heating, air con, ventilation systems work 

☐ House is clean including oven

☐ Drainage and water working - taps, shower, flush toilet

☐ Check hot water cylinder on and no new leaks

☐ No damage to walls, surfaces. No new water damage

☐ Check doors and windows open and close

☐ Check security alarm/camera works

☐ Check automatic garage doors/gate works

☐ Check for remotes e.g. for heat pump

☐ Everything is as it was when viewed

☐ Conditions have been met regarding any work that was agreed to

☐ Check all keys present

☐ Check they haven't left any rubbish behind (e.g. under the house, deck), things you'd have to dispose of - can cost hundreds of dollars to dump

☐ Take photos of the major chattels - some vendors have in the past sold high-end appliances and replaced them with cheap lookalikes or ones that aren’t functional

Once you get the keys, it's very hard to resolve issues afterwards - do a good proper inspection here.

What standard should I expect of the house? 

Most faults are on you to pick up in due diligence, however I believe there are often some warranties for items to be functional and to be in a similar state to when advertised. Check with your lawyer if any concerns.

 I.e. What should be left behind in the house?

Chattels vs Fixtures

It's important to know the difference, as fixtures stay with the property when sold, while chattels do not.

• "Fixtures" are items that are permanently attached to a building or land, becoming part of the property.

• "Chattels" are moveable personal belongings that are not considered part of the property and can be removed without causing damage to the land.

• There should be a list of chattels on the S&P which tells you what will be left behind.

• It isn't always clear cut if something is a chattel or fixture.

• The two points which are used in law to decide if an item is a fixture or a chattel are:

  • 1.1. The degree of annexation.

    • How is it attached to the house? Fixtures are generally fixed, chattels are generally movable. If an item is sitting on it's own weight, it is more likely a chattel, but if it is attached by something other than its own weight, it is likely to be a fixture. One test sometimes used is if you flipped the house upside down, whatever falls out is a chattel and what stays is a fixture.

  • 1.2. The purpose of the annexation

    • What purpose is the item serving? Fixtures are put on the land for the permanent enjoyment and improvement of the land whereas chattels are for a more temporary purpose or to be enjoyed by the occupants of the space.

    • The law gives more weight to point 1.2 over point 1.1.

Disputing

• If there are items that you think are fixtures but the owners try to take them with them, you can contest this with the vendors. If it turns into disagreement, it can be difficult as you may need to then take legal action - which might not be financially worth it to pursue.

• It's good if you can draw up a list of what you expect to be left behind so issues can be resolved ahead of time.

Resources

Just a few law firm websites with examples, we sourced our information from these pages. Speak to your lawyer if any disputes.

• https://smithpartners.co.nz/property-law/what-are-fixtures-and-chattels-nz/

• https://www.pierlaw.co.nz/fixture-or-chattel-why-should-i-care/

• https://www.nwm.co.nz/legal-updates-item/fixtures-chattels

• https://legalvision.co.nz/property-and-leasing/what-are-fixtures-and-chattels-in-commercial-building/

Update Your Will

• Get a will written up (can do this after settlement) - what you would want to happen with the house if you passed away.

Personal insurance (life, income):

When you're buying a house is a good time to consider updating your personal insurances, especially life and income:

• Life insurance - if you die, a payout goes to someone you specify (e.g. your partner), this could be with the intent to pay off the mortgage or at least a good portion of it e.g. 400k.

• Income insurance - if you're unable to work due to illness, you can get 80% of your income paid for. ACC covers you in the case of injury, but not illness (e.g. cancer). It's good to ask - if you weren't able to work for a year due to illness, would you be able to service the mortgage?