Property guidance by Quay Law
Property guidance by Quay Law
Unit title guidance from Quay Law
Ian Mellett, Barrister and Solicitor, Quay Law
Most unit title buyers borrow to complete their purchase. Lenders take security over the unit, and because the value of that security depends partly on the building and the body corporate, they often look more closely at unit titles than at freehold houses.
This page explains what lenders consider and how to protect yourself.
A lender’s security is only as good as the property behind it. With a unit title, that property includes a share in a building the borrower does not control. Weathertightness problems, unfunded maintenance or inadequate insurance can all affect the value of every unit in the development.
Each lender sets its own criteria, and those criteria change from time to time. It is therefore important to confirm early that your lender is comfortable with the particular building, rather than assuming that a general approval will apply.
Matters that commonly attract a lender’s attention include:
A finance condition protects you if your lender declines to lend on the property. It should allow enough time for your lender to complete its assessment, which may include a valuation and a review of body corporate information.
We recommend that you tell your lender at the outset that the property is a unit title and provide the disclosure documents as soon as you have them. If a lender raises concerns late in the process, there may be little time left to find an alternative.
Your lender will require evidence that the building is insured before it releases funds. In a unit title, the building is insured by the body corporate, so your lawyer will usually obtain a certificate of insurance from the body corporate manager. You will also need to arrange your own contents insurance from settlement.
If you are combining lending with a KiwiSaver first home withdrawal, both processes need to be complete before settlement. We recommend starting the KiwiSaver application early, as it involves a statutory declaration and an approval process of its own. Quay Law regularly helps first home buyers with their KiwiSaver withdrawals as part of the purchase.
Once your finance is approved, your lender sends mortgage instructions to us. We prepare the loan documents, explain them to you, arrange signing and certify to the lender that its requirements have been met. On settlement day, we receive the loan funds and pay the purchase price to the seller’s lawyer.
What to check before buying an apartment or townhouse on a unit title: the title, disclosure, minutes, finances, maintenance plan, insurance and building.
What a body corporate must insure, what owners need to insure themselves, how excesses work and what buyers should check before purchasing a unit title.
How weathertightness issues affect Auckland apartments and townhouses, what must be disclosed, and what to check before buying in an affected building.
What to check when buying an Auckland apartment, from the building and body corporate to car parks, rules, KiwiSaver and letting, explained by Quay Law.
If you are arranging finance for a unit title purchase, we can help you identify issues your lender is likely to raise before they cause delay.
If you are buying or selling a unit title property in Auckland, we recommend speaking with us before you sign an agreement. Contact Ian Mellett at Quay Law, Barrister and Solicitor, by completing our enquiry form below, or call us on 09 523 2408.
The information on this page is provided for general information purposes only and is not legal advice. Every transaction is different, and all matters should be discussed with the team at Quay Law.