Legal Requirements to buying a townhouse
SM Property

March 15, 2023

Buying an off the plan townhouse in New Zealand is an attractive investment option for those looking for a brand new property. However, it’s important to understand the legal and regulatory requirements that come with buying an off the plan property. In this blog, we’ll provide an overview of the legal and regulatory requirements for buying a townhouse off-the-plans. Of course, several of these regulations are also seen in purchasing other types of property.

The Unit Titles Act 2010

This legislation only applies when buying a townhouse on a “Unit Title”. You’ll notice most of the homes sold by SM Property are on a “Freehold Title”, so this legislation won’t apply. This Act governs the ownership and management of unit title properties, including some off the plan townhouses. This Act sets out the legal framework for the creation/ registration of unit title developments, and the rights and responsibilities of unit title owners.

The Building Act 2004

The Building Act 2004 is the legislation that governs the building and construction of any new property in NZ, including off the plan townhouses. Townhouses need to comply with the Building Code, and receive the necessary consents before construction can start. This process is the same for any type of property build.

The Real Estate Agents Act 2008

This Act is the legislation that regulates real estate agents in NZ. When buying an off the plan townhouse, it’s important to work with a licensed real estate agent who can guide you through the process and provide expert advice. We recommend working with an agent who specialises in new build and off the plan townhouses, like SM Property, as the process can vary quite a lot from an existing home purchase.

The Contract

When buying an off the plan townhouse, you’ll be required to sign a contract, also known as a Sale and Purchase Agreement, with the developer. The contract will include information such as the purchase price, completion date, implied plans, or any warranties or guarantees. Because this contract will be a legally binding document, you’ll want to get a lawyer to read and review it carefully.

The Consumer Guarantees Act 1993

This legislation protects consumer rights in NZ, and applies to any type of marketing or sale, not just real estate. When buying an off the plan townhouse, you’re entitled to certain guarantees under the Act. For example, you have the right to expect the property is acceptable quality and is fit for its intended purpose.

The Fair Trading Act 1986

This legislation regulates and ensures fair trading in NZ. When selling a property, all developers and real estate agents must comply with this Act and not engage in misleading or deceptive conduct. For example, if an agent advertises a property as having “stunning sea views” but the view from the property is obscured by trees and the image was taken from a nearby hill, this is misleading conduct.

In conclusion, buying a townhouse, or any property in NZ involves navigating this legal and regulatory landscape. By understanding the above legislations, you can ensure that your purchase is legally sound and meets your expectations. We recommend consulting with an agent that specialises in off the plan property, and seek legal advice for any property purchase. A good agent will help you navigate and better understand this process so it doesn’t seem so daunting. Contact the SM Property team to start your property journey today!

For more tips and tricks on purchasing property in New Zealand, head to our other blogs, or visit our Instagram.

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