Properties with unconsented works is relatively common, especially in regional New Zealand. So, if you’re buying a house with a disclosed defect – whether it’s an unconsented part of the property, a leaky roof, or a boundary issue – it’s important to take your lawyer on the house-buying journey with you.

Once you’ve put pen to paper (and you know what you’re signing) and your offer has been accepted, it’s time to get to work to tick off the conditional clauses, such as due diligence, finance, and insurance.

Your due diligence might include getting a builder’s report and checking the Land Information Memorandum (LIM). When it comes to the finance clause, it pays to already have a mortgage broker lined up who can work with the timeframe outlined in the sale and purchase agreement. It also pays to have an insurance broker who knows what you’re buying and how best to insure it.

When it comes to obtaining insurance for properties with a disclosed defect, it can be a little tricky. Following the Christchurch earthquakes, banks and insurers became more cautious about properties with disclosed defects. And you can understand why. Imagine you bought a house with an unconsented attached sleep-out. A fire starts in the sleep-out, spreads to the house and the whole thing burns to the ground. If you didn’t disclose to your insurer that the sleep-out was unconsented, they might not pay out on your total loss claim. Which means the bank won’t be paid out to settle the mortgage you have on the property. A nightmare scenario, but one that could happen.

Which is why, during the conditional phase of a contract it’s important to get the right insurance cover in place. That way, your lender should be satisfied about the level of risk they’re taking in providing you with a mortgage.

Even minor defects can raise red flags for lenders and insurers. Here’s why you need to be cautious:

• Banks may decline or reduce lending on homes with major issues like water damage, structural problems, or unpermitted work.

• Insurers may refuse coverage, or offer it with significant exclusions or higher premiums.

• Without insurance, your bank won’t release the funds, which could delay or derail your purchase.

Your lawyer will help you identify these risks early, and – if appropriate – help negotiate terms that give you the right to walk away or renegotiate if problems arise.

At Owen Culliney Law, we take the time to understand your goals as a first-home buyer. When a defect appears in the disclosure packet, we’ll:

• Advise you on legal and financial risks

• Help structure your offer with the right protective conditions

• Coordinate with your other advisors (e.g. mortgage broker or building inspector)

• Support you all the way to settlement

Buying your first home should be exciting, not stressful. Let us protect your interests from day one.