Property buyers may not realise checks they should do

The Real Estate Authority has actually finished research study that reveals that the percentage of realty buyers looking for legal guidance and residential or commercial property documents has actually dropped.

Participants to its research study were less most likely than in the previous year to have actually acquired a Land Information Memorandum (LIM), title search, or home files before buying a residential or commercial property, and were substantially less most likely to have actually spoken with an attorney or conveyancer.

President Belinda Moffat stated possible buyers must discover whatever they might about a residential or commercial property before dedicating.

“Buying a home is often the most financially significant purchase a consumer will ever make. Obtaining key property information documents is fundamental due diligence that a responsible buyer should always undertake.

“With first-home purchasers representing a significant percentage of purchases throughout the duration our research study took a look at, the outcomes suggest how crucial it is for those who are brand-new to property deals to thoroughly look into the residential or commercial property they want to purchase and take some time to discover the realty deal procedure.”

A LIM gives a summary of information held by the local council, including things like the consents granted for work on a property and information about the flood risk and rates.

The property file at the council can contain relevant information that isn’t on the LIM such as a site plan and the original plans of the house. The property title has a record of legal rights and restrictions that can impact what you can do with the property and any access you need to provide to others.

Sometimes, people have reported buying houses with less due diligence in periods when the market is hot and pressure is on.

But REA engagement manager Aaron Alexander said with buyers having the upper hand in the market at the moment, it might be that people did not realise what they should be doing.

“We do not believe there’s been as much pressure on time for individuals to progress on their deals. What the research study recommends is that it might not be a concern of individuals selecting not to get these files, it might be an understanding issue. The research study likewise reveals that just 48 percent of all property customers reported that they had excellent understanding of the end-to-end deal procedure.

“These are people who, in the preceding 12 months, had gone through or attempted to go through a real estate transaction. That’s concerning that they don’t rate their knowledge very highly. It may simply be that people don’t know that they ought to be obtaining these documents rather than choosing not to get them.”

The authority suggested individuals engage a legal representative or conveyancer early at the same time.

“REA’s 2026 consumer research suggests fewer prospective home buyers are seeking legal advice before buying a home. This is concerning given the complexity and risk involved in real estate transactions. While legal fees will be a consideration, the downstream costs that may be incurred if an important issue with a property is not identified before making an offer can be very high,” Moffat stated.

Alexander stated salesmen had statutory guides they were needed to provide purchasers before they signed an arrangement and needed to enable them time to take legal recommendations.

“A responsible buyer should always be undertaking that due diligence and always be making sure that they know what they’re buying … you really can’t know too much about any property.

“Realty experts normally act for the supplier, however play an important function in directing all celebrations through a property deal. Under the Code of Conduct REA manages licensees should make sure all representations about the home are precise and validated, that understood problems are divulged which customers are offered time to look for legal guidance before signing arrangements. Notably, they should deal with all celebrations relatively, which consists of permitting celebrations time to acquire expert guidance and not putting celebrations under excessive pressure. None of this reduces the basic value of buyer-side due diligence, procedure understanding and specialist recommendations.”

Property law expert Joanna Pidgeon said she was surprised by the research.

“It is extremely typical when suppliers are offering a residential or commercial property to offer complete residential or commercial property info consisting of LIM report, copy of title and so on in a package or able to be downloaded from a link so the details is usually readily available to purchases for numerous deals. Whether customers read it, comprehend it get legal recommendations on it before participating in an arrangement is obviously another concern.

“When the market is hot, purchasers are more likely to enter into a contract without advice for fear of FOMO (fear of missing out), or have incurred costs in previous due diligences while missing out on properties and can become cost sensitive. In a flatter market such as now, there is usually more time for a purchaser to be considered and enter into an agreement after carrying out due diligence, or inserting a due diligence clause or particular conditions.”

She stated getting previous legal guidance or having an arrangement that was conditional on acceptable due diligence was best.

“It is important also that purchasers understand that council will not take responsibility for incorrect LIM reports if the LIMs are not addressed to the purchaser in name. Having expert legal advice can prevent expensive problems down the line, and I would also strongly encourage purchasers to obtain a trusted property adviser to help guide and protect them through the process. Understanding the purpose for the use of the property and providing advice can also add value – there may be tax issues, whether the property may be rented out, title, building or other issues which experienced lawyers can help guide purchasers through the fishhooks.”