What goes on in a property transaction?

Many kiwis will, during their lifetimes buy and sell property. Property transactions are not simple; nor should they be. The importance and value of a property transaction alone necessitates a degree of complexity and care.

However, the transaction and how it is completed is not well understood by the general public. It may, therefore, be useful for property owners and potential property owners to consider what the lawyers do in the background to complete a sale, purchase or refinance.


A lawyer in a standard property transaction is the key-point of contact for several parties to the transaction. The lawyers (for both sides of a sale) are the “keepers” and enforcer of the contract, the negotiator, and an advisor.

Consequently, a lawyer manages the transaction by communicating with the key participants in the transaction, including banks/lenders, Kiwi Saver scheme and fund managers, real estate agents, Government agencies, local authorities, mortgage and insurance brokers, tenants and property managers, body corporate managers, valuers, surveyors, engineers and builders.


Behind the scenes, the lawyer obtains and collates all of the information received by the various participants to the transaction and, if required, informs the client of the critical points in each report, agreement or offer.

Key to the role as informer is to keep all participants, but crucially the client, informed of key dates and deadlines in the transaction. Missing a date or deadline can have significant financial and practical implications.


A lawyer will advise the client on legal and other issues that arise in the transaction. Advice may include raising issues with the legal elements of the title to the land, problems with a Land Information Memorandum (“LIM”), assisting the client to exit an agreement or providing options for handling problems on the day of settlement.

In certain circumstances, the lawyer may also be asked to give advice on structures for ownership of the property, relationship property considerations and complexities around family trusts, guarantees, gifting and insurance.

Custodian and transactor

A lawyer must communicate with and meet the requirements of banks and other lenders. For instance,the lawyer must give certain assurances to lenders before they will advance money to complete the transaction. To give these assurances, the lawyer must investigate, compliance with the lender’s instructions and various laws. Unless such investigation is completed and the bank/lender is comfortable, the funds will not be advanced and even when funds are advanced, in most cases they will only be advanced to the lawyer, as custodian, to use in buying the property.

The lawyer must ensure that the legal title to the property, the physical ownership of the property and the funds themselves change hands in such a way as the parties are protected. This process of settlement is carefully staged so that the funds, securities (such as mortgages) and the property change hands concurrently.

Once the lawyer has the necessary funds to complete the transaction or has received those funds following a sale, the lawyer is required to pay those funds to the correct person; be it the other lawyer, the bank/lender, secured parties, real-estate agents or the client themselves.


Hopefully, after the lawyer plays its part, a buyer gets the land, the seller gets some money, the bank gets a mortgage and all other participants in the transaction get what they need without a hitch.