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Be careful when purchasing a property at Auction...

May 28, 2024

A young couple had pre-approval for finance from their bank and went to an auction. They were excited when they were successful with their bid. Only after their success at the auction did they decide to engage the services of a Solicitor.


When their Solicitor asked the couple for a copy of their unconditional letter of finance from their bank, the couple did not have this. They had relied on the bank’s pre-approval letter, thinking this was their offer for finance. Upon closer reading of their pre-approval letter, they realised that the bank needed to approve the property the couple were looking to purchase.


As it transpired, the bank did not approve of the property on account of building issues that had been disclosed in the Agreement for Sale and Purchase. The bank therefore would not provide finance. However, the couple were bound to a contract to purchase the home.


After several stressful weeks they eventually secured finance with a second tier lender at a significantly higher interest rate than what would have been obtained through a bank.


Reminder... an Auction Agreement is unconditional. When you are purchasing at an auction, you are essentially entering into an Agreement to purchase a property unconditionally. This means you have to have undertaken all of your due diligence checks on the property prior to going to the auction. This includes the following:


 Finance – You need an unconditional offer of finance to purchase this property. This is a letter from your bank that records the address of the property and your full legal names. You need to advise the bank that you are wanting to purchase at an auction.


 Insurance – You need an unconditional offer of insurance that records the address of the property and your full legal names.


 Title – Your Solicitor should undertake a review of the Record of Title including easements and land covenants amongst other registered instruments on the title.


 Building Report – You should have the property inspected by a qualified builder who will check for structural integrity and any building problems such as leaks and non-complying additions.


 LIM Report – You should have obtained a LIM report from the local Council for the property that will record the building permits, building consents, and Code Compliance Certificates for works undertaken at the property, and also drainage, zoning, and any resource consents affecting the property, amongst other relevant property matters.


 Toxicology Report – You may consider obtaining a toxicology report, particularly for methamphetamine contamination, if the property has a rental history – although the problem in New Zealand is not exclusive to rental properties.


It is important to seek legal advice prior to submitting an offer to purchase a property. This is particularly a necessary step if the property is being sold by auction.


Rainey Collins General Issues Autumn 2024

Entertainment Expense Guide

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How can I try to prevent a personal grievance being raised against me?

By Stuarts Accountants • September 11, 2024
An employee can raise a personal grievance if they feel they have been treated unfairly or unreasonably. For example, if an employee thinks they have been unfairly dismissed or unjustifiably disadvantaged by their employer. Personal grievances handled incorrectly can result in significant costs for an employer. It is therefore important to know your obligations and to take steps to prevent such grievances. Employers have an obligation to act fairly and reasonably. This obligation is really important when an employer undertakes a disciplinary and/or dismissal process, as the employee will feel under real threat at those times, and potentially likely to challenge what has happened and how processes were conducted. When undertaking these processes, it is vital to first look at the employee’s employment agreement. It is likely that the agreement will provide specific steps to take during a disciplinary procedure. If that is so, an employer is required to follow those steps otherwise they will have breached the employment agreement. You should also be sure to communicate with the employee. This is important in all contexts. For example, you should communicate with the employee even if their misconduct was minor. Though this can be informal, it ensures the employee is aware of your expectations. Having a discussion with the employee may also get ahead of the problem and resolve it short of a personal grievance. Make sure that you have a relevant person with you in the discussion who can confirm what took place if needed, and ask them to record a note of what happened that can be referred to later. The employee must also be fully informed if any disciplinary process is being undertaken and they should be aware of its potential outcomes. This includes being informed of any complaints or investigations against them. Employees must also be allowed to have their say throughout any process and be given a chance to explain their side of the story. An employee must also be informed they are allowed a support representative at any formal meetings with the employer. During any of these processes a decision must not be made until all factors are considered. This requires a genuine investigation into any alleged behaviour by the employee, as well as any evidence from the employee themselves. A few extra tips include remaining calm and polite, even when a personal grievance is being raised by an employee. Escalating the situation risks making matters worse. It is absolutely vital not to take short-cuts throughout this process. Personal grievances can result in large costs for an employer who gets the process wrong, even if the employee’s behaviour was serious. The employment landscape is literally littered with employers who reasonably had problems with an employee but got key elements of the processes wrong. It is recommended to implement clear and effective procedures before those processes are required. This ensures that there is a step-by-step process to follow and there are likely to be less issues during the process. It is also recommended to keep a record of any serious interactions or conversations with employees, and that all paperwork is accurate and well organised. These documents will likely be required if a personal grievance is eventually raised against you. Being able to refer the employee to them might show them that the correct processes have been followed, and avoid a personal grievance being raised at all.  If you are confused about your obligations or wish to clarify how you can prevent a personal grievance, it is best to seek legal advice from a professional with experience in the area.

When can I dismiss an employee without notice?

By Stuarts Accountants • September 11, 2024
The process of dismissing an employee usually includes several steps such as:  investigating behaviour,  raising concerns with an employee and,  giving notice. However, there are some limited circumstances in which not all of these requirements are needed. An example of such a case is when an employee’s behaviour is so serious that their employer is not required to give the employee notice. This is known as “summary dismissal” and may be appropriate when an employee has behaved in a way that amounts to serious misconduct. Serious misconduct is conduct which has destroyed the trust and confidence in an employment relationship. Examples of serious misconduct may include (but are not limited to):  theft,  violence,  use of illegal substances,  dishonesty,  bullying and,  workplace harassment. A dismissal without notice is contrasted with a dismissal with notice. For example compare an employee who is to be dismissed without notice for serious misconduct for fraud with an employee who is to be dismissed after another finding of misconduct following a final warning for a breach of timekeeping. Dismissing an employee “without notice” merely means that an employee can be forced to leave the workplace instead of being given their notice period, and the employer is able to cease paying the employee from the date of dismissal as there is no notice period that has to be paid. Not having to give notice does not mean that an employer can dismiss an employee immediately when an issue arises. It is important not to be misled by the term “without notice”. Employment agreements generally include a notice period. This includes the notice period if an employee chooses to leave their job, and/or if they are dismissed from the job. Employers are always required to follow a fair process. Whether there has been serious misconduct or not an employer is required to undertake a number of steps before dismissing an employee. These steps include: 1. Raising any concerns with the employee along with the possibility of dismissal if the concerns are correct; 2. Investigating claims against the employee before making a decision on the facts; 3. Providing the employee with relevant material so they can prepare their response; 4. Advising the employee of their right to have a support person attend meetings and assist with their response; 5. Allowing the employee a reasonable opportunity to respond to the allegations; 6. Considering all the facts, including the response from the employee; 7. Advising the employee of the decision on the allegations, the level of misconduct found, and any preliminary view as to the penalty outcome; 8. Allowing the employee to provide feedback on the preliminary proposed penalty and genuinely considering that feedback; and 9. Advising the employee of the penalty outcome. Failing to undertake these steps is a breach of an employer’s good faith obligations. This can lead to serious and expensive consequences for the employer. Dismissing an employee without notice can be used when the behaviour amounts to serious misconduct that justifies a dismissal without having to give the notice period. However, it is important that employers remain aware of their overall obligations during the dismissal process. If you are confused about your obligations, it pays to seek advice from a professional. Source: Rainey Collins Employment Issues 21.8.24
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