How to do due diligence when buying property in New Zealand

What due diligence is (and isn't)

Due diligence is your right — usually written into the sale and purchase agreement (SPA) as a condition — to investigate the property before becoming unconditionally bound to buy it. It typically lasts 10–15 working days.

What it is not:

• It is not a guarantee that nothing is wrong. You're doing your best to find problems given the time available.
• It is not a negotiating stunt. Sellers know experienced buyers do full due diligence.
• It is not free. Expect to spend $1,000–$2,500 on reports, even if the deal falls through.

At auction, there is no due diligence period — all investigations must happen before you bid. See our auction vs negotiation guide.

How to structure the due diligence period

Order your checks so the long-lead items start immediately and you have time to follow up. A sample 10-working-day timeline:

If you need more time — for example, if the LIM is delayed or the builder recommends a specialist — request a due diligence extension in writing via your lawyer before the deadline. Sellers often agree if you give a reason.

The building inspection: what to ask for and how to read the report

Hire an independent building inspector — not one recommended by the agent. A compliant inspection follows NZS 4306. Ask specifically for:

• Drone or cherry-picker access to steep roofs
• Moisture-meter readings on monolithic or plaster cladding
• A full subfloor inspection (borer, pile condition, moisture, drainage)
• An asbestos risk assessment (pre-2000 properties)

When the report arrives, read it methodically. Inspectors use severity ratings such as Urgent, Significant, and Monitor. Get quotes for anything rated Urgent or Significant before deciding — not after going unconditional.

Red flags that warrant serious consideration before proceeding:

• Active water ingress in monolithic cladding (potential leaky building)
• Significant foundation movement or failed piles
• Rubber-insulated wiring (pre-1970s) — many insurers won't cover it
• Dux Quest plumbing (blue plastic pipe, 1978–1989) — known to fail at fittings
• Unconsented structural work not shown on council records

A thorough report typically lists 15–30 items. That's normal. You're looking for the few that are expensive, unsafe, or uninsurable — not perfection. See our full builder's report guide.

Reading the LIM: five things that can sink a deal

Your lawyer should review the LIM (Land Information Memorandum) with you. Know what to look for yourself:

1. Missing code compliance certificates (CCCs). If work was consented but there's no CCC, you inherit unconsented work. Councils can issue notices to fix — sometimes requiring demolition or full reinstatement. Check every consent line.
2. Natural hazard overlays. Flood plain, liquefaction zone (especially post-Canterbury), coastal inundation, or erosion risk. These affect insurance costs, lender appetite, and future resale value.
3. HAIL-registered land. The Hazardous Activities and Industries List covers former dry-cleaners, petrol stations, and more. A HAIL listing can trigger investigation requirements that delay settlement.
4. Heritage or character overlays. These can prevent you from subdividing, adding a sleepout, or altering the façade. Check before assuming you can develop.
5. Outstanding rates or notices. Unpaid rates run with the land. Your lawyer checks this, but confirm it explicitly.

See our full LIM report explainer for a section-by-section breakdown.

Title and legal checks

Your lawyer pulls the title from LINZ. Key things they're checking:

• Ownership. The sellers are who they say they are and both owners have signed — a common issue with relationship property.
• Mortgages and caveats. All registered securities must be discharged at settlement.
• Easements and covenants. Rights of way over your land, access agreements, or covenants restricting use (e.g. no further subdivision, no commercial activity).
• Cross-lease issues. If it's a cross-lease, the flats plan must match the actual building. Any extension not reflected in the plan creates a defective title that costs $5,000–$20,000 to fix.
• Unit title (strata). Get the pre-contract and additional disclosure statements. Check the body corporate's long-term maintenance plan and whether any special levies are pending.

Review the sale and purchase agreement in parallel — your lawyer reads both together to check for consistency.

Confirming finance and insurance

If your SPA includes a finance condition, you need written confirmation from your lender before going unconditional. Not verbal. Things that can delay this:

• The bank ordering a registered valuation (adds 5–7 working days)
• AML/CFT documentation requests from the bank
• A building report flagging defects that affect the property's security value

Insurance must also be confirmed in writing. Since the 2011 Christchurch earthquakes and more recent flooding events, insurers have significantly tightened underwriting. High-hazard properties can be declined or insured only with very large natural-hazard excesses — sometimes $20,000 or more. Never go unconditional without a written insurance quote in hand.

How to make the go/no-go decision

By day 9 or 10 you should have everything in front of you. Work through this framework:

1. Total cost of remediation. Get quotes for every Urgent and Significant building report item. Add them up. Would you still buy at the current price minus those costs?
2. Risk you can't quantify. Weathertight risk in monolithic cladding or significant LIM issues sometimes can't be accurately priced. Is that uncertainty acceptable at this price?
3. Is it insurable? If you can't get cover at a reasonable premium and excess, step back regardless of how much you like the property.
4. Does your finance still stack up? If the valuation came in below the purchase price, your LVR changes and your loan terms may shift.

If you're proceeding but have found defects, you have three options: go unconditional as-is, request a price reduction or vendor remediation before settlement, or withdraw. Withdrawal on a valid condition returns your deposit in full.

Realy's deal workspace lets you track every due diligence item against your deadline and share status with your lawyer and broker in real time — so nothing slips through the cracks.

Frequently asked questions