Buying a tiny house is a significant investment and just as you would check for security over a car, you should also do the same for your tiny house.
Buying an Existing Tiny House.
When buying an existing tiny house, you will need to consider the type of tiny house you are buying, which will have an impact on the checks you carry out. Firstly, you will need the following basic information from the vendor:
(a) The vendor’s full legal name. If the vendor is an individual, you should request to see their personal identification (i.e. driver’s licence) to confirm their full legal name. If the vendor is a company, the full legal name should be checked online at Companies Office; and
(b) If the tiny house is registered as a vehicle with the New Zealand Transport Agency, you should obtain the registration number for the vehicle and confirm the vendor is the owner.
Once you have this information, you can carry out checks to see if there is any security registered over the tiny house that indicates there may be some money owing to a creditor. The first check is on the Personal Property Securities Register (PPSR). The PPSR is effectively an online publicly available notice board where creditors can register a claim to personal property and therefore interested persons can check if there is any debt or obligation attached to the goods that they wish to buy.
Searching the PPSR for claims over personal property (called security interests) is cheap to do on the PPSR. Once you have the above basic information, you can go to the PPSR website and carry out the following checks:
a) Type in the details of the vendor’s full name (either as an individual or organisation) and search what security interests have been registered against the vendor; and
(b) Type in the registration number for the vehicle to see whether any security interests have been registered against the vehicle.
If either of these searches shows results that indicate that a secured party has an interest in the tiny house (called a financing statement), then you are on notice to discuss this security interest with the vendor and confirm that this will be removed as part of the settlement payment that you will make. Interpreting financing statements and whether they cover a tiny house can be difficult so we recommend you get your lawyer to advise you.
Not all tiny houses are classified as vehicles and some may be attached to land. In those circumstances, it is also important to carry out a search of the title to the land at Land Information New Zealand to confirm that the vendor is the owner and to see if a mortgage or other encumbrance has been registered against the title (which may secure the tiny house). You will need a lawyer to assist you with this search and if there are any mortgages or other encumbrances registered over the land on which the tiny house is situated, you are again on notice to request that the vendor obtain confirmation from the mortgagee that their security over the tiny house will be released upon payment of the settlement amount.
Buying a New Tiny House
If you are dealing with a new tiny house builder you should also consider the position regarding ownership of the tiny house whilst the tiny house is under construction. We would normally expect you will make staged payments to the tiny house builder for materials and when particular milestones are.
Your contract should confirm that you own the tiny house as it is being constructed. In addition, we also recommend that you carry out checks on the PPSR in the tiny house builders name to see what security interests have been registered over the assets of the tiny house builder.
If there are security interests registered that could potentially cover the tiny house under construction, you then need to obtain comfort from those secured parties that their security will not cover your tiny house once you have made the staged payments. We recommend that you ask your lawyer to confirm this point and review the build contract.
Contract
This article summarises the checks and steps that need to be carried out when buying a tiny house. As it is a significant investment, and in addition to the above security checks, it is important that you have a robust written contract for the purchase of the tiny house, which will confirm the position around ownership and obtaining good title.
Andrew Skinner has over 20 years of experience as a commercial lawyer as well as being Vice Chair of the Frame and Truss Manufacturers Association. This article is necessarily general in nature and is therefore not intended to be relied upon as legal advice.
