Real Estate Agent's Guide: Navigating NZ Residential Property Titles & Registered Interests

Post last updated:
February 18, 2024

When operating in New Zealand's real estate industry, it's crucial for agents to have a solid understanding of the various property titles and registered interests that exist within the country's property market. A comprehensive knowledge of property law can greatly enhance your ability to serve your clients, ensuring smooth transactions and building a reputable career as a trusted real estate professional.

This guide aims to empower real estate agents with an understanding of New Zealand's residential property titles, as well as the primary registered interests that can affect property ownership and transactions. 

Types of Residential Property Titles

As a real estate agent, it's essential to understand the different types of property titles that exist in New Zealand, as each type affects the property's ownership, use, and restrictions. The following are four key property titles:

1. Freehold (Fee Simple): This is the most common property title, where the owner has complete control over the land and any buildings on it, subject to applicable laws (for example the Resource Management Act 1991 and the Building Act 2004) and any restrictions (for example easements or covenants registered on title).

2. Leasehold: With leasehold ownership, the landowner grants the leaseholder the right to use and occupy the land and any buildings on it for a specified lease term. Typically involves periodic ground rent payments made by the leaseholder to the landowner. Leasehold properties are common in Auckland, particularly for apartments in the viaduct and often where churches own the underlying freehold. Note there can be a number of subleases in place so it's worth understanding the background of what you are selling when you obtain a listing. 

3. Cross-Lease: In cross-lease ownership, multiple parties jointly own a property's land while independently leasing their respective dwellings or flat. Each cross lease holder is granted what is called a registered leasehold estate of the particular area and building that they occupy. These leases are usually for 999 years and each one will set out exclusive areas of occupation as well as any shared or common areas. 

It's crucial to check if the owner has completed any works which have been structural in nature or have changed the footprint of the home from what is depicted on the flats plan. If these works have occurred, they should be disclosed in the listing documents and the sale and purchase agreement.

4. Unit Title (Stratum): Common in apartment buildings and townhouse complexes, unit title ownership involves individual ownership of units, with shared ownership and responsibility for common property areas. All owners automatically become members of the body corporate which owns the common areas and is responsible for administering the complex and making decisions on items such as maintenance. 

When listing a property, it's suggested that background body corporate documents be obtained and reviewed (e.g. the last three years AGM minutes and body corporate rules). In addition there are disclosure requirements which must be satisfied under the Unit Titles Act 2010 (these are the Pre-Contract Disclosure Statement or "PCDS" and the Pre-Settlement Disclosure Statement or "PSDS". If there is a body corporate manager appointed, they can help pull together the information for the listing. 

Registered Interests Affecting Property Titles

Several registered interests can impact property ownership, affecting its use, future transactions, and value. As a real estate agent, recognising these interests is essential in providing informed advice to your clients. Some common registered interests include:

1. Mortgages: Most residential property buyers rely on bank financing, which results in a mortgage registered on the property title. This mortgage serves as security for the loan, granting the lender the right to sell or repossess the property if the borrower defaults on repayment. Any existing mortgage will be repaid and discharged on settlement. 

2. Easements: Easements are rights granted to a third party to access or use a portion of a property owner's land for a specific purpose, such as a shared driveway or utility connections. Easements can affect property use and may influence future development or renovation plans so it's worth checking out the details so you can answer questions from potential purchasers.

3. Covenants: Land covenants are rules that apply to land and affect how you can use the land. The rules can either make a landowner do something (positive covenants) or prevent the landowner from doing something on the land (restrictive covenants). These rules can apply for a set period of time or stay on the land forever. This means whoever owns the land will be affected by these rules. Common covenants include limitations on building types, sizes, and materials which can affect the property's development potential and resale value.

4. Consent Notice: Consent notices are a form of covenant between the council and the land owner and can only be imposed through a subdivision consent. They relate to conditions that must be complied with on a continuing basis by the owner and subsequent owners after the deposit of the survey plan (s221 of the RMA). Such conditions may include engineering works, density, site coverage, and the location of building platforms. These are particularly worth understanding where you might be selling blocks of land with houses yet to be built on. 

Searching Property Titles and Identifying Registered Interests

To effectively advise your clients, conducting a thorough search of a property's title is crucial. The preferred method for title searches is accessing Land Information New Zealand (LINZ) records, which can be done through an online search portal like Landonline or through a licensed lawyer.

When searching for a property's title, it's essential to examine:

1. Legal description: Verify the property's legal description matches the information provided by the vendor, ensuring the accurate identification of the land parcel. This should be mirrored into the legal description of what is being sold in the sale and purchase agreement. 

2. Ownership: Confirm the current registered owner of the property and any limitations or restrictions affecting their ownership (for example a trust).

3. Registered interests: Review any registered interests affecting the property, such as mortgages, easements, covenants, and consent notices, to understand any potential limitations or obligations affecting the property.

Advising Clients and Managing Expectations

Armed with a comprehensive understanding of property titles and registered interests, you can effectively guide your clients through the buying or selling process, managing their expectations and helping them make informed decisions. Key aspects of effectively advising clients include:

1. Disclosure: Ensure your clients are aware of all registered interests affecting a property, as well as any potential implications on their intended use, future renovations, or resale value.

2. Due diligence: Encourage buyers to conduct thorough due diligence, consulting with experts like property law specialists, surveyors, or architects as needed to gain a clear understanding of any registered interests' consequences.

3. Negotiations: With a solid understanding of property types and how registered interests can impact a property's value and use, you'll be well-equipped to negotiate effectively on behalf of your clients and to ultimately get deals done!

Enhance Your Real Estate Expertise with NZ Legal

A comprehensive understanding of residential property titles and registered interests is vital for real estate agents operating in New Zealand's property market. Knowledge of these critical aspects will enable you to provide clients with outstanding service and informed advice as they navigate the complexities of buying or selling a property.

If you, or you clients need specialist legal help with a transaction, don't hesitate to contact NZ Legal for support in navigating the sale and purchase environment in New Zealand.


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