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It's All in The Title

Nov. 19, 2019


The Certificate of Title for your property records the legal status of your land, as well as notes any obligations such as restrictions or easements. There are various types of title, each conferring different rights. It’s important to understand what type of Title your property (or prospective purchase) has, in order to make sure you fully understand your rights. 


Fee Simple


Fee Simple, sometimes called “Freehold”, is the greatest possible interest you can have in land. This means that you own the Title to the property and underlying land and are free to sell it at will. 
Fee simple properties can still be subject to easements or encumbrances. These are legal rights granted to other parties that give them the right to do something to your property or restrict you from doing certain things to your property. For example, you may grant a neighbour a right of way over your property to put in a driveway or path.


Cross Lease


A cross lease is where you jointly own a Fee Simple interest along with your neighbour(s). While you own the underlying Title together, you each then lease part of the land from each other. This type of Title was popular for a while in New Zealand due to strict subdivision rules. Cross leased properties can be semi-detached or standalone. 
If you are considering buying a cross lease property, it is imperative that your lawyer sees the cross lease before you enter an unconditional agreement to purchase. The cross lease will have a deposited lease plan which shows the location of the buildings. It is also important that your lawyer checks the lease plan carefully, as it can be expensive to remedy if the lease plan does not accurately reflect the outline of the buildings and other structures on the land. 
The lease could also have restrictions on what you can do with your home, from erecting structures in your backyard to what colour you can paint your house. Your lawyer will be able to advise you on these. 

 

Leasehold


When you buy a Leasehold property, you are not purchasing the underlying land. You are buying the house itself and a lease of the land, which could be owned privately or by the Council. Once you have purchased, you will have ongoing expenses such as ground rent. Understandably, these properties are often much cheaper than freehold properties.
As with a cross lease, it is paramount that a lawyer read the lease information before you buy a leasehold property. There are many variables in a leasehold, such as frequency of rent review, restrictions on use, and term of the lease.

 

Unit Title


Unit Title ownership is common for apartment buildings or townhouses. When you purchase a unit title, you are buying your particular unit as well as a share of the “common area” (such as the lobby of an apartment building). Unit Titles are governed by a body corporate, which you automatically join when you purchase. Body corporates make decisions for the building, such as maintenance or repairs, insurance, levies and management. 
When buying a Unit Title, there will be a lot of documentation to go through. This will include body corporate minutes and body corporate rules. You need to read these carefully to ensure there are no issues raised in the body corporate minutes, or anything restrictive in the rules that you may disagree with such as banning pets. You should also get pre contract and pre settlement disclosure statements which will advise you of any weathertightness issues, proceedings pending against the body corporate, levies to pay, planned maintenance, and other relevant matters.  

 

For property-specific, tailored advice, contact our experienced property lawyers on property@becker.co.nz.

 

Nina Becker
Staff Solicitor

 


Disclaimer: The information contained in this article is general in nature and not tailored to your personal circumstances. It is only current as at the date posted and should not be relied upon as legal advice. For legal advice applicable to your situation, please contact us for an appointment.