Title Estates
It is always best practice to ensure you obtain a Title Search of the property you are intending to purchase as there are many different types of estates in which land is held in New Zealand under the Torrens system.
Types of Estates 1.
Fee simple - This is the largest interest which can be held in land next to the Crown.
In effect this type of ownership is not limited by time and continues indefinitely.
It carries a bundle of rights representative of absolute ownership of the property.
Such rights include disposing of the land by sale, gift or generally whatever the owner wishes.
2.
Life estates - Generally speaking this type of interest is limited to the life of the tenant of an estate.
It is normally used in family situations where a person wishes to divest themselves of the ownership of their estate during their life time, but retain the use of the land.
This type of estate is generally created by registration of a Deed of Lease for Life against the title.
3.
Leasehold estates - This is where the owner being the Lessor grants an exclusive right of possession of the land for a period of time on certain terms to another party being the Lessee.
For a valid lease to be created it must specify the length of time to run, property and exclusive possession being signed by all parties.
Again this type of Lease would be registered against the title.
4.
Cross Lease - This type of estate is know as a composite title.
There is an undivided share as tenants in common in the fee simple of the land together with the lease hold estate.
In effect if the Cross Lease comprises 2 Flats each owner would have a 50% share each in the fee simple, and a lease generally for 999 years for the leasehold portion.
There is a large number of Cross Lease Titles in New Zealand.
In addition to obtaining a title search you must ensure you receive a copy of the title plan, together with all registered encumbrances which affect the land.
In the case of a Cross Lease Title you must obtain a copy of the foot print of the flat together with the lease and the leasehold interest.
Great attention should be given to the foot print plan of the flat to ascertain whether there have been any additions or alterations to the flat.
If for example since the time of the building of the flats there have been any alterations or additions that have changed the original dimensions of the flat or any extra structures that have been erected, enclosed and attached to the flat you have the right to requisition the Vendor to update the flats plan.
It would be in your interest to ensure any Agreement for Sale and Purchase being used is the eighth edition 2006 (2) form approved by the Auckland District Law Society.
Under this Agreement you have the right to requisition the Vendor to any defect in the Title under clause 5.
2.
This right is for 10 working days from the date the Agreement is signed by all parties.
The appropriate clause to protect your interest would be the Agreement for Sale and Purchase is conditional upon your Conveyancing Practitioner's approval of the Title, Flats Plan, Cross Lease and any encumbrances.
5.
Unit Title Stratum Estate - The Unit Titles Act 1972 was enacted to allow the issue of separate Titles in high rise developments.
The title comprises an estate in the Unit and accessory unit (garden, garage, stairway, and common areas).
An undivided share in the fee simple (or leasehold) estate in the common property, and an undivided share in the fee simple (or leasehold) estate to which the unit owner is entitled.
When purchasing a Unit Title you should investigate further as to any extra levies and insurance payable in addition to rates and taxes.
This information should be obtained via the Vendor through the Body Corporate in the form of a Section 36 Certificate.
The Unit Title Act is being rewritten and now has proposed changes bringing this legislation into alignment with Strata Titles in Australia.
Types of Estates 1.
Fee simple - This is the largest interest which can be held in land next to the Crown.
In effect this type of ownership is not limited by time and continues indefinitely.
It carries a bundle of rights representative of absolute ownership of the property.
Such rights include disposing of the land by sale, gift or generally whatever the owner wishes.
2.
Life estates - Generally speaking this type of interest is limited to the life of the tenant of an estate.
It is normally used in family situations where a person wishes to divest themselves of the ownership of their estate during their life time, but retain the use of the land.
This type of estate is generally created by registration of a Deed of Lease for Life against the title.
3.
Leasehold estates - This is where the owner being the Lessor grants an exclusive right of possession of the land for a period of time on certain terms to another party being the Lessee.
For a valid lease to be created it must specify the length of time to run, property and exclusive possession being signed by all parties.
Again this type of Lease would be registered against the title.
4.
Cross Lease - This type of estate is know as a composite title.
There is an undivided share as tenants in common in the fee simple of the land together with the lease hold estate.
In effect if the Cross Lease comprises 2 Flats each owner would have a 50% share each in the fee simple, and a lease generally for 999 years for the leasehold portion.
There is a large number of Cross Lease Titles in New Zealand.
In addition to obtaining a title search you must ensure you receive a copy of the title plan, together with all registered encumbrances which affect the land.
In the case of a Cross Lease Title you must obtain a copy of the foot print of the flat together with the lease and the leasehold interest.
Great attention should be given to the foot print plan of the flat to ascertain whether there have been any additions or alterations to the flat.
If for example since the time of the building of the flats there have been any alterations or additions that have changed the original dimensions of the flat or any extra structures that have been erected, enclosed and attached to the flat you have the right to requisition the Vendor to update the flats plan.
It would be in your interest to ensure any Agreement for Sale and Purchase being used is the eighth edition 2006 (2) form approved by the Auckland District Law Society.
Under this Agreement you have the right to requisition the Vendor to any defect in the Title under clause 5.
2.
This right is for 10 working days from the date the Agreement is signed by all parties.
The appropriate clause to protect your interest would be the Agreement for Sale and Purchase is conditional upon your Conveyancing Practitioner's approval of the Title, Flats Plan, Cross Lease and any encumbrances.
5.
Unit Title Stratum Estate - The Unit Titles Act 1972 was enacted to allow the issue of separate Titles in high rise developments.
The title comprises an estate in the Unit and accessory unit (garden, garage, stairway, and common areas).
An undivided share in the fee simple (or leasehold) estate in the common property, and an undivided share in the fee simple (or leasehold) estate to which the unit owner is entitled.
When purchasing a Unit Title you should investigate further as to any extra levies and insurance payable in addition to rates and taxes.
This information should be obtained via the Vendor through the Body Corporate in the form of a Section 36 Certificate.
The Unit Title Act is being rewritten and now has proposed changes bringing this legislation into alignment with Strata Titles in Australia.
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