We recently attended an update from Robbie Muir, Registrar-General, Land Information New Zealand. While there were many other updates that will affect our practice, one of his focusses was the update to the Land Transfer Act 1952. The Law Commission completed a report in 2010 on a number of provisions to modernise the 1952 Act and the updated Act received assent through Parliament in July of this year. The new Act is expected to come into force in November 2018.

We summarise a few of the updates we see being beneficial to our clients:

Covenants in gross

One of the updates we see as an improvement is the ability for developers (in particular) to note covenants in gross on the title to properties (by way of an update to the Property Law Act 2007). At present land covenants are recorded on property titles as easement instruments, where the instrument creating the easement grants a right over another person's land given to a land owner which is additional to their basic property rights. Standard easements identify the land having the benefit of the easement and the land subject to the easement. A covenant is an obligation contained in a deed, and these are recorded so that the obligations bind present owners of land as well as subsequent owners. The obligations can be positive (in that they require the landowner to do a certain thing) or restrictive (where they require the landowner not to do certain things).

In terms of easements, you are also able to record an easement in gross which allows for a benefit to be held by a person or corporate entity rather than attaching to land. However, land covenants can only be recorded, under the 1952 Act, where they benefit land. This can raise issues where an obligation is owed to party that does not retain any land...For example, a developer, an individual or a corporation who does not own land in the vicinity.

While this may not appear to be a problem that requires fixing, currently what has been a common practice is securing these "covenants in gross" via a registered encumbrance. For example, a developer requires land owners in a development to be members of a club which imposes certain conditions or obligations is secured by a registered encumbrance where if you do not comply you are charged an annual rent charge as a penalty for not complying.

An encumbrance is recognised as a charge over the land (like a mortgage) and wasn't really intended to secure this sort of obligation. The use of encumbrances has resulted in a lack of clarity as to the encumbrance mechanism and what it is used for. Going forward these obligations will be able to be recorded on the title as a land covenant as they relate to the use of the land even where the obligation is owed to someone who does not retain ownership of any land.

Compensation

Another update we see benefitting the landowner is to the compensation regime under the 1952 Act. The grounds for compensation (fraud and error on the land register) remain unchanged but how compensation is calculated has been updated. Currently, compensation is on the value at the date of the loss to the landowner (which can be some time before compensation is payable). Under the new Act compensation can be valued at the date the loss is discovered or should've been reasonably discovered by the landowner. There will be discretion to reduce the amount of compensation where a landowner has not taken care but in general this should be fairer for land owners requiring compensation under this regime.

Privacy

The land register in New Zealand is a public record and as a result it can be quite simple to find where people live or own property. Under the new Act, the Registrar-General will have more power to withhold ownership information in the interests of personal safety. There is already a power to do so under the Domestic Violence Act 1995 but this will extend the powers to other circumstances where this may be in the landowner's interest. We would expect there would need to be a very good reason for the Registrar-General to use this power.

Should you require any further information about the updates to the Land Transfer Act 1952 please contact us to discuss.

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