A property is likely one of the largest purchases you will ever make in your life, so it is essential that you understand exactly what you are getting for your money. Before you enter into a contract, ensure that a solicitor from Webster Malcolm has reviewed the title and the Land Information Memorandum (known as a LIM), and that you understand the features of the property.
If you are bidding at an auction you need to make enquiries before you bid. Otherwise, you can have conditions in your agreement which gives you time to make enquiries.
A property title records key information about the property, such as the type of ownership you are purchasing, the size and general boundaries of the land, and the rights and restrictions which affect the property.
See our article on Different Ways Titles are Held.
Some common rights and restrictions on land in New Zealand include:
- Land Covenants
These are obligations to do, or refrain from doing something. These are especially common in new subdivisions, where the developer wants to ensure all the houses which will eventually be on the land fit the same aesthetic. There may be rules around the type of building materials you can use for the house, and rules against keeping pets or keeping motorhomes on the land. These covenants generally bind all future owners of the land, so it is vital to be aware of anything that may affect your enjoyment of the property.
- Consent Notices
These notices detail requirements imposed by the Council, and are issued under the Resource Management Act 1991. These requirements often include building height restrictions and obligations to protect native vegetation.
Easements give a right to use part of land that a person does not own for a specific purpose. The most common one is a right of way or shared driveway. Your neighbour may have an easement across your land which gives them a right to convey electricity. This would have terms and conditions attached which could, for example, mean that you cannot build a property over that area of your land. There are also costs involved for the maintenance of these areas.
It is very important that you have the title checked before you buy, and extra important in an auction situation. The standard Auckland District Law Society Agreement for Sale and Purchase of Real Estate does not include a title approval condition, so if you discovered after entering into the contract that the title has a land covenant preventing pets, you could not cancel because you have a pet cat.
It does have what is known as a ‘requisitions clause’, and a common misconception is that this is a title approval condition. However it only gives the purchaser a right to object to defects in the title (not for something which is unfair or adverse).
Where a property is being auctioned, there isn’t even a requisition clause; instead there is a clause stating that the purchaser accepts the title to the property being auctioned. Once you have signed the auction agreement, there is basically no way of backing out, so proper due diligence beforehand is key.
Land Information Memorandum (LIM)
A LIM report is prepared by the local council upon request. It provides information such as
- Permits, building consents or requisitions (and details of unconsented works)
- Stormwater or sewage drains
- Any Heritage New Zealand protection
- Special land features such as erosion or flooding
- Other certificates issued by the local council or building consent authority
- Any notices given to the council by network utility operators
- Any notices given to the council by any statutory organisation that has the power to classify land or buildings for any purpose.
It is important to compare what is in the LIM to your inspection of the property. For example there might be a swimming pool at the property but no consent for this.
When you purchase you can send a copy of the LIM to one of our team members at Webster Malcolm and we will review the report for you and outline any key points.
Other due diligence
There are other due diligence enquiries that you can make which may depend on how you want to use the property. For example if you want to renovate or build a minor dwelling, you will need to ensure that there is sufficient land for this and that you will get resource consent and building consent.
You can obtain information from the local council or employ other professionals such as planners, surveyors or property inspectors.