Certificate of Title

A Certificate of Title (CT) is a record of who owns or has an interest in land in New Zealand. There are four main categories in relation to land:

• Freehold (types are: fee simple, life estate or stratum estate).
• Leasehold (you can also have a stratum estate in leasehold).
• Unit title or cross lease (the ownership flat situation).
• Company lease or licence (note that a licence is not a title, but a right to enter land).

Regardless of the type of interest, every residential section in New Zealand has a CT held by Land Information New Zealand (LINZ). Anyone can get a copy of a CT by having the correct Land District and the title number. Or you can get someone else to do the search for you. There are many search agents available. Look in the Yellow Pages under Real Estate Agents, Property Management, Land Information, Resource Management, Document Services, Legal Agents, Lawyers, and Surveyors.

If you are doing the search yourself, to find the correct Land District go to the LINZ website. To find the CT number, you can either go to your local council with the street address and ask for help to find the legal description off the rating records, or use the LINZ processing centres. You will need the legal description of the property, for example, Lot 1 DP 1234, which you can get off rating records.

Once you have a number, you can either order a copy of the CT from a LINZ processing centre or online through the LINZ Skylight service website or you can post or fax in a request. A small fee is payable. You should get a copy of the CT within 36 hours.

The CT will give you the size and general shape of the site, who owns it and whether there are mortgages, leases, right of ways or other interests registered against the title.

Title insurance

When you complete the purchase of your section or property, you become the registered proprietor. However, this does not protect you from problems that do not appear on the title such as:

• Your neighbour encroaching part of your land.
• Misplaced fences and rights of way.
• Drainage and access problems.
• Matters omitted from the LIM such as sacred Maori sites.

These could mean additional building costs or may even prevent you from building. At least one insurance company in New Zealand is offering title insurance protection against these risks.

You could simply take out the cover and not bother to do the leg-work of checking the LIM, the council records and running it past your lawyer. However, it is sensible to do this work to satisfy yourself that the section is going to be suitable and nothing will prevent you building your house on it. But consider insurance to cover those things that may have escaped the most diligent search of you and your lawyer.

The cover is for as long as you own the land and it's not necessary to prove anyone was at fault to make a claim.

What is a cross lease?

A cross lease is where a number of people share in the ownership of a piece of land (as tenants in common which means they can sell, or pass on their share in their will). The homes that they build on the land are actually leased from the other land-owners. The houses are usually flats or townhouses. For example, if you purchase a flat in a three flat development that is a cross lease, you will become the registered proprietor of:

• An undivided one third share in the land and buildings (as tenant in common in equal shares) with the other owners of the other two flats, and
• A long term lease, from all three of the tenants in common (including you), for your particular flat.

Disadvantages of cross leases

The problem with this type of ownership is:

• The rights of the owner depend on the terms of the particular lease, which has usually been arranged by a developer who built the development but now has no further interest in it.
• The usual term of a cross lease is 999 years, whereas the physical or economic life of the house will be a lot shorter.
• You must comply with the covenants set out in the lease - if you fail to comply, the other flat owners may be able to compel you to sell your undivided share in the fee simple title.
• You will usually need to get the unanimous support of all the owners of the cross leased homes to make any kind of decisions for example, decisions concerning common spaces such as driveways or car parking areas. If agreement can’t be reached it might involve a lengthy arbitration.
• When homes are altered, unless the cross lease and building plans are changed, the original cross lease will not include the alterations without additional surveying and legal costs. Furthermore, you will need to get the agreement of the other lease-holders before you can do the work.
• Most cross lease owners believe that their title is as good as an ordinary freehold title without understanding all the implications.

Converting from cross lease to freehold title

If there are real problems with your home being built on a cross lease title, there is the option of changing the title to freehold. A freehold title gives the owner exclusive rights of use and enjoyment of the land, and is the most common form of ownership for land in New Zealand.

You should see a lawyer about converting the title. Converting from cross lease to freehold title is very complicated and may be expensive as essentially all the cross leases will need to be converted. Be aware of the need to comply with the requirements of the district plan (for example, the distance between the houses) and that a new survey plan will need to be approved by your local council. You will need to get subdivision consent and consent of all of the other owners.

Unit titles

Unit titles were created (under the Unit Titles Act 1972) to allow people to own an apartment in a building and to allow for multiple ownership of the common spaces and facilities, such as driveways and lifts.

A unit title can be bought and sold, or leased or mortgaged. It is made up of three components:

Ownership in the particular units (which can be the apartment and the car park). An undivided share in the ownership of the common property. An undivided share in the ownership of the units if the unit plan is cancelled. The unit owners own the common property as tenants in common so that when the unit owner dies, their share does not revert to the other owners but passes on to someone else, according to the terms of that person’s will. Each owner’s share in the common property is proportional to their ‘unit entitlement’.

A body corporate arranges the upkeep and insurance for the building, paid for out of money levied on the owners.