What’s in a title?
14 Nov 2018
By Janice Hughes, Director, Aspiring Law
We Kiwis love our real estate – in my experience, though, there are some who aren’t quite so enamoured with the checks and balances needed when buying a property.
We’ve previously highlighted the importance of studying a property’s LIM (Land Information Memorandum) and building reports before going anywhere near the dotted line. Now, it’s time to talk titles.
Some people don’t even study this crucial document before buying – a potentially painful oversight, considering the title is, effectively, what’s being bought and can reveal some nasty fishhooks.
Even if the LIM report looks great, the builder’s assessment comes up trumps and everything else checks out, never, ever go unconditional until you’ve had a lawyer do the fine-tooth-comb check of the title.
A title is, essentially, a description of a piece of land. Modern titles include a detailed surveyor’s plan, plotting the lot down to the last centimetre. But the title doesn’t stop at the land’s dimensions. It encompasses a range of information – and I’m not just talking “handy-to-know” type details, I’m talking vital, legally-binding information that might change the property from a “must have” to a “don’t want a bar of it”.
Who’s got a stake in your land?
The restrictions and conditions on the title are contained in the “interests”, which, as the name suggests, outlines what interests others have in your property.
Be warned: these interests can be extensive – everything from any mortgage on the property to neighbours’ rights.
Interests can include easements on your property – rights of way, rights for the likes of telephone and power lines and sewerage pipes to cross your land to ensure neighbours’ access to key services.
I’ve seen cases where people have failed to get proper advice early enough, “go unconditional”, only to find an easement so unpalatable, they wished they’d never laid eyes on the place.
Easements aren’t all one-way traffic, though. Also included in the title will be the easements your property enjoys from neighbours.
Land covenants are also covered under “interests”. These restrictions and conditions are becoming more plentiful and detailed with the proliferation of subdivisions and developers’ determination to maintain their reputation for high-quality developments.
Some covenants are set down through resource consents, but more often than not are private, completely separate from council and can only be found on the title.
Particularly with new subdivisions, covenants can be so specific they render your “dream home” impossible. They can prevent the use of certain colours, materials and even the way the section is landscaped.
Significantly, too, for planning the construction and financing of your home, developers are also imposing covenants that require homes and landscaping to be completed within a certain timeframe. Usually within 18 months, you need to have everything finished, lest the subdivision be left with streets lined with skeletons of houses and unsightly mounds of earth.
You need to be familiar with what’s included in the title not just when you first consider buying a property, but if you want to change anything in the future. A common problem is with trees.
Property owners can assume it’s their right to crank up the old chainsaw to improve the view. Slice with care. It’s not unusual for covenants to insist that certain trees remain, particularly where their removal would disadvantage neighbours through, for example, loss of privacy.
It is very important to obtain legal advice around any type of property purchase early, to ensure you’re informed on all of the realities. Beyond face value, there can be a plethora of pitfalls that can only be unearthed through, firstly, knowing where to go to find key information and, secondly, what to look for.
It is an often complex fishing mission. Whatever the restrictions and conditions on your property, and wherever they are documented, when you buy a property, the onus is on you as the owner to be familiar with them. Ignorance is no defence. Even if you flout them unintentionally, the buck stops with you … and the bucks you have to part with to rectify your mistake can be significant.