Understanding Certificates of Title

Understanding Certificates of Title20 Apr 2020

What are certificates of title?
Certificates of title, also referred to as computer registers, prove the ownership of land and can also detail some of the rights and restrictions that apply to a particular piece of land. Certificates of title have been recorded electronically since 2002. All earlier paper-based certificates of title were converted into ‘computer registers’ between 1999 and 2002.

A certificate of title sets out:
• the owners (registered proprietors) of the land;
• a description of the piece of land being the area, lot number and plan number;
• any interests, rights and restrictions registered on the title, for example, a mortgage, easement or covenant;
• the type of interest in respect of which the certificate of title proves ownership e.g. fee simple, leasehold.
Fee simple title (also referred to as “freehold”)

A fee simple (freehold) title gives the greatest benefit to an owner in respect of the enjoyment and use of the land. The advantages of fee simple are that:
• you own the land in perpetuity. There is no time limit on ownership (as in the case of a leasehold title);
• you can do what you like with the land subject to any interests registered on the title e.g. land covenants, and the general law e.g. district and regional plans, the Building Act 2004 and the Resource Management Act 1991, without having to obtain the consent of other land owners (unlike a cross lease title or a unit title).

Cross lease title
A cross lease title is where there is more than one building on one freehold title. All owners jointly own the freehold title in specified shares, and each of the owners grant a lease of a specified area to each individual owner so that each owner has the exclusive right to occupy their own building. The lease will also usually include a right for an owner to have the exclusive use of a specified area around a building.

Unit title (also referred to as “stratum”)
A unit title is generally used for apartments or groups of buildings on one piece of land where there are shared facilities (“common property”). The common property could be, for example, the driveway, gym facilities, lifts, and swimming pools. Each unit (being an apartment or a building in a group of buildings) is allocated a share of the underlying piece of land on which the complex is built. On purchasing a unit title property, the purchaser will automatically become a member of the body corporate. The body corporate owns the common property and governs and regulates the conduct of the unit owners in relation to the common property and certain aspects of their unit. An owner will have to pay levies for the annual costs of the complex, including insurance, repair and maintenance, management costs and all matters relating to the common property.

Leasehold title
A leasehold title is an interest in land for a specified period of time pursuant to a lease entered into between the owner of the land and the tenant. The lease will give the tenant exclusive possession of the property and specify the term of the lease and any other obligations of the tenant, for example, who is responsible for payment of rates, insurance, maintenance, if there is a right to renew the lease or a right to review the rent.

Crown’s rights
An important point to note is that all interests in land are subject to the Crown's right to compulsory acquire land (in return for payment of compensation) under certain pieces of legislation such as the Public Works Act.

It is important to obtain legal advice before purchasing a property to understand the type of land you are purchasing and what restrictions (if any) are registered on the certificate of title to the land which could affect your intended use of the land.

For further information please contact

Annette Edwards
Email: [email protected]
Direct Dial: +64 7 834 6683

For the full article: http://www.harknesshenry.co.nz/legal-articles/property/understanding-certificates-of-title/