Property Title Interests: A Quick Guide

When you’re looking to buy (or sell) a property, you should understand the title and the ‘interests’ listed on it. Many of these interests contain a lot of legal jargon, so this article is a brief, plain English guide to what they mean.

An interest can be described as anything that creates rules about the property owner’s use of the land, or gives rights to the property owner to use an (adjoining) piece of land. With the exception of mortgages, most interests ‘run with the land’, meaning that they bind whoever is the current property owner.

It pays to understand what is on the title, as this will become your responsibility upon becoming the owner! Here are some commonly seen interests.

Mortgage- most buyers will need a mortgage which then gets registered on the title as an instrument. If you are buying, the vendor’s mortgage will be removed from the title at settlement.

Caveat

You may see a caveat on the title of a house you are looking at. ‘Caveat’ is Latin for ‘let him beware’ and means that someone has a claim on the land. It acts as a public notice to others that the property cannot be dealt with (sold, refinanced etc.) unless the caveat is removed or lapses. Commonly they are placed on the title by creditors with a legal interest in the land, ex-partners, or buyers who are awaiting settlement. 

When you enter a sale and purchase agreement, the contract typically says that on settlement day, the vendor’s lawyer will do what is needed to give you the title. This means that they should have the caveat removed on or before settlement. If you are concerned about a caveat on a property, you can speak to your lawyer.

Easement

Easement translates to ‘convenience’ or ‘ease’. It either gives you the right to use an adjoining piece of land (such as an access way) or requires you to allow someone else to use your land (for example, allowing Chorus to lay and maintain fibre cables).

When you are purchasing with easements, you will want to be sure that you have the necessary right of way if it is needed to access the property. In new developments you will also want to look out for bin and bike storage easements allowing you to use common areas for these purposes.

There is some old-fashioned language used in easements, so it helps to speak to your lawyer to interpret them!

Covenant

‘Covenant’ comes from the Old French for ‘promise’. It is different from an easement which is about the giving and taking of usage rights over pieces of land. Instead, it is an agreement between various landowners, often neighbours, to follow rules. The most common examples would be:

• A developer has placed a covenant on the title which says you cannot object to the construction of additional units, or which holds owners to certain maintenance standards to preserve the quality of the development

• The Residents’ Association has a covenant which requires all landowners to be members, observe the rules and pay levies. 

• There is a fencing covenant. It is typically used where someone sells a piece of their land to another person who then becomes your neighbour, and means they don’t have to contribute to building a fence. It lasts for 12 years.

Leases

You may notice a lease on the title. This could mean that the property is a ‘cross-lease’.

There are other types of leases as well, your lawyer can advise you on these.

Consent notices

You will see these with subdivisions. They are placed on the title by the Council as a condition of Council consenting to the subdivision. They may cover things to be done by a person building on the land (such as requirements around engineering works, density, site coverage, and retaining walls). Or, they may cover ongoing requirements for future owners (such as maintenance of private drains and pumps, planting, and fencing).

Some of the other interests seen include:

An encumbrance- this can be a wide range of things as it just means anything that places a restriction on the owner. 

Statutory restrictions- the doctrine of tenure means that the Crown (i.e. the Government) is legally the ultimate owner of all land. The Crown may have some extra rights over the land which are noted on the title. Common examples are the Crown Minerals Act, the Public Works Act, and the Conservation Act. 

If you have questions about a property title, please contact our team on 04 4953747, or by emailing admin@devinelaw.co.nz.

NB: This article is a general overview only and not a substitute for legal advice specific to your circumstances.