The four most common types of registered land holding are:
Other types of arrangements for use of land for a limited period include:
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Yes, the main restriction is on foreign investors acquiring "sensitive land." Under the Overseas Investment Act 2005, if the purchaser is an "overseas person" acquiring an interest in "sensitive land" (which includes residential or lifestyle land) then they need consent from the Overseas Investment Office.
"Overseas person" means all individuals who are not New Zealand citizens nor ordinarily residents of New Zealand. This can also cover companies, trusts, partnerships, and other corporate entities. There are some exceptions for Australians and Singaporeans.
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There are properties held by Crown agencies that are subject to a Right of First Refusal (RFR) in favour of certain iwi groups under Treaty of Waitangi settlements made with the Crown. For these, if the Crown wishes to sell or enter a long-term lease (typically longer than 50 years) then it may need to first make offer to sell or lease the land to the
See also under Public Works Act.
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The key legislation governing property transactions are:
As part of the wider transaction process, there are also various Acts that may apply and can affect the title to land. These include:
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Generally no, with the main exception being the Overseas Investment Act 2005 applying to overseas persons acquiring "sensitive land" in New Zealand (see section on Overseas Restrictions).
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Transfers of title are done electronically on the Land Information New Zealand (LINZ) platform.
When land is sold, the lawyers for each party prepare transfer instruments and create an e-dealing in LINZ. On completion of settlement, the instruments are lodged and released by the lawyers, and the transfer is usually completed instantly.
Undertakings relating to the payment of settlement funds and the lodging and releasing the instruments are exchanged between the parties’ lawyers. There are strict rules about giving these undertakings, and the New Zealand Law Society has issued guidelines for lawyers for land transactions.
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Yes, the New Zealand operates on a "Torrens System" under which all legal ownership and many interests in land are recorded in the "register" administered by LINZ. There is a single register for each land holding (title), and a historical record of past transfers and interests can be obtained from the website by the public for a relatively small fee.
Transfers of titles are recorded electronically. The records of title issued by LINZ are guaranteed by the government and a registered owner has "indefeasibility of title." Therefore, title insurances are rarely required.
In some merger and acquisition deals, which may include the transfer of property, a purchaser might chose to get warranty and indemnity insurance (W&I insurance). While not specifically title insurance, W&I insurance can cover losses for breaches of vendor warranties including those relating to the quality of the vendor's title, or the vendor's ability to give good title for the property.
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A seller can look for a buyer privately, or more commonly will put their land on the market through a real estate agent.
Once a buyer is found, the seller and buyer negotiate an agreement which is recorded (in most cases) using the ADLS/REINZ Agreement for Sale and Purchase of Real Estate form.
A purchaser will often require that the agreement is subject to conditions, including checking the title, getting satisfactory finance, or due diligence. There are also strict time limits within which purchasers must raise any requisitions about the title. Once all conditions are satisfied, the contract becomes unconditional, and completion of settlement will follow. On the settlement date, the relevant transfer instruments are lodged on the e-dealing platform managed by LINZ and the effective transfer is complete. The parties then organise the handover of keys and access to the land if not granted earlier.
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Yes, it is always advised that buyers undertake their own due diligence. This commonly includes reviewing the:
This is usually carried out by the buyer’s lawyer. The buyer can also request on-site inspections and tests including building and geotechnical reports, seismic assessments, asbestos assessments, methamphetamine drug contamination/toxicology reports, and valuations. The extent of investigation will depend on the nature and intended use of the real estate and/or the complexity of the target property.
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Most common consent requirements include:
Consent by a spouse is not necessary in New Zealand if the seller owns the land in their sole name. However it would be prudent to consult their lawyer about any relationship property issues that could arise. Other consents are needed in certain cases, but are less common:
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The Property Law Act 2007 states that the agreement must be written and signed by both parties. However, there are instances where other forms of agreement may be enforced if there is a lack of written agreement but there have been clear actions in reliance (called part performance).
In most cases, the ADLS/REINZ standard form Agreement for Sale and Purchase of Real Estate is used. This agreement sets out the terms of the sale and includes: a description of the property, the price, deposit, significant dates, access rights, any chattels to be included, representations and warranties, conditions and any other matters needed for the effective transfer of the property.
Agreements for commercial properties or other more complex transactions may include more bespoke and negotiated terms to fit the requirements of the transaction.
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Generally, there are no warranties required by legislation. Standard warranties and representations are set out in the ADLS/REINZ Agreement for Sale and Purchase of Real Estate, and these can be amended to fit the requirements of each transaction.
There are statutory obligations that the vendor cannot contract out of such as the requirement to provide a pre-contract and pre-settlement disclosure statement when selling a property subject to the Unit Titles Act 2010.
Standard contractual warranties and representations under ADLS/REINZ Agreement for Sale and Purchase of Real Estate include:
The seller undertakes that on both execution and settlement date:
Last modified 22 Mar 2024
It depends on the nature of the misrepresentation, and the terms of the agreement between the parties. Most breaches of a warranty or undertakings will enable the purchaser to claim compensation and equitable set-off resulting in a reduction in the purchase price. The seller must comply with warranties and disclosure requirements but otherwise the general principal of "caveat emptor" applies.
A buyer may be able to cancel the agreement and potentially claim damages if the misrepresentation concerns an essential term of the agreement and substantially impacts the benefit or burden of the agreement.
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The key areas of public law are property law, building code/standards, resource management law, overseas investment law and tax law. These are mostly contained in the following acts:
A brief description of these acts is contained in the Legislation Affecting Real Estate Sales tab and an explanation of the relevant tax law can be found in the Taxation of Real Estate Sales and Purchase tab.
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Yes, buyers can be responsible for the management and/or clean-up of pre-existing soil pollution or environmental contamination on the land they purchased. Depending on the nature of the property being purchased and/or the previous use made of the property, the buyer might seek seller warranties regarding the contamination status of the property.
The Land Information Memorandum records any soil contamination issues known to the relevant council. Existing known contamination can be subject to ongoing monitoring requirements, and resource consents may be needed if the owner wishes to disturb the soil for development or other purposes.
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Each council website will have information on the planning and zoning rules for each area within its district. The Land Information Memorandum will also include maps and information on the applicable zones and planning laws for each property.
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Yes, development agreements can be made with public authorities in relation to specific developments.
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Yes. Under the Public Works Act 1981, the government (central and local authorities) has a statutory authority to acquire land it needs for public works such as schools or roads.
The compulsory acquisition will always start with negotiations between the owner and the acquiring authority to purchase the land from the owner. If the acquisition cannot be agreed, then the acquiring authority must follow the process set out under the Act for compulsory acquisition.
Compensation should cover the market value of the land, as well as additional factors like disturbance, loss of business, legal costs, etc. Where parties don’t agree, the Land Valuation Tribunal can determine the compensation to be paid.
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Common taxes and transaction costs:
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Shares can be held on revenue account (ie taxable) or on capital account (ie non-taxable). Broadly, shares are held on revenue account where they are acquired with a purpose of disposal, the person is in the business of dealing in shares or acquires and disposes of the shares in the course of carrying on or carrying out a profit-making undertaking or scheme. If shares are held on revenue account, then an amount a person derives from any future sale would be subject to New Zealand income tax. Alternatively, any amount derived from the sale of shares held on capital account should not be subject to New Zealand income tax.
New Zealand also has specific tax anti-avoidance rules that would allow New Zealand's Inland Revenue to challenge transactions that have been structured as a share sale, rather than an asset sale, to defeat the intent and application of New Zealand's land-taxing provisions.
Transaction costs incurred (eg advisor costs) in acquiring shares held on revenue account should be income tax deductible but would not be income tax deductible if the shares acquired are held on capital account. Ordinarily, buyers and sellers will cover their own transaction costs, unless the parties agree otherwise. This will be a commercial decision.
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What are the buyer's remedies against misrepresentation by the seller of real estate?
It depends on the nature of the misrepresentation, and the terms of the agreement between the parties. Most breaches of a warranty or undertakings will enable the purchaser to claim compensation and equitable set-off resulting in a reduction in the purchase price. The seller must comply with warranties and disclosure requirements but otherwise the general principal of "caveat emptor" applies.
A buyer may be able to cancel the agreement and potentially claim damages if the misrepresentation concerns an essential term of the agreement and substantially impacts the benefit or burden of the agreement.
Last modified 22 Mar 2024