Understanding a property’s title is crucial when engaging in any land transaction, whether it involves purchasing, selling, mortgaging, or refinancing. A property title provides essential information about the property, including its type (freehold, leasehold, etc.), size, boundaries, and any registered rights or restrictions affecting it.

For buyers, conducting a thorough title search is essential to fully grasp what they are acquiring and to identify any potential issues. Here are some common rights and restrictions found on New Zealand property titles:

1. Mortgages: These secure borrowing against the property and must be discharged upon sale.
2. Consent Notices: Issued under the Resource Management Act, these notify property owners of specific council requirements, often impacting building plans or land use.
3. Easements: Rights to use another’s land, such as for driveways or utilities, come with terms and conditions that should be carefully reviewed.
4. Land Covenants: Obligations regarding property use, often imposed by developers to maintain subdivision aesthetics or regulate building materials.
5. Fencing Covenants: These prevent owners from demanding contributions to shared fencing costs under the Fencing Act.

Discovering any unfavorable rights or restrictions on a property title before purchase is crucial. While standard contracts like the Auckland District Law Society Agreement for Sale and Purchase of Real Estate don’t include a title approval condition, buyers can object to title defects under the requisitions clause. However, this clause only allows objections to defective titles, not unfair or adverse registrations, and is limited to undisclosed matters.

Therefore, it’s advisable for buyers to either check the title before signing a contract or include a special condition making the contract conditional upon title approval. In auction scenarios, where there’s no requisitions clause, buyers must thoroughly check the title beforehand, as they accept the property’s title as-is upon purchase.

In summary, conducting a property title check is a crucial step in any real estate transaction to avoid potential issues and ensure a smooth process for all parties involved.