Buying property in New Zealand? Learn what a defective title is, how it can impact your purchase, and why getting legal advice before signing is essential. Trusted property lawyers in Masterton and Wellington.

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What Is a Defective Title and Why It Matters When Buying Property

Buying a property is one of the biggest investments most people make — but not all property titles are created equal. A defective title can cause significant financial and legal headaches, especially if you discover the issue after signing the Agreement for Sale and Purchase.

At Core Legal Masterton & Wellington, we regularly help clients identify and resolve title defects before they become costly problems.

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A Real Example: The Costly Consequences of a Defective Title

A purchaser recently bought a property at auction. The Auction Agreement stated that the buyer was deemed to have accepted the vendor’s title. Assuming everything was fine, the buyer didn’t seek legal advice beforehand.

After the auction, their lawyer discovered that the property was under a cross lease, and the building had been extended without updating the title plan. This meant the title was defective.

Because the purchaser had accepted the title under the auction terms, they couldn’t request the vendor to fix the issue (known as requisitioning the title). As a result, the buyer had to pay to correct the title themselves — an expensive and stressful process that could have been avoided with early legal advice.

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Common Types of Defective Titles in New Zealand

1. Easement Errors
   Easements (such as rights of way) often specify which titles they apply to. If they’re incorrectly recorded or attached to the wrong title, the title becomes defective.

2. Boundary Encroachments
   Decks, garages, or buildings that extend beyond the legal boundary cause encroachment issues. Remedies may include boundary adjustments, registering easements, or applying to the Court.

3. Instruments Registered Against the Wrong Title
   Mortgages or easements occasionally get registered on the wrong property title — a rare but serious issue.

4. Defective Cross Leases
   Cross leases are one of the most common causes of title defects, especially when alterations are made to the property without updating the flat plan.

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The Importance of the Title Requisition Clause

The title requisition clause in a Sale and Purchase Agreement allows a purchaser to raise objections or even cancel the deal if the title is defective or materially different from what was represented. However, at auctions, these rights are often waived — meaning buyers must accept the title as-is.

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Why You Should Get Legal Advice Before Buying

Before signing any property agreement, have your lawyer review the Record of Title and related documents. Banks may refuse to lend against a defective title, and fixing one can be complex and costly.

At Core Legal Masterton & Wellington, we offer practical, fixed-fee consultations to help buyers and sellers understand risks and protect their investment before purchase.

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Frequently Asked Questions (FAQs)

1. What is a defective title?
A defective title is a property title that has legal or technical issues — such as encroachments, missing easements, or unregistered alterations — that affect ownership or use of the property.

2. Can I cancel a property purchase if the title is defective?
Sometimes. If the Agreement includes a title requisition clause and you discover the defect before settlement, you may be able to cancel or require the vendor to fix it.

3. Are cross leases risky?
Yes. Cross leases often cause title problems if the property has been altered without updating the title plan.

4. Should I get legal advice before bidding at auction?
Absolutely. Once you win the auction, you’re bound by the terms — even if the title is defective.

5. How can Core Legal help?
Our property lawyers in Masterton and Wellington provide clear, affordable advice on title checks, conveyancing, and sale and purchase agreements.