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Understand the title deed when buying a property in New Zealand

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Investing in property in New Zealand is an attractive prospect. Options include scenic waterfront properties, city apartments, and rural estates, making it an appealing market.

However, international buyers may find it challenging to navigate the New Zealand real estate market, particularly when verifying the authenticity and legality of the "Certificate of Title," which serves as the official title deed in New Zealand.

We have actually covered this specific document (among others, like the sales contract) in our property pack for New Zealand.

In this article, we will give some insight to ensure a smooth and legally compliant property transaction in New Zealand.

However, please do not forget that this blog post is for informational purposes only and that we are not legal experts. It's always advisable to consult with one. They can indeed thoroughly examine your specific situation and provide you with the most appropriate and tailored advice.

What is the Certificate of Title in New Zealand?

The Certificate of Title, often referred to simply as the 'Title' in New Zealand, is a crucial document in real estate transactions.

It's a legal document, effectively serving as the official record of who owns a specific piece of land or property. Think of it as a comprehensive identity card for a property.

The Title includes essential information like the property's legal description, its dimensions, and the names of the property's owners. It's a bit like a car's registration document, but for land and buildings.

This Title is distinct from other property documents because it's the definitive proof of ownership. While you might come across other documents like a Sale and Purchase Agreement or a LIM report, these serve different purposes.

A Sale and Purchase Agreement is a contract for the sale of the property, and a LIM report provides information about the property from the local council. But the Title is what confirms you legally own the property.

Owning a Title confers several legal rights. Primarily, it gives you the right to use the property, sell it, lease it, or mortgage it. It's a powerful document because it establishes your legal claim. However, it doesn't grant unlimited rights.

For instance, you still need to comply with local council regulations and zoning laws. You can't just build anything anywhere. Moreover, if there are any easements, covenants, or other restrictions listed on the Title, you must adhere to those as well.

Regarding reliability, the Title is highly reliable. In New Zealand, property titles are maintained in a centralized system managed by the government, ensuring their accuracy and integrity. This system, known as the Land Information New Zealand (LINZ), keeps an up-to-date record of all land ownership and transactions in the country.

Now, about resale and inheritance, the Title plays a pivotal role. When you sell the property, the Title is transferred to the new owner, which is essential for the legal completion of the sale.

For foreign investors, this process is the same; owning a Title in New Zealand gives them the same rights as local property owners.

In terms of inheritance, the property and its Title can be passed on to heirs as per your will or, in the absence of a will, according to New Zealand's inheritance laws.

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How to verify a title deed in New Zealand?

The process

Verifying the authenticity of a Certificate of Title in New Zealand is a crucial step in any real estate transaction.

It ensures that the property you are interested in is legally owned by the seller and free of undisclosed encumbrances. The good news is that this process is quite straightforward, thanks to New Zealand's robust land registration system.

The primary government body responsible for land titles in New Zealand is Land Information New Zealand (LINZ). LINZ maintains an electronic register, known as the Land Transfer Register, which is part of the New Zealand Land Information System (Landonline).

To verify a Title, you or a professional on your behalf, such as a lawyer, can access this register. This system provides the most reliable and up-to-date information about land ownership and interests in land.

Lawyers play a crucial role in this process. In New Zealand, property transactions are typically handled by legal professionals. They have direct access to Landonline and can swiftly check the authenticity of a Title.

They will ensure that the Title reflects the current legal owner and check for any interests registered against the property, such as mortgages, easements, or covenants.

Notaries are less involved in the process. In New Zealand, notaries primarily deal with international documents, so their role in domestic property transactions is limited.

Real estate agents can also assist but in a different capacity. While they don't have direct access to the Land Transfer Register, they can provide guidance and refer you to the appropriate legal professionals. They play more of an advisory and facilitative role in the transaction.

When verifying a Title, watch out for red flags. These include discrepancies in ownership details, unexplained encumbrances, or signs of tampering with the document if you're presented with a physical copy. Always cross-reference the details on the Title with the information in Landonline.

To avoid common scams, never rely solely on a paper copy of the Title. Scammers might present forged documents.

Always have a lawyer verify the Title through Landonline. Be wary of high-pressure sales tactics or deals that seem too good to be true. Such situations warrant extra caution and thorough verification.

What to check

Understanding the property's history, debts, liens, and other critical information in New Zealand is a vital part of any real estate transaction.

This knowledge helps you make an informed decision and avoid potential legal or financial issues down the line.

To access and trace the property's history, you'll primarily use the Land Information New Zealand (LINZ) system. This is where all property records, including past ownerships and transactions, are stored. It's a centralized, electronic register that provides detailed information about any property registered in New Zealand.

Lawyers and conveyancers typically have access to this system and can retrieve the history for you. This history is important as it reveals patterns of ownership, any recurring issues, and can sometimes indicate the property's market value trends.

Checking for outstanding debts or liens is also done through the LINZ system. When you look at the Title, it will list any encumbrances, such as mortgages, easements, or covenants. These are crucial to know because they can affect your rights as a new owner.

For instance, if there's an outstanding mortgage, it usually needs to be cleared before you can take ownership. Easements might restrict how you can use certain parts of the property, and covenants can impose conditions on how you maintain or modify the property.

Verifying the property's measurements and boundaries is another critical step. The Title includes a legal description of the property, which outlines its boundaries and dimensions.

However, for a more detailed understanding, you should refer to a cadastral survey map, available through LINZ or a licensed surveyor. If there are discrepancies between what's on the Title and the physical boundaries, it's usually resolved through a boundary adjustment process, which may involve legal and surveying work.

Understanding zoning laws and land use restrictions is vital too. These are not listed on the Title but are controlled by the local council. Each council has a District Plan, which you can access online or at the council offices.

These plans outline what you can and can't do on a property, based on its zoning. For example, certain areas are designated for residential, commercial, or agricultural use, and each has its own set of rules and restrictions.

After our research and the feedback collected from our local real estate partners, we have written an article about the risks and pitfalls when buying a property in New Zealand, you might want to check it out.

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How to update the title deed after the property transaction in New Zealand?

Once you've purchased a property in New Zealand, updating the Certificate of Title (Title Deed) is an essential step.

This process is known as registering a change of ownership and is typically handled by your lawyer or conveyancer. Here's how it works:

After the property transaction is complete, your lawyer will prepare a transfer document, which both you (the buyer) and the seller sign.

This document is then submitted to Land Information New Zealand (LINZ), the government department responsible for land titles. LINZ updates the official Land Transfer Register to reflect the change in ownership.

Your lawyer will also ensure that any existing interests, like the seller’s mortgage, are removed from the Title, unless they're continuing (like in the case of an easement).

For foreign owners, understanding New Zealand's inheritance laws is important, especially regarding property. If you own property in New Zealand, it can be included in your will and passed on to your heirs.

If you don't have a will, the property will be distributed according to New Zealand's intestacy laws. As a foreign owner, you should also consider how inheritance laws in your home country might interact with those in New Zealand.

It's a good idea to consult with legal professionals who understand both jurisdictions.

Lastly, it’s important to regularly review and update your will, especially after acquiring significant assets like property. This ensures that your property is inherited according to your wishes.

As a property owner in New Zealand, your Title Deed is a crucial document, and keeping it updated, along with having the right insurance and legal arrangements, provides peace of mind and security for your investment.

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This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.