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Title Defects Holding Your Property Back

24 July 2020

Title defects are like one of the many dormant volcanoes that pepper the Auckland region: they sit quietly in the background causing no issues, until one day…

Property owners will often not realise their title contains a ”defect” until they want to do something with the property; such as, re-mortgaging, selling, or starting building improvements. Fixing a title defect can be costly and time consuming, and if not resolved correctly, can scupper even the most carefully arranged plans. Luckily, Glaister Ennor can help.

Limited as to Parcels

”Limited as to Parcels” means that when the first title for your property was created, a guaranteed title could not be issued. Simply put, this means the boundaries of your land are not correctly defined. This defect generally occurs with properties that were first subdivided in the early 1900s. 

Why is Limited as to Parcels a problem? There are several: if there is already a structure built close to the boundary, it could encroach on your neighbour’s land. If you plan a new build where the structure will be close to the boundary, the Council may require you to provide a new survey of the land before receiving building consent. Finally, if you are planning to subdivide to create unit titles or cross lease titles, the removal of the previous limitation is required.

Paper Roads

”Paper Roads” can often be found embedded in land that was formerly owned by the Crown. A paper road is an unformed legal road that the local authority set aside to ensure public access would be available once the land was developed. Roads are shown on survey plans but haven’t been built or used; hence the term Paper Road.

Why is a Paper Road a problem? If you have a large tract of land that you plan to develop, you won’t be able to build on any part of the paper road; even if, your title completely surrounds it. This is because the local authority retains ownership of the land the paper road sits on and treats it as an asset; even if, they have no intention of building a road. Instead, you will need to apply to the local authority to have the status of the road changed, through a process creatively named ”road stopping”. Most local authorities require a valuation for the land the paper road sits on, for which you will need to pay, before having the land transferred to you.

Deeds Land

”Deeds Land” is land that was never transferred onto the Torrens system; so, there is no guaranteed title available on the Land Registry.

Why is Deeds Land a problem? Mortgage lenders will not provide finance to acquire a property that is Deeds Land because the lender can’t register their interest on the title, and, therefore, the lender will have no protection. Instead, the land registry will require you to apply to bring the Deeds Land onto the Land Registry. This application needs to be accompanied by a land survey that clearly defines the boundaries of the land.

Should you wish to discuss anything relating to this article, please do not hesitate to contact David Creswell and Stephanie Harris.