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Land Development - Removal of Redundant Interests

5 October 2017

A hot topic, at the moment, in land development is the creation of affordable housing. Affordable housing is a goal that many seek to achieve through cheaper construction methods, cheaper sales methods, and increasing the speed and efficiency of the build itself. But at the outset of a development even as early as the master planning phase, the removal of redundant easements and land covenants on the title can have a significant downstream effect in terms of lessening costs and time. If you have a land covenant registered on your title, the surveyor has to read it, the developer needs to be told about it, the lawyer has to read it, the sales agent needs to know about it, potentially mortgagees may need to be informed, and the end purchasers need to be advised of it by their conveyancing practitioners. Taking redundant land covenants off the title at the outset creates significant time and cost efficiencies.

There are two ways that this may be done. The first is pursuant to section 70 of the Land Transfer Act 1952, which sets out the circumstances where the Registrar-General of Land may remove a redundant or expired easement from the Land Register. The basis for removals that the Registrar-General of Land can consider include an effluxion of time, an extinguishment upon the happening of a specified event, an application based on a merger (where the same person owns the titles that have the benefit and burden of the easement), or a redundancy where the dominant land or part of it becomes separated from the servient land usually due to subdivisions. The process to gain a removal often takes about two months, and it involves notice to all affected parties. It is important to be careful with timing, because when you process an application, the edealing will put a pause on all affected titles while it is being processed. You do not want to hold up other edealings, which may be of importance.

Land Information New Zealand do not have any significant discretion when using their powers under the Land Transfer Act; so, where you have an easement or land covenant that is not clearly and absolutely defunct, then we need to utilise the Property Law Act 2007. Section 317 of the Property Law Act allows the court to make orders to modify or extinguish wholly or in part easements or land covenants. They will make the orders if we can satisfy the court that it ought to be changed or removed because of circumstances; such as, changes in the nature or use of the land, changes to the zoning, changes to the character of the neighbourhood, or any other circumstance the courts consider relevant. There are other arguments to be made too; such as, where the easement or covenant would impede the use of the burdened land in a way not contemplated at the outset, where everyone affected consents, or where the change or removal requested would not substantially injure any of the persons it was supposed to benefit. Therefore, there are many factors that lend credence to the argument that an easement or land covenant should be removed.

The section 317 applications are comparatively simpler than most court applications. The best-case scenario is that they proceed on an undefended basis, they are determined on the papers and without a hearing, they proceed by way of originating application, and they may even, in some circumstances, be done on a without-notice basis. In such circumstances, this can be about an eight-week process, costing as little as $12,000 to $15,000 plus GST and disbursements. Of course, it depends on the nature of the easements, covenants, land, people, and circumstances. It will be more expensive and time consuming if you need to serve notice on the dominant tenements and if anyone takes issue and tries to object to your application. However, many of these old land covenant or redundant easements are ripe for removal applications.

In our view if you are in the master planning phase or are land banking, removal of redundant interests on your title is an excellent way to add value and reduce downstream costs.

Source: InBrief Spring 2017

InBrief Spring 2017

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