+64 7 872 0236 [email protected]

Property

Freshwater farm plans

Property, Rural
0

Roll out by regions starting 1 August

Freshwater farm plans are part of the Essential Freshwater package introduced in 2020. Its purpose is to:

  • Stop further degradation of New Zealand’s freshwater resources and improve water quality
  • Reverse past damage, and
  • Bring New Zealand’s freshwater resources, waterways and ecosystems to a healthy state within a generation.

To that end[1], freshwater farm plans are now beginning to be required by all farms that have:

  • 20 hectares or more in arable or pastoral use
  • Five hectares or more in horticultural use, or
  • 20 hectares or more in combined use.

Southland and Waikato roll out first

The order sets out[2] which of New Zealand’s regions must have their plans underway.

The first regions to prepare their plans from 1 August 2023 are Southland and Waikato. The remaining regions must start the process at various times up to 1 July 2025. Due to the effects of Cyclones Hale and Gabrielle earlier this year, the timing of the implementation of these plans in Hawke’s Bay and Tairawhiti is yet to be decided.

Within 18 months of the order coming into effect for a particular region, plans must be ‘certified’ by a certifier who will be appointed by the local regional council. Plans must be audited within 12 months of the date of certification, with the timing of further audits dependent on the results of the initial audit.  Auditors will be appointed by the local regional council. Plans must be recertified every five years.

The process

The freshwater farm process requires farm operators to identify on-farm risks to freshwater and to determine actions to manage those risks based on the:

  • Farm’s landscape features and natural environment
  • Farming activities, and
  • Environmental health, and cultural and community values of the local catchment.

The intent of the legislation is to ensure that the on-farm actions are practical and effective in relation to a specific farm, rather than having a one-size-fits-all approach to the issue.

It is the responsibility of the ‘farm operator’ who is the person with ‘ultimate responsibility for the operation of the farm’ to prepare the freshwater plan.

Under Section 217E of the Act, the main duties of the farm operator are to:

  • Prepare a freshwater farm plan in accordance with Part 9A of the Resource Management Act 1991 (RMA) and Regulations
  • Submit the plan to a certifier for certification
  • Ensure that the farm operates in compliance with the certified freshwater farm plan, and
  • Arrange for the farm to be audited in accordance with Part 9A of the RMA and any regulations for compliance with the certified freshwater farm plan.

Keep the plan current

The farm operator must also keep the certified freshwater farm plan fit for purpose by amending  the plan as necessary to reflect the Act and Regulations.

Section 217F sets out what the freshwater farm plan must contain. Basically, it must:

  • Identify any adverse effects of activities carried out on the farm on freshwater and freshwater ecosystems
  • Specify requirements that are:
  • Appropriate for the purpose of avoiding, remedying, or mitigating the adverse effects of those activities on freshwater and freshwater ecosystems, and
  • Be clear and measurable
  • Demonstrate how any outcomes prescribed in any Regulations are to be achieved
  • Comply with any other requirements in the Regulations, and
  • Comply with section 217L.[3]

There are a variety of templates and guidance tools made available by MPI here and other resources are available to farmers to help them complete their freshwater farm plans.

If you need some help in navigating the freshwater farm plan regime, please don’t hesitate to be in touch. We are here to help.

[1] Under part 9A of the Resource Management Act 1991 and the Resource Management (Application of Part 9A –Freshwater Farm Plans) Registrations 2023.

[2] Resource Management (Application of Part 9A – Freshwater Farm Plans) Order 2023.

[3] Section 217L states that a freshwater farm plan may contain a requirement that relates to an activity on the farm that is subject to a ‘specified instrument’ (a resource consent, conservation order or similar requirement). This section is intended to ensure that compliance with the freshwater plan does not supersede any obligation to comply with any such specified instruments.

 

 

DISCLAIMER: All the information published in Rural eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Rural eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Property briefs

Commercial, House, Property
0

Unit titles legislative updates

Unit titles are most commonly used for apartments or townhouses that share amenities such as lobbies, lifts or driveways with other owners in the same building or on the same property.

The latest amendments to the Unit Titles Act 2010 came into force on 9 May 2023. These include broadening the scope of information that sellers must provide to prospective buyers, and bolstering the governance structures for body corporates that manage unit title buildings or developments.

These changes have prompted amendments in the unit title provisions in the standard ADLS Sale and Purchase Agreement. The amendments reflect the increased disclosure obligations: the wording in respect of the warranties has been updated to expressly refer to any pre-contract disclosures made by the seller.

The ADLS form has also been updated in respect of courses of action available to buyers where they don’t receive a pre-settlement disclosure statement at least five working days prior to settlement. The options available to buyers haven’t changed in themselves. Rather, the agreement clarifies where the buyer elects for settlement to take place without delay that this constitutes a waiver of any right for that buyer to delay or cancel the settlement.

The purchase process of unit title properties is different from buying other sorts of properties. If you are considering buying or selling a unit title property, these changes may impact on your rights or obligations.

 

First Home Grants thresholds increase

On 15 May 2023, the price cap thresholds across the country for Kāinga Ora’s First Home Grants (FHG) saw a number of increases. The rises were not limited to main centres; 37 areas had their price caps for new builds increased including Southland and Central Hawke’s Bay.

Similarly, the KiwiBuild caps were also raised. Notably Queenstown’s threshold increased to $845,000 and Hamilton’s rose to $860,000.

These increases reflect the rapid rise in house prices and land in the last few years which meant that in certain areas the caps were so low that they became almost inaccessible for prospective FHG applicants.

With interest rates still rising, the latest round of price threshold increases should help a wider group of first-home buyers into new or existing homes.

To find the price thresholds for existing homes or new builds in your region, click here. The Kāinga Ora website also has information on eligibility and where the territorial boundaries lie to determine which regions the thresholds apply to. We can help you in determining both your eligibility and how to access the FHG.

 

Loan to value restrictions eased

In November 2021, the Reserve Bank imposed more restrictions on banks in respect of their lending in order to help curb the rapid rise in house prices in the previous few years. This caused difficulty for potential borrowers (both owner occupiers and investors) to obtain finance.

Eighteen months on, the Reserve Bank has eased the previous restrictions on bank lending to lower equity borrowers and investors. The easing measures took effect from 1 June 2023.

Previously, banks could only allocate up to 10% of their total lending towards owner occupiers with a loan to value (LVR) ratio of less than 80%. The 1 June changes saw this increase from 10% to up to 15%. This means that banks now have more funds available for borrowers with smaller deposits.

With national house prices falling around 17% since the November 2021 LVR restrictions took effect, the Reserve Bank believes that the risks that prompted the tightening on bank lending to low equity buyers have reduced.

This is good news for first home buyers who may not be able to save a 20% deposit despite being in a position to service the loans required to enter the property market.

The increase in availability of loan funds for low equity borrowers, the increases to FHG price caps and a general easing of the property market could be signalling a turning of the tide for buyers.

To see how you may be able to take advantage of these market factors and get onto the property ladder, you could contact us or a lender to understand what assistance or options could work for you.

 

 

DISCLAIMER: All the information published in Property eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Property eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Owning a heritage building

Commercial, House, Property
0

A burden or a boon?

Owning a piece of New Zealand’s history may be a dream come true for some property owners, but it could be a nightmare for others. Whether ownership of a heritage building is a boon or a burden to you will depend on how your plans fit within the rules and whether you make the most of incentives available to heritage building owners.

In this article, we outline some things you need to think about when owning or buying a heritage building.

 

Defining a heritage building

The term ‘heritage building’ usually refers to a property on the New Zealand Heritage List/Rārangi Kōrero.  Anyone can apply to list a building, but Heritage New Zealand Pouhere Taonga makes the final decision on whether that building is significant enough to be included. All heritage buildings are categorised according to their heritage values. ‘Category 1 Historic Places’, for example, are places of special or outstanding historical or cultural significance, while places categorised as ‘Wāhi Tapu’ are places sacred to Māori. The full list of existing heritage buildings and places can be found here.

Listed buildings, however, are not the only ones that may be subject to special protections. Councils can recognise the heritage values of any building in their district plans. Property owners (or potential owners) should take care when checking whether a building is protected by a district plan as the rules may not necessarily use the words ‘heritage building.’ A building described as ‘a site of interest’, as being of ‘special character’ or in similar words may also be protected.

The status of a heritage building is not affected by its condition. Even buildings in need of serious repair could have heritage status. Also, there is no rule that a building must be of a certain age to be considered heritage; do not rely on age as the sole indicator of a building’s status. The best way is always to check the list and the district plan.

 

Effect of heritage status

If you own a heritage building, you must be cautious when dealing with your property. These buildings come with greater restrictions aimed at preserving their historic values. For example:

  • You must operate within district plan rules and seek council consent where necessary: Being on the New Zealand Heritage List/Rārangi Kōrero does not automatically protect a building. Instead, some relevant restrictions can be found in the local district plan. The scope of these restrictions could range from the removal of interior fixtures, to exterior design changes and/or to demolition.  Related bare land of potential archaeological interest or notable trees may also be protected in this way. Even where your proposed work is approved, the council may impose conditions requiring that the work be carried out in a manner in keeping with the building’s heritage or overseen by experts. Obtaining a consent and meeting such conditions can significantly increase your project’s cost and timeframe.
  • You must seek special authorisation from Heritage New Zealand Pouhere Taonga where work on or use of a heritage building may affect a pre-1900 archaeological site or land subject to a heritage order: Importantly, this authorisation is in addition to any council consents. While heritage orders can be found in the district plan, authorisation for disturbing pre-1900 archaeological sites is required regardless of whether that site is recorded. Again, the authorisation may come with conditions.
  • Overseas buyers may need Overseas Investment Office consent before buying a heritage property: Property with a listed heritage building or subject to a heritage order is likely to be ‘sensitive land’ under the Overseas Investment Act 2005.

On the bright side, owning a listed heritage building also comes with benefits designed to encourage history preservation and enhance the character of the area. For example, you may be entitled to:

  • Funding or other assistance: There are grants available to assist with the costs of preserving heritage buildings, such as the National Heritage Preservation Incentive Fund. Heritage New Zealand Pouhere Taonga also offers wider support services to heritage building owners, including advice on alterations and consent processes, and
  • Fee waivers: Some councils are willing to waive consent fees for work involving heritage buildings.

As changing the status of a heritage building can be difficult and failing to work within the rules can result in criminal prosecution, it is essential that you have all information upfront before buying or working on a heritage building.

Please contact us if you need help checking whether a property has heritage building status and/or navigating the relevant rules and consent processes.

 

 

DISCLAIMER: All the information published in Property eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Property eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Kāinga Ora First Home Partner scheme

House, Property
0

A co-ownership option

In the Winter 2022 edition of Property Speaking we discussed what to consider when co-owning a property with friends or family. Another co-ownership option to consider is the Kāinga Ora First Home Partner scheme (FHP).

The scheme supports first home buyers, who do not have a sufficient deposit, or who may struggle to service a low-equity mortgage, to buy a property partnering alongside the government. Kāinga Ora (KO) can contribute up to the lesser of $200,000 or 25% of the purchase price.

 

How does it work?

It’s easiest to explain by using an example. You want to buy a property costing $800,000. You have a 10% deposit ($80,000) but your lender will only offer a mortgage of $600,000. This leaves a 15% shortfall of $120,000. KO will help you buy the property by contributing the additional $120,000 in exchange for being the registered owner of that 15% share.

You must live in the property and will be responsible for meeting all the mortgage payments and outgoings. You must gain KO’s consent before making any improvements, alterations or renovations to the property. KO requires you to live in the property for a minimum of three years and you must gain KO’s consent before you sell the property.

You agree with KO to use your best endeavours to buy out their share within 15 years from settlement (it can be  extended up to 25 years). You will meet annually with KO to review your financial circumstances and make sure you will meet the goal. KO owns a share of the property and the price you need to pay for their share will change as the value of the property changes.

To secure both your and KO’s interests:

  • You both enter into a shared ownership agreement that incorporates the points in the paragraphs above. In addition, the agreement includes enforcement and dispute resolution procedures
  • A covenant is registered against the property title in favour of KO; a second covenant is registered against the property title in your favour, and
  • Under the covenants you each agree to comply with the terms of the shared ownership agreement. The covenant also serves as notice to the public. For example, a prospective buyer would look at the title to your property, note KO’s covenant, and would know that you need KO’s consent to the sale.

 

Eligibility criteria

KO has criteria you must meet to be eligible for the FHP scheme. These include:

  • Being over 18 and eligible to buy residential land in New Zealand
  • Having a total household income of $130,000 or less with a good credit rating
  • Being a first home buyer. If you have previously owned a property but no longer do so, you may still be eligible
  • Not having previously received shared ownership support from KO
  • Having a minimum deposit of 5% of the purchase price, and
  • The home you want to buy must be:

– A new build: a completed home with a code of compliance certificate issued within the previous 12 months that has not previously been lived in, or

– An off-the-plan purchase: a home still to be built, the sale and purchase agreement must cover both the land purchase and the build.

In each of the above cases, the home must be habitable from the settlement date/the date that title and code of compliance issue, and

  • You must also meet the lending criteria of a participating bank. At the time of writing the participating banks are Westpac, BNZ, Kiwibank and SBS.

 

Where to start

Check your eligibility and apply for the FHP here. Gather these documents before applying: photo ID, proof of income and evidence of your deposit.

Once confirmation of eligibility has been received, you need pre-approval from one of the participating banks. A mortgage broker can be an asset in navigating this.

It is important to note that you cannot enter into a sale and purchase agreement for a property under the FHP scheme until both requirements above have been satisfied.

The FHP scheme can be a great way for first home buyers to get on the property ladder. It is essential, however, that you understand how this ownership structure will affect you, and you are aware of your rights and obligations.

If you are considering applying for the FHP scheme, we can guide you through the process.

 

DISCLAIMER: All the information published in Property eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Property eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Business briefs

Commercial, Property, Your Own Business
0

Update on construction contracts retention regime

In our Spring 2021 edition, we discussed the proposed changes to the retention money regime for construction contracts in light of the introduction of the Construction Contracts (Retention Money) Amendment Bill.  The legislation was passed on 5 April 2023 and it comes into force on 5 October 2023. In brief, the Act will require contractors to place retentions in a trust account with a registered bank in New Zealand (or other accepted form) and keep it separate from other money or assets.

All construction contracts entered into or renewed from that date onwards will be subject to the new requirements.

For more information about how the new legislation will work, please be in touch.

 

New obligations for businesses offering Buy Now Pay Later

The government recently announced it will introduce new regulations to extend the consumer protections in the Credit Contracts and Consumer Finance Act 2003 (CCCFA) to apply to Buy Now Pay Later (BNPL) schemes.  BNPL provides consumers with interest-free credit to buy goods and services and pay for them later. Consumer advocates have raised concerns that BNPL is ‘easy money’, which leads to vulnerable consumers taking on more debt than they can afford to pay back.

The CCCFA imposes certain obligations on lenders to protect borrowers. It does not, however, currently apply to BNPL.  While the new regulations are not yet finalised, it is expected that obligations for businesses offering BNPL will include:

  • Only charging reasonable default fees
  • Varying repayments on request when a consumer suffers unforeseen hardship
  • Offering financial mentoring services to consumers who miss payments, and
  • Being a member of an external dispute resolution scheme.

The new regulations are expected to be introduced to Parliament later this year.

 

Large businesses may need to disclose payment practices

The Business Payment Practices Bill is currently being considered by Parliament and, if passed, will require large businesses to publicly report on their payment practices.  As currently drafted, the proposed legislation will require businesses with more than $33 million (including GST) in revenue for two or more consecutive accounting periods to report six-monthly on their payment practices on both a public register and on their own websites.  Information required to be disclosed will include time taken to pay invoices and the proportion of invoices paid in full. If businesses do not comply with the reporting requirements, they could face fines of up to $500,000.

The purpose of the Bill is to improve transparency for business-to-business payment practices and provide small businesses with information to help with making decisions when engaging with large businesses. The Bill also encourages large businesses to improve their payment practices given its transparent nature.

The Bill is currently awaiting its second reading so there may be some changes before being passed into law. We will keep you up to date with its progress.

 

Are your T&Cs unfair?

The Commerce Commission has filed proceedings in the High Court against holiday home company Bachcare Limited. It alleges that some of Bachcare’s contract terms with consumers are unfair under the Fair Trading Act 1986 (FTA).

The Bachcare contract terms in question are:

  • Regardless of how far in advance a guest cancels their booking the guest may lose up to 100% of the amount paid
  • Service fees are deducted regardless of whether the booking is cancelled by Bachcare or the guest, and
  • Where a booking is cancelled due to an uncontrollable event, such as an extreme weather event, and is unable to be re-scheduled, a guest could lose 100% of the amount paid.

Since 2022, the unfair contract terms regime has applied to contracts between businesses that have a trading relationship with an annual value of $250,000 or less (known as ‘small trade contracts’). The Commerce Commission appears to be increasing enforcement efforts now the regime has been in force for some time.

If you have not already done so, now is a good time to review your consumer terms and conditions, and small trade contracts to ensure they comply with the FTA.

Please contact us if you need help with unfair contract terms.

 

 

DISCLAIMER: All the information published in Commercial eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Commercial eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Property briefs

House, Property
0

Updates on legislation

There are several new pieces of legislation relevant to property owners, buyers and developers that are moving slowly through the House. As these bills are still subject to the final stages of the parliamentary process, the proposed laws could change before coming into force – or be discarded altogether. Nevertheless, as some of these bills move closer to their final form, it is useful keeping an eye on their progress.

If you have long-term development plans, feel free to talk with us about how these proposed law changes may affect you and we can help you factor these potential changes into your plans.

 

Changes to LIM information

Somewhat timely given the recent flooding events across the country, the Local Government Official Information and Meetings Amendment Bill is set to clarify the natural hazard information available through local councils.

A Land Information Memorandum (LIM) is a critical document for property buyers to review as it contains information held on council files about a particular property. It is common for property purchases to be subject to the buyer approving the LIM or for real estate agents to provide the LIM upfront to buyers.

As a component of New Zealand’s National Adaptation Plan regarding climate change, the bill aims to ensure that LIMs across the country have clear and consistent information to help property buyers and owners understand the natural hazard risks for a property, including the potential impacts of climate change. It introduces clearer requirements in law for councils to provide information in LIMs about natural hazards that affect, or may affect, a property and the effects of those hazards. It formalises information-sharing responsibilities between regional and local councils given that regional councils often hold natural hazard information.

 

Replacement of the Resource Management Act 1991

There is a suite of bills expected to progress through the House that will replace the Resource Management Act 1991 (RMA).

Together, the three bills aim to significantly update the existing resource management regime by addressing some current complexities as well as taking better account of issues such as climate change, and the need to improve housing supply and infrastructure.

The three key pieces of proposed legislation are:

  1. Natural and Built Environment Bill: This is essentially the main replacement for the RMA. Amongst the bill’s many changes, it proposes to shift the resource management regime’s focus from managing adverse effects on the environment to achieving positive outcomes.
    The proposed legislation would also see the vast array of national policies and standards consolidated into one single National Planning Framework, and local policies and plans into 14 natural and built environment plans. Once in effect, these changes will alter your approach to applications for resource consents.
  2. Spatial Planning Bill: The bill proposes the establishment of regional planning committees involving central government, local councils and Māori. These committees will be responsible for long-term regional spatial strategies which will include certain areas in each region being earmarked for development, protection and restoration, or infrastructure improvement.
    The strategies should also identify which areas are vulnerable to natural hazards and climate change. As the strategies will be relevant to, say, resource consent decisions, they may affect the likelihood of any plans for the development or use of property being approved.
  3. Climate Adaptation Bill: This proposed legislation will address climate change issues such as the funding to move communities to avoid natural hazards such as flooding or erosion.

The Local Government Official Information and Meetings Amendment Bill, Natural and Built Environment Bill and Spatial Planning Bill have been moving through the House since November 2022. The relevant Parliamentary Select Committees received public submissions on these bills and are expected to report back to the House on 22 May 2023.

The Climate Adaptation Bill has yet to be introduced to Parliament, but it is expected to begin the process sometime this year.

 

 

DISCLAIMER: All the information published in Property eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Property eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Subdivision consents

Commercial, House, Property, Rural
0

Recent changes to planning rules

In the Autumn 2022 edition of Property Speaking we discussed different types of resource consents. Since then, the government has released a new National Policy Statement for Highly Productive Land (NPS-HPL), which you can read here. The purpose of the NPS-HPL is to ensure that highly productive land is protected for use in land-based primary production, both now and for future generations. Councils are now required to consider the need to preserve highly productive land when determining any application for a subdivision consent.

Subdivision consent

If you want to change the size of your section by purchasing some of your neighbour’s property and merging it with your own (a boundary adjustment) or you want to split your property into additional property titles, then you will need subdivision consent from your local council.

Requirements

Your region’s district plan sets out the requirements that you must meet in order to subdivide your property. In addition to the requirements being different between regions, the requirements are also different depending on the zone in which your property is located. Properties are divided into zones that consider the standard characteristics expected in that area. The zones are:

  • Residential
  • Commercial/retail/town
  • Industrial
  • Rural lifestyle
  • Rural production, and
  • Special purpose.

The names of the zones may differ between regions but there will be a zone for each of those standard characteristics.

Conditions

Consent for your subdivision is likely to come with conditions.  Your local council may also ask that part of your property is transferred to the council; this is known as ‘vesting.’ Sometimes the council will pay you for that land but other times it will form part of your development contribution.

Areas around waterways may be taken for an esplanade reserve or esplanade strip, whereas areas of land that will become roads may be taken for road reserves.

The council can also require that new subdivisions have certain design specifications which are dictated through the district plan; these are recorded on the property title in a consent notice.

Affected parties

Where your subdivision is not a permitted activity, or it does not fit within the standard requirements for a subdivision in that area, the council may still grant you consent on a ‘notified basis.’ This means that it provides notice to affected people who can then raise any concerns with your proposed subdivision within a specified time.

The council may add further conditions to the development or even refuse the consent depending on any concerns raised.

Highly productive land (HPL)

In addition to the prior considerations that councils had to consider, since 17 October 2022, they now must map the land within their region to determine if it is HPL. In general, land will be mapped as HPL if it is:

  1. In a general rural zone or a rural production zone
  2. Predominantly within an area with a Land Use Capability class of between 1–3. A helpful map shows the current class of land within New Zealand here
  3. Not identified for future development within the relevant district’s district plan as at 17 October 2022, and
  4. Forms a large and geographically cohesive area.

Councils have the next three years to remap all the land within their region. Until that mapping is completed, all land will be treated as HPL if it falls within categories 1–3 above.

Most of the Land Use Capability class 1–3 land is within Northland, Auckland, Waikato, Bay of Plenty (between Tauranga and Whakatāne), Taranaki, Manawatu, Canterbury, Otago and Southland, although there are smaller areas of class 1–3 land throughout New Zealand.

If you are applying for a subdivision consent, your local council will consider whether the land is HPL and, where it is, it will be much more difficult for you to obtain a subdivision consent.

Since the NPS-HPL came into force on17 October 2022, it has caused problems for landowners who had subdivision consent applications for land within class 1–3 areas pending on that date. Councils had to reassess applications taking HPL into account. This, in some cases, resulted in consent being refused.

If you are thinking about subdividing your property, especially in a rural zone, do talk with us and your surveyor early on. We can discuss the specific planning requirements that now apply to your property and help assess whether your subdivision is likely to receive consent before you proceed any further on the development.

 

 

DISCLAIMER: All the information published in Property eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Property eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Storm damage to properties

House, Property, Rural
0

For landlords, tenants and buyers

With historic amounts of rain and flooding in many regions, this year has so far been challenging for many communities in the North Island. It is anticipated that these extreme weather events are likely to become more frequent in the future.

Many properties have been damaged by flooding, landslides and silt. Some of these may be under sales agreements or leased under residential tenancy agreements. We give some advice on what landlords, tenants and buyers (who have not yet settled) can do.

Residential tenancies

The responsibility for repairing damage to a property caused by a weather event or natural disaster, including drying a property that has been damaged by flood water (and paying for the electricity to do so), lies with the landlord.

If the landlord and tenant cannot come to an agreement on the next steps, either party may apply to the Tenancy Tribunal for a way forward.

Is the property completely destroyed? If the property is no longer habitable, rent will reduce accordingly and either party may give notice to the other terminating the tenancy. A landlord must give seven days’ notice and a tenant must give two days’ notice. We recommend taking photos of the damage in case there is a dispute about whether the property is destroyed. Notices from emergency services or council officials (such as red stickers) can also be used as evidence that the property is no longer habitable.

Partially destroyed? If the property is partially destroyed, or part of the property is so seriously damaged that it is no longer habitable, rent will reduce accordingly and either party may apply to the Tenancy Tribunal for an order to end the tenancy. The tribunal may make an order terminating the tenancy if it is satisfied it will be unreasonable to require the landlord to repair the property or the tenant to continue with the tenancy at a reduced rent.

Damaged but can be repaired? The damage should be repaired at the landlord’s cost as soon as practicable. The landlord should ask a building professional whether it is safe for tenants to remain in the property in the meantime. If the tenant can remain in the property while the work is completed, the landlord and/or tenant should consider agreeing to a rent reduction to compensate the tenant for any inconvenience while the work is being carried out.

If the tenant needs to move out, the landlord and tenant should negotiate to reach an agreement. The landlord should let the tenant know how long the repairs are expected to take and when the tenant can move back in.

Bought a property but not settled?

Under the ADLS Agreement for Sale and Purchase of Real Estate, the property and chattels remain at the risk of the seller until possession is given and taken (usually on settlement day). If you have bought a property but not yet settled, the cost of repairing the damage usually lies with the seller.

Property is destroyed? If the property is destroyed or damaged so it is no longer habitable, and is not repaired prior to the settlement date, the buyer must decide to either:

  1. Complete the purchase at the purchase price, less an amount equal to the insurance payment received or receivable by the seller (unless the insurance company agrees to reinstate the property up to the insurance cover for the benefit of the buyer prior to the settlement date), or
  2. Cancel the agreement: the deposit is refunded in full and neither party can make any further claims against the other.

Damaged but can be repaired? If the property is damaged, but is still habitable, settlement takes place on settlement date at the purchase price less an amount equal to the reduction in value of the property.

The reduction in value is deemed to be equivalent to the reasonable cost of reinstatement or repair. If the seller and buyer cannot agree on a reasonable cost of repair, the dispute will follow the compensation dispute procedures under the agreement.

We can help

Insurance companies will be very busy over the coming months assessing properties and processing claims. Given the scale and timing of the extreme weather events this year, this will take some time. There are also likely to be delays in the timeframes for repairs. Both landlords and tenants, and sellers and buyers, will need to be patient, flexible and practical to resolve any issues that may arise. Any agreement made between parties should be recorded in writing.

If you need any help to work through these issues, please don’t hesitate to talk with us.

 

DISCLAIMER: All the information published in Property eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Property eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Who are the ‘children of the settlors’?

Kids, Property, Relationships, Trusts
0

Make it clear in the trust deed

In the recent case of Re Merona Trustees Ltd[1], the High Court was asked to determine who the beneficiaries of a trust were as it was not clear who was intended by the phrase the ‘children of the settlors’ that was in the trust deed.

Background

The trust settlors, Merv and Rona, had two daughters together – Lilly and Miffy. Rona also had two sons from a previous marriage when she was very young – Rob and Ray. When Rona’s first marriage broke down, and in the absence of social welfare benefits, she could not afford to keep her sons, and they both went to live with different extended family members. Rob had occasional contact with Rona and, after Rona’s marriage to Merv, Rob was raised by them both. Ray, however, was raised by extended family and had no contact with Rona. It was only as an adult that Ray came to know Rona and the wider family.

Interpreting the trust deed

Rona died in 2013. Merv died in 2020. After Merv’s death, a question arose as to who were the beneficiaries of the trust they had settled.

The question for the High Court was interpreting the trust deed that referred to ‘the children of the Settlors’. Did it mean:

  • The two natural children of Merv and Rona together, being Lilly and Miffy
  • The two natural children of Merv and Rona, as well as Rona’s son Rob, who was raised as a member of Merv and Rona’s family, or
  • The two natural children of Merv and Rona, as well as both of Rona’s sons, Rob and Ray?

High Court hearing

The court heard two main competing arguments.

The trustees primarily argued that ‘the children of the settlors’ meant Rob, Lilly, and Miffy; the ‘children’ did not include Ray. They said that the context in which the trust was established was highly relevant to the interpretation of the trust deed. In particular, a predecessor trust had been established in 1986 before Ray connected with Rona as an adult. The trust in question was settled in 2002, when Rob, Lilly and Miffy were in their forties and fifties.

Even in 2002, after coming to know Ray, Merv and Rona presented to their professional advisors as a couple with three children – Rob, Lilly, and Miffy. Their accountants recorded Merv, Rona, Rob, Lilly and Miffy as the beneficiaries of the trust. The family’s lawyers also understood Rob, Lilly and Miffy to be Merv and Rona’s three adult children. Merv and Rona also signed memoranda of guidance in relation to the trust, that were effectively instructions to the trustees as to their wishes. These memoranda recorded their wish that ‘our children’ benefit from the trust; Rob, Lilly, and Miffy were named, but Ray was not.

Finally, Rona’s will left a bequest each to Rob, Lilly, and Miffy as her children, and an equal but separate bequest to Ray who was described as her ‘birth son.’ She also left him a letter which asked that he be content with this bequest. The court found that by implication, she did not see him as eligible to benefit from the family wealth which was otherwise held in the trust.

On the other side, Ray’s lawyers argued that Ray was also a beneficiary of the trust. They said that once Ray had been reunited with Rona, they developed a close relationship with each other and the wider family. Although Ray was not close with Merv, Ray was included in family gatherings including at Christmas and birthdays. Ray was treated equally with Rob, Lilly, and Miffy in Rona’s will, and he was a part of the family.

The High Court considered that Merv and Rona had brought Rob up as a child of their own, and that it was ‘inconceivable’ that they would have intended to exclude him as a beneficiary of the trust. The documents signed at the time, and subsequently, showed that Merv and Rona thought that Rob was a beneficiary of the trust. In the context of their family, ‘the children of the settlors’ plainly included him. The only question was then whether Ray was also included.

Decision

The court found that the language of the trust deed could be interpreted to include Lilly and Miffy as natural children of the settlors, as well as Rob, who was raised within the family unit as though he was a natural child of both Merv and Rona.

The wording of the trust deed, however, could not be interpreted to include Ray. While Ray enjoyed a good relationship with the family when they reconnected, he was not raised as a part of Merv and Rona’s family unit.

Care must be taken

This decision emphasises the importance of clarifying who is intended to be a beneficiary of a trust at the outset. This is particularly necessary in the context of blended families where there may be reasons to differentiate between classes or groups of children.

In this case, the lawyers and accountants were not necessarily aware that Rob was not a child of Merv and Rona. It is possible that if they had known at the outset, the trust deed would have been drafted in a way that made it clear who the beneficiaries were.

If you are concerned about the wording of your trust deed and how it may affect your children, please be in touch to review your trust deed.

[1] Re Merona Trustees Ltd [2022] NZHC 1971.

 

 

DISCLAIMER: All the information published in Trust eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Trust eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

What is the PPSR?

Commercial, Property, Your Own Business
0

Gives protection when leasing or selling goods

Anyone who has been in business, even for a short time, will have encountered the PPSR (Personal Property Securities Register). The PPSR is a searchable online register that records if a third party has a financial interest in the assets of individuals or entities.

The register only records interests in personal property (not land). Personal property includes all property that is not land or ships.

If you or your business leases or sells goods on credit terms, or if you have lent money to a third party, you should seriously consider registration on the PPSR in order to protect your business or yourself.

Registering a security on the PPSR

It is helpful to look at examples where registration on the PPSR would be appropriate.

  • Leasing assets for a term of longer than 12 months, such as eftpos or photocopier equipment
  • Selling goods on credit terms, for example, payment is due on the 20th of the following month
  • Selling goods on consignment terms where payment is due when the goods are sold, or
  • Making a loan to an individual or a company.

In each of the above situations, registration on the PPSR provides you with protection if rental payments or invoices are not paid or loan payments are not kept up. PPSR registration ensures you will be paid before parties that do not have registered securities.

If you register, you may be able to collect any goods or even trace the proceeds of the sale of those goods. When goods are supplied on credit terms, a ‘super priority’ exists if registration is completed within 10 working days of delivery of the goods. This super priority will have priority over all prior registrations no matter when registered.

What happens if I do not register?

If you don’t register on the PPSR, it may mean that you are not paid in full – or at all.

How to register?

To register on the PPSR you must have a contract with the party you have leased to, sold goods to or lent money. That contract needs to include a right to register on the PPSR.

Timeliness of registration on the PPSR is critical. Where there are two registrations in respect of the same property the first registration will have priority.

Registration is completed online here.

Searching the PPSR

You would search the PPSR if you are:

  • Considering leasing, selling, or lending to a third party to determine what other obligations and registered securities they have
  • Considering buying personal property from a third-party. The most common example of this is the purchase of a motor vehicle. Money may be owed on the vehicle, and without having the security discharged as a condition of purchase, you run the risk of losing the vehicle and the money you paid for it
  • Buying a business that includes personal property as part of the assets
  • Selling a business and you want to determine if any money needs to be repaid, or
  • Buying land with buildings on it that includes chattels.

How long does PPSR registration last?

Registrations on the PPSR expire five years after registration. It is important to note when to renew registrations before they expire. If registrations are renewed, their priority continues from the date of the original registration.

If registrations are not renewed and you subsequently reregister, the priority will be from the date of the subsequent reregistration.

What if things go wrong?

If a person or entity you have leased to, sold goods to or loaned money to becomes bankrupt, goes into liquidation or placed into receivership – what should you do?

Talk with us as soon as possible so we can advise you on your options. If you have registered on the PPSR, your position is stronger than if you haven’t.

Regularly lease, sell goods or loan money to third parties?

We can help you to review your existing contracts or prepare contracts to help protect your business. We can advise you on how and when you should register on the PPSR.  Navigating the PPSR is fairly straightforward. If, however, you have any questions or queries regarding the PPSR and how it benefits or affects your business, please don’t hesitate to contact us.

 

DISCLAIMER: All the information published in Commercial eSpeaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are those of individual authors, and do not necessarily reflect the view of Edmonds Judd. Articles appearing in Commercial eSpeaking may be reproduced with prior approval from the editor and credit given to the source.
Copyright, NZ LAW Limited, 2022.     Editor: Adrienne Olsen.       E-mail: [email protected].       Ph: 029 286 3650

Get in touch today, we’d love to talk.

+64 7 872 0236 [email protected]