+64 7 872 0236 [email protected]

Property

Over the fence

Property, Rural
0

Resource Management (National Environmental Standards for Freshwater) Regulations 2020 now amended

Wetlands have many environmental benefits; they can significantly reduce nutrient and sediment losses on farms, improve water quality, and provide a habitat for birds and fish.

In 2020, Resource Management (National Environmental Standards for Freshwater) Regulations were introduced. These regulations protected wetlands to preserve their environmental benefits. The initial regulations had limited consenting pathways and resource consents were not obtainable for the construction of any water storage facility that could adversely impact the extent or values of the wetland.

In January 2023, these regulations were amended to introduce new consenting pathways for the purposes of:

  • Urban development
  • Quarrying activities
  • The extraction of minerals and ancillary activities (with additional controls on coal mining)
  • Landfill and cleanfill areas, and
  • Water storage, ski area infrastructure and New Zealand Defence Force activities, that are included in the definition, and the existing National Environmental Standards for Freshwater provision for ‘specified infrastructure.’

There are certain ‘gateway tests’ under the new consent pathways that must be satisfied before consent is granted.

The effects of the activity must also be managed using the ‘effects management hierarchy.’ This addresses any adverse effects the activities may have on the extent or value of the wetland. There are also certain conditions imposed on the new consenting pathways, including the requirement that water storage infrastructures must provide significant national or regional benefits.

 

Affordable Water Reform replaces Three Waters Reform Programme

On 13 April 2023, the government announced changes to its Three Waters Reform Programme. Three Waters was introduced in 2022 to change the delivery of drinking water, wastewater and stormwater to ensure all New Zealanders have safe and reliable water infrastructure.

After a significant negative public response to the Three Waters proposal, the government has made key changes to what is now called Affordable Water Reform. These are:

  • Ten publicly owned specialised service entities rather than four
  • The entities will be based around the existing regions and will be connected to the communities that they serve
  • The entities will be owned by local councils and will be operationally and financially independent
  • Each entity will be governed by a professional board and local input will be enhanced through the regional representative group for each entity. There will be an equal number of mana whenua and council representatives on each entity’s regional representative group, and
  • The introduction of the entities will occur through a staged approach between early 2025 and 1 July 2026 at the latest.

The original Better-Off funding model was designed to support councils through the transition period and to manage the financial impacts of the reforms. The Crown will still provide Better-Off funding for the first phase ($500 million) but not for the second phase ($1.5 billion). The first phase of funding has been implemented to try to negate the financial implications that the councils face during the transition.

The latest amendments do not largely impact the Water Services Legislation Bill and the Water Services Economic Efficiency and Consumer Protection Bill currently before Parliament. The government intends to pass legislation to implement these new changes before the election in mid-October.

Reaction to the changes to the government’s revised water reform programme has, it is fair to say, been mixed. It will be interesting to see how these reforms progress over the next six months before the election.

 

Cyclone Gabrielle – animal welfare management

Cyclone Gabrielle had a significant impact on farms in the North Island and left many animals stranded and in danger. This has highlighted the importance of having a disaster management plan in place which sets out what is required to keep your stock and pets safe.

When preparing for a disaster there are a range of factors to consider including:

  • What items should be included in an emergency kit, such as necessary food, medicine and water
  • Where the emergency kit will be stored so that it is accessible in the event of a disaster
  • Evacuation routes
  • Where animals can be safely stored in the event of a disaster including high points and well sheltered areas
  • What will happen with the animals while your property is restored, and
  • How will your animals be cared for if your property is damaged?

When a disaster occurs it can greatly impact the health of your animals. They are often stressed from the disaster which weakens their immune systems and increases their risk of becoming sick. As medical supplies are usually difficult to obtain following a disaster, it is important to ensure that you always have sufficient supplies on hand to keep your animals healthy.

There is also the possibility that stock feed could be damaged as a result of the disaster. Following Cyclone Gabrielle, the floodwaters caused some feed to become contaminated with sewage, bacteria, chemicals and other toxins. Moisture also increases the risk of mould.

As a part of your disaster response planning you need to consider what will happen where there is limited feed, including what animals take priority such as animals that are pregnant or newly born animals that will be at the highest risk.

 

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

Leased land impacted by Cyclones Hale and Gabrielle

House, Property, Rural
0

Some options for lessees

The damage caused to land by the recent weather events across New Zealand has raised concerns about the ongoing viability of leased land that has been impacted by these storms. Depending on a lessee’s particular circumstances, there are options in terms of relief from rental payments or, in the more extreme circumstances, termination of the lease.

If you are a lessee, the Property Law Act 2007 (PLA) and the law of frustration of leases may provide you with options when the land subject to the lease has been damaged or destroyed. ‘Frustration’ in the legal context means a contract that, subsequent to its formation and without fault of either party, is incapable of being performed.

Property Law Act 2007 implied terms

Section 218 of the PLA implies a list of covenants, conditions and powers in all leases. An ‘implied term’ is what is included in a lease by statute. These terms allow a lessee to seek relief from rent payments or to cancel the lease.

If the land you lease has been destroyed or damaged, the PLA[1] may provide you with rent relief in proportion to the destruction or damage caused. Events that may lead to rent relief include floods and storms. If you are at fault for the event that caused the destruction or damage, such as being responsible for the cause of flooding, you will not be entitled to a rent reduction until the damage is repaired.

If your lease states that the land may be used for one or more specified purposes such as cropping, and during the term of the lease that land can no longer be lawfully used for cropping, you may be able to terminate the lease. An example would be if land was ‘red zoned’ so couldn’t be legally used for cropping any more[2]. As with rent relief, if you are at fault for the land not being able to be lawfully used for the specified purpose, you will not be able to cancel the lease.

Under the terms implied in all leases found in the PLA, you must keep the leased property in the same condition that it was in when the lease term began. However, this does not apply to reasonable wear and tear and events such as floods and storms, unless you are at fault. This means that if the land you lease has been damaged by flood and your lease is due to expire soon, on termination you are under no obligation to restore the land to the condition it was in at the beginning of the lease.

Your lease may include a clause that states any implied terms found in the PLA that are inconsistent with a specific term of the lease will not apply. Before signing a lease, you should review these specific terms to check for any inconsistency with the implied terms set out at schedule 3 of the PLA.

Force majeure

Some leases may include a ‘force majeure’ clause that covers what is colloquially referred to as ‘Acts of God.’ These include events such as floods, earthquakes or, more recently, pandemics. These clauses typically provide for the lease to be terminated, or provide that the parties’ obligations, such as payment of rent, under the lease are to be suspended for a period of time.

‘Frustration’ and rural leases

Recently, leases have been recognised for their contractual nature not just as an interest in land. ‘Frustration’, which is a remedy to cancel contracts, can now be used to cancel a lease.

When there is a radical change in circumstances outside of your control, such as a cyclone damaging the leased land, you may use the remedy of frustration to cancel the lease. Your lease will be cancelled effective from the date of the event. An example of this situation would be if a river changed its course (which did happen in Gabrielle), making it impossible to farm the land, you could claim the lease was ‘frustrated’ so should end from the date the river changed course.

When deciding if a lease could be cancelled via frustration it is important to look at the purpose of the lease and the length of the remaining term. To be successful in using frustration to end a lease, the purpose of the lease will need to be unable to be carried out during the remainder of the lease term. If your lease has a lengthy term remaining, it is less likely it will be frustrated by an event such as a storm that renders the land unusable for a short period of time.

So far in 2023 there have been a handful of severe weather events that have caused significant damage to leased land. As these climate change-related events become more common, we are likely to see frustration being more commonly used to attempt to cancel leases.

 

If you are unsure about the terms of your lease after Hale and/or Gabrielle, or any other the other significant weather events that have recently occurred in New Zealand, please don’t hesitate to contact us. We are here to help.

[1] Property Law Act 2007, s4 of schedule 3.

[2] Ibid, s10 of schedule 3.

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

Bank of children

Estate, House, Kids, Property, Relationships, Retirement, Trusts
0

Children helping their parents

Most of us have heard of the expression ‘Bank of Mum and Dad’ where parents help fund their children to get onto the property ladder or with another investment.

 

What happens in the reverse situation, however, where children become the ‘bank’ and assist their parents financially?

 

Why would this happen?

In recent years, parents may have assisted their children in allowing their property to be used as security for borrowings by their children, they could have helped fund the deposit for a child’s first property or provided financial support in a number of other situations.

 

Sometimes, the boot is on the other foot when parents retire or have their income reduced. That may be the time for children to repay the favour and assist their parents.

 

Family-wide discussion

If children are considering helping out their parents financially, we recommend that you have a family-wide discussion on what sort of assistance could be provided.

 

It is important that the entire family is aware of any proposed arrangements, especially if not all of the children are going to be involved. Those children who are assisting may become part-owners of their parents’ property as part of the agreement.

 

There are various family arrangements that could apply but some children may already own their own home. Other children may already be living with or intend moving in with their parents. All of these circumstances will need to be considered.

 

Contact your parents’ lender

Presuming the transaction will be funded by a loan, rather than cash from the children to the parents, the next step is for the parents to contact their lender (usually their bank) to discuss its requirements. The lender may require the current lending for the parents to be discharged and an updated finance application in the name of all of the joint owners with new loan documents. Often, the lender requires the added security and details of a child’s income for the application.

 

See your lawyer

To prevent any future difficulties and dissention in the family, it is important to arrange suitable documents such as a property sharing agreement. This records each party’s responsibility for who and how the family will use the property, loan repayments, maintenance of the property, rates, insurance and a sale process for the property should there be a breakdown in the parties’ relationship or if one of the parties wishes to sell.

 

A property sharing agreement will be the guiding document for the arrangement. As well as ensuring you have a will in place, the agreement can cover what will happen to the parent’s share of the property when they die. The last thing parents want is a falling out between their children.

 

Other things to consider

Other considerations for both parents and children include:

  • The children’s ability to use KiwiSaver funds in the future to purchase their own home
  • Current and future relationships of the children
  • Parents moving into a rest home and how subsidies could be affected
  • The alternative of a reverse mortgage, and
  • Review of wills and enduring powers of attorney.

 

Conclusion

With increases in interest rates and the rise in the cost of living, more retiring parents may face the difficulty of retaining their family home. Rather than the option of a sale, children may be able to assist with the retention of their parents’ home and keeping past memories alive.

 

DISCLAIMER: All the information published in Fineprint 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 Fineprint 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

Joyful Husband And Wife Relaxing On Couch In New Home

Vendor obligations after signing an agreement for sale and purchase

House, Property
0

A case heard in the Supreme Court earlier this year presents a cautionary tale for property sellers[1].

In this case, a seller was embroiled in a long legal battle over their last-minute cancellation of an inspection for their buyer’s due diligence condition after the seller became aware of a potential better offer on the property. The buyer argued that, because the seller’s actions had prevented the buyer from gathering necessary information on the property, the seller could not also then cancel the agreement to pursue the better offer when the buyer was consequently unable to satisfy (or waive) the due diligence condition by its deadline. The Supreme Court’s decision came more than two years after the dispute first arose and was only focused on some preliminary legal issues (rather than resolving the dispute fully).

For all sellers, this case signals that even though you have a signed agreement for sale and purchase, there is likely to be more for you to do than just wait for settlement day when money will change hands.

In many agreements, the next stages of the deal are not necessarily left to the buyer alone; there can be obligations that you as seller must meet. If you don’t meet these obligations, you risk outcomes such as being pulled into a lengthy dispute preventing you from selling your property, as in the Melco case, or having your buyer request that money is held back on settlement. In this article, we cover some examples.

 

Meet any express obligations in the agreement

Your agreement might contain some express, deal-specific obligations for you as seller such as conditions you must meet or work you must complete before settlement. If you are using a standard ADLS/REINZ agreement, these obligations will be usually set out in the further terms of sale section.

Most agreements will also contain some warranties about the state of the property. For example, the standard ADLS/REINZ agreements contain warranties about the condition of chattels, rates payments being current and any work you have arranged on the property having appropriate consents.

Hopefully, where possible, you will have addressed any warranties before signing the agreement. If not, however, you must ensure that all warranties and other obligations are met by settlement day, otherwise this can lead to disputes around settlement, including the buyer proposing to retain settlement monies.

 

Help with the buyer’s conditions where necessary

As highlighted in the Melco case, even where there is not an express obligation, you may have an implied duty to assist the buyer with meeting the buyer’s conditions. You can help the buyer by, for example, providing any requested information in a timely manner and allowing access to the property.

The dispute in Melco also shows that even where you want to exit the deal, you should not do things like prevent your buyer from accessing the property for the purpose of gathering sufficient information for a due diligence condition. Taking this kind of action that deliberately blocks the buyer from fulfilling their conditions, or their own obligations under the agreement, could compromise your position.

 

Allow a pre-settlement inspection

Another area where a seller has obligations is pre-settlement inspections. Under the standard ADLS/REINZ agreement, the buyer may visit the property once for a pre-settlement inspection (with reasonable notice in writing). The buyer also is allowed another inspection to check you have met any agreement to carry out work on the property (no later than one day prior to settlement) if your agreement provides for such work.

Where your agreement provides for these types of inspections, you must allow this access, otherwise, the buyer could, for example, seek that money is held back until the inspection can take place.

Confusion can arise if the buyer wants to access the property for other purposes. If you want to allow this, you should be clear about the purpose of any access to avoid disputes about whether the access was for the set inspections under the agreement or for something else.

Failure to meet your obligations as seller can lead to long and costly disputes. Every agreement is different; please contact us for guidance about your obligations under your specific agreement to help avoid an outcome similar to what occurred in the Melco case.

[1] Melco Property Holdings (NZ) 2012 Limited v Hall [2022] NZSC 60

 

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

Property briefs

House, Property
0

Victims of domestic violence can terminate tenancies

Changes to the Residential Tenancies Act 1986 (RTA) came into force on 11 August 2021 allowing a tenant to terminate their fixed term or periodic tenancy if they are the victim of a domestic violence incident.

Domestic violence under the RTA has the same definition contained in section 3 of the Domestic Violence Act 1995 and includes physical, sexual and psychological abuse.

If your tenant is a victim of domestic violence, they may exit from their tenancy agreement by giving you (the landlord) two days’ notice. Your tenant needs to provide you with evidence of the domestic violence. It is important that when you receive notice from a tenant in this situation that you treat this with confidentiality and sensitivity, and meet your obligations under the Privacy Act 2020.

If your tenant is part of a group tenancy situation, they must notify the other tenants within two days after the date the tenancy expires. The remaining tenants are entitled to a two-week rent reduction that is calculated using the formula in section 56B of the RTA.

We can help you navigate the process if your tenant gives you notice to terminate the tenancy after a domestic violence incident.

 

Body corporate rules beefed up

The Unit Titles (Strengthening Body Corporate Governance and Other Matters) Amendment Act 2022 became law on 9 May 2022.

The purpose of the amendments is to:

  1. Improve the information which sellers must provide to buyers of unit title properties. To help sellers in providing information, bodies corporate now have a duty to retain records and make information available to owners for the purpose of disclosure
  2. Strengthen the governance arrangements for bodies corporate, which include expressly permitting committee members to attend a body corporate meeting by audio or audiovisual link, specifying that a quorum is met if owners holding 25% or more of the principal units are present (provided that, where there are two or more owners there is a minimum of two owners present for each meeting) and allowing committee members to vote electronically
  3. Increase the professionalism and standards of body corporate managers by introducing a mandatory code of conduct, and
  4. Ensure long-term maintenance planning and funding is adequate, and provide the ability to establish separate utility interests for different expenses. For example, if there are two units in a single storey development and one unit has twice the ground coverage of the other unit, then a separate utility interest could be established so the bigger unit pays for two thirds of the roofing costs.

The changes will come into effect on 9 May 2024 unless an Order in Council is issued to bring some of the changes in earlier.

 

Buying a property with unconsented works

Building work must meet the standards set out in the Building Act 2004 and the building code. Under the current system, there is a two-step process to have your proposed building work consented and signed off:

  1. You must apply to your local council for building consent, and
  2. The consenting council must inspect the work in order to issue a code of compliance certificate (CCC) confirming that the work has been completed in compliance with the building code.

If you fail to obtain the proper consent and the CCC then your building work is unconsented which leads to significant issues when you come to sell your property. Some banks will not lend to buyers of properties that have unconsented work.

What is most important is to check with your insurer to confirm you can get insurance cover before you sign the agreement. A condition of most, if not all, mortgages is that you keep the property fully insured. If your home has unconsented works, some insurance policies will not cover the unconsented area and some will not cover any damage where, for example, a fire originates in the unconsented area, even if the fire spreads to a consented area. In extreme cases, unconsented works could void your cover entirely.

For some situations, there is a process available to obtain a certificate of acceptance which is the council signing off on your unconsented building work. The process to obtain such a certificate changes from council to council. It may also not be available if too much time has elapsed.

It is important to do your due diligence, so you know what you are buying before you sign the agreement.

If you need any guidance on this, please 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

Trusts and succession

Estate, Property, Rural, Trusts
0

Trustee duties in farm succession planning

In a previous edition[1] of Rural eSpeaking, we covered certain aspects of the changes to trust law brought about by the Trusts Act 2019, particularly in relation to succession. That article focused primarily on the duties imposed by the Act on trustees to provide information to beneficiaries and some of the implications of that.

The Act also codified trustees’ duties to beneficiaries, with the guiding principle set out in section 21:

‘In performing the mandatory duties set out in sections 23 to 27 and (except to the extent modified or excluded by the terms of the trust) the default duties set out in sections 29 to 38, a trustee must have regard to the context and objectives [our emphasis] of the trust.’

The mandatory duties are pretty self-explanatory. These are a duty to:

  • Know the terms of the trust
  • Act in accordance with the terms of the trust
  • Act honestly and in good faith, and
  • Act for the benefit of beneficiaries or to further permitted purpose of the trust.

Those duties would all seem self-evident, but practice suggests that many trustees have difficulty in knowing the terms of the trust or acting in accordance with the terms of the trust, particularly without advice.

In that situation, a trustee’s duty is to ensure that they are appropriately advised so that they can carry out their duties properly.

Default duties bring the most angst

It is the default duties that are likely to cause trustees more difficulty. These duties can be modified by the trust deed and virtually all new trust deeds since the Act has come into force modify these to the maximum extent permissible. Older trust deeds may impliedly modify some or all of these, but not by specific reference to the Act (for obvious reasons).

There are 11 default duties but the ones most likely to cause trustees difficulty in terms of succession or future planning are the duties to:

  • Not exercise power for their own benefit
  • Not bind or commit trustees to future exercise of discretion
  • Avoid conflict of interest, and
  • Act impartially.

Affecting farm succession planning

If trustees are considering a succession plan for a trust-owned farm property that may not result in an equality of treatment between beneficiaries, the first step is to have a thorough review of the trust deed. The review will ascertain exactly who the beneficiaries are; in the case of the older trusts this could be a wide group. From this, trustees can establish what restrictions there are on their power to act, particularly where there is some element of favouring one beneficiary over another (common in a farm succession scenario), or acting in the favour of one or more beneficiaries who may also be trustees.

Many trust deeds have been reviewed, or are under review, since the Act came into effect on 30 January 2021. Where possible, trust deeds are being modified to ensure that, as far as possible, these default duties are excluded. Some older trust deeds, however, don’t have a power to vary the terms of the trust. In this situation, trustees are faced with having to act within the terms of the existing trust or, where there is a power of resettlement, exercising their power to resettle the entire trust capital on a new trust, although this can be an expensive exercise and have tax implications. Another option is court orders.

Who are the beneficiaries?

The other area that trustees are looking at is the definition of beneficiaries. Older trust deeds tend to have an extremely wide beneficiary pool.

One way to limit the exposure of trustees to challenges from disaffected beneficiaries is to reduce that beneficiary pool to core family members, and to exclude the wider family such as spouses, stepchildren, etc.

Why is this all important?

In the context of farm succession, families often have the difficulty of having significant capital assets but insufficient cash or borrowing capability to enable absolute equality between children if one child is going to have the farm.

Often the other children are asked to accept a lesser share of the trust to enable  the farming operation to be carried on by one sibling. By reducing the beneficiary pool, and by excluding the trustees’ default duties as far as possible, there is greater protection for the trustees when making decisions about which some beneficiaries may be unhappy.

 

Risks

There is, however, always a risk in amending a trust deed by excluding certain beneficiaries and excluding trustees’ default duties. The risk is that by making those decisions, the trustees can leave their actions open to challenge – on the basis that they weren’t exercising their power to exclude beneficiaries or vary the trust for a proper purpose; this is one of the mandatory duties that cannot be excluded. If, for example, a group of trustees exclude all the settlor’s children except for one and then remove all their default duties in order to leave the trustees free to benefit that beneficiary solely, the previous decision (to exclude beneficiaries, and varying the trust) would be open to challenge.

 

Have a plan all can live with

As always for succession matters, the best answer is to come up with a plan that all of the core beneficiaries can live with and buy into. This would ordinarily take some time to plan so that the farming operation is in a position to enable the desired succession to take place and also to accommodate siblings who are not involved in the farming operation.

Sometimes, however, this isn’t possible. If the trustees are faced with making difficult decisions that may be unpopular with some beneficiaries, they must be very careful to understand what they can and cannot do and to seek (and take) professional advice.

[1] Rural eSpeaking, Autumn 2021, No 35.

 

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

Automated farming irrigation system in sunset

Protecting productive land

Property, Rural
0

New policy statement: NPS-HPL

Following the Our Land 2018 joint report from the Ministry for the Environment and Stats NZ, as well as a certain amount of political pressure, the government gazetted the National Policy Statement for Highly Productive Land (NPS-HPL) on 19 September 2022.

The NPS-HPL came into effect on 17 October 2022 (the commencement date) and requires every regional council to map as highly productive land any land in its region that is:

  • In a general rural zone or rural production zone
  • Predominantly Land Use Capability (LUC) 1, 2 or 3 land, and
  • Forms a large and geographically cohesive area.

This mapping must take place within three years from the commencement date.

Protection of urban expansion on highly productive land

The Our Land 2018 report found that, amongst other things:

‘Urban expansion is reducing the availability of some of our most versatile productive land.  Studies based on changes in land cover indicate that between 1990 and 2008, 29 percent of new urban areas were on some of our most versatile land. Fragmentation can also be a pressure on urban fringes: in 2013, lifestyle blocks occupied 10 percent of New Zealand’s most versatile land. This may block future options for agricultural production.’

Accordingly, the intent of the NPS-HPL is to protect highly productive land for use in land-based primary production, both now and for future generations.

It does this by requiring the mapping of highly productive land and putting significant restrictions on the ability of local authorities to zone this land for subdivision, urban development or rural lifestyle purposes.

LUC 1, 2 or 3 land is arable land that is suitable for cropping, viticulture, berry fruit, pastoralism, tree crops and forestry. LUC class 1 has minimal limitations and is highly suitable for those uses whereas LUC class 3 has moderate limitations for those uses.

Regional councils may also map land that is not LUC 1, 2 or 3 land as highly productive if the land is, or has, the potential to be highly productive for land-based primary production in that region having regard to a variety of factors.

Exceptions

There are, as always, some exceptions: to the NPS-HPL. These are:

  • Land that, if already identified for future urban development, must not be mapped as highly productive land
  • Certain territorial authorities may allow urban rezoning of highly productive land if:
  • Urban rezoning is required to provide sufficient development capacity to meet demand for housing or business to give effect to a National Policy Statement on Urban Development 2020
  • There are no other reasonable, practical or feasible options providing at least sufficient development capacity within the same locality and market while achieving a well-functioning urban environment, and
  • The environmental, social, cultural and economic effects of benefits of rezoning outweigh the long term environmental, social, cultural and any economic costs associated with the loss of highly productive land for land-based primary production, taking into account both tangible and intangible values.

There are further prescribed matters that the territorial authority must consider when making its decisions on whether or not to rezone highly productive land. There are also similar restrictions in relation to the subdivision of highly productive land and zoning highly productive land for rural lifestyle purposes. Territorial authorities are required to avoid ‘inappropriate use or development of highly productive land that is not land based primary production.’ 

On a practical level

It will be interesting to see the practical effect of the NPS-HPL around the country. Many of our urban areas are built on highly productive land, for obvious historical reasons. Those areas that spring to mind are the productive vegetable growing areas of Pukekohe and the Horowhenua, and the apple and wine growing regions of Hawke’s Bay, Marlborough and Nelson. Some urban areas in this country have little room for expansion other than on highly productive land.

The rural community will welcome the NPS-NPL but it will present difficulties for town planners to figure out how to deal with the much-publicised need for further housing. Allowing higher destiny development in district plans may be one solution to these problems.

 

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

Shared parenting

Kids, Property, Relationships
0

Relocating the children without consent

Deciding to move to a new location can be exciting and bring a sense of renewal, particularly after a long cold winter and enduring these Covid years.

 

However, if you are separated with children, what happens to ongoing parenting arrangements in these situations? Can you move with your children without agreement from the other parent?

 

If you do this, it is referred to as a ‘unilateral relocation’, and it can result in applications filed and court orders sought. Both parents are considered a guardian of the children, regardless of how much contact one of the parents may have. There are certain decisions about a child that are ‘guardianship decisions.’ You must discuss these with the other parent. Topics to talk about include where a child lives, where they go to school, any medical decisions and so on.

 

The process

Whatever the reasons for you considering a move, the best option is to discuss this openly and honestly with the other parent. Understandably, the idea of your children moving away can be difficult for the other parent.

 

It may be that you can reach an agreement between the two of you. If it becomes difficult, you can get help initially with mediation forums outside of the Family Court.

 

If you cannot agree, you can file an ‘application to resolve a dispute between guardians’ in your local Family Court and the court will decide for you. The court will look at specific factors, including:

  • What is in the best interests of your children
  • Your children’s relationship with you both
  • What contact arrangements would look like for the other parent, as the court recognises the importance of your children having a relationship with both of you
  • The ages of your children, and
  • Your children’s views on the move.

 

Don’t want them to move?

If your children have not yet moved, and you don’t want them to, you can file an application in the Family Court to stop the children from being moved within New Zealand. You can also ask the court for an ‘order preventing removal’ to stop the children from leaving New Zealand. These applications can be filed on a ‘without notice’ basis, where you ask the court to consider the application without first hearing from the other party.

In this application, you ask the court to make an order that states the children cannot be removed from a specified location (within New Zealand or from New Zealand). With this order in place, it limits your children being removed until further investigations could occur or agreement is reached.

 

What if they are moved anyway?

If the children are relocated without your consent, you can apply to the Family Court for the children to be returned to where they had been living. You would file again for a guardianship order that your children reside in a particular place, and then file for a parenting order. The court will generally favour the status quo location of your children, which is where they were

living for the most recent period before they moved. In determining these applications, the court will always consider what is in the welfare and best interests of the children. This is a paramount consideration.

 

Children’s best interests come first

It is important that your children are happy and settled, and that their interests come first. Ideally both parents will work together to ensure arrangements for their children’s welfare are agreed harmoniously. If, however, agreements can’t be reached, there are options for court intervention. It is wise to try and avoid that as it can be very expensive and take a long time. Most of all, it can affect your children’s relationship with both parents – and no one wants that.

 

If you are concerned about where your children are living, or that they could be moved without your consent, please be in touch with us straight away so we can avoid too much heartache for everyone.

 

DISCLAIMER: All the information published in Fineprint 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 Fineprint 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

Attorney vs executor: What is the difference?

Estate, Health Issues, Property, Relationships
0

It can sometimes be confusing when we talk about an attorney (for an Enduring Power of Attorney – EPA) and an executor who is appointed in your will and who looks after your estate when you die. The difference, as outlined below, is literally a matter of life and death.

 

An EPA

An EPA is used when you may not be able to make decisions for yourself. For example, you may become very unwell, or unable to communicate important decisions (you could be away from email or phone access for some time), leading in either case to an inability to make important decisions. Your attorney is the person you trust to act in your best interests – with your property and your wellbeing.

 

There are two types of EPA – property, and personal care and welfare. Your attorney can be the same person/s or you can choose different people for these two roles.

 

An attorney’s role

Your property attorney can manage your finances, they can sell your house if necessary and even buy Christmas and birthday gifts for specific people. Your personal care and welfare attorney can make decisions about your medical care, help choose a rest home if you need to move, and consult with other family members about your health.

 

Most importantly, your attorney makes decisions in your best interests; they only have as much power as you give them in your EPA. Your personal care and welfare attorney cannot, for example, withhold life-saving medical treatment; it is absolutely up to you to decide what your attorney can, and cannot, do.

 

Who needs an EPA?

EPAs aren’t just for the elderly. They are also for the young man who has had serious injuries in a car accident  and struggles with his memory, and for the 50-year-old who is working offshore and wants her partner to sign documents on her behalf.

 

Without an EPA, nobody can make decisions on your behalf if you can’t make them for yourself. Your parents, spouse or children don’t automatically have this right. The only way around this is to spend thousands of dollars working through the Family Court to get an attorney appointed.

 

A will

A will is the document that states where you want your assets to go after you die. Your will appoints an executor, or several executors; they will carry out the wishes that are stated in your will.

 

Executor’s role

An executor works with us to administer your estate and carry out the terms of your will.

 

Your executor calls in your assets and pays any money you may owe. They ensure, for example, that your daughter gets your engagement ring, your life insurance pays off your mortgage and they invest the rest of your money until your children turn a specified age and can get their inheritance.

 

Get your affairs in order

Without a will, your assets will be distributed according to the intestacy rules that govern who gets what from what your estate. Without a will, your family may not get what they expect or what you want which could be very upsetting for them.

 

The only wrong time to get a will and an EPA is when it’s too late. Take back the power to decide where your assets go when you die, and save yourself and your family much heartache. Get in touch with us about preparing your will and EPA today.

 

DISCLAIMER: All the information published in Fineprint 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 Fineprint 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

Negative equity on your property? Not necessarily a nightmare

House, Property
0

What is negative equity?

A negative equity position is where the value of a property that provides security for lending falls below the sum that has been borrowed. The issue is that if the bank ever required the lending to be repaid, the proceeds of the property sale may not be sufficient to repay the full loan amount. With the current property market falling, this may put some property owners, particularly those who have recently purchased, in a vulnerable position.

 

Is it scary?

On the face of it, being in a negative equity position appears frightening. Lenders, brokers and other financial service providers, however, all indicate that it doesn’t need to be scary, but it is fair to say it does make property owners uncomfortable.

The key for borrowers is to ensure they keep up regular loan repayments. Banks make money by collecting the interest paid on loans, so it makes little sense for lenders to race in and force homeowners to sell. Only where a borrower begins to stop their repayments (a ‘default’) does this risk materialise.

 

Impact of rising interest rates

The second aspect for borrowers who have seen their property slide into a negative equity position is that interest rates continue to rise. Meeting current repayments may be quite achievable, however, when it comes time to re-fix the interest rate and the repayment amounts increase, then the strain on finances becomes greater. If servicing your mortgage already stretches your household finances, keeping up with repayments at a higher rate can become unachievable.

 

What to do when times are tough?

Before leaping to conclusions and thinking the bank will turf you out of your house and force a mortgagee sale, talk with your bank first. The bank does not want to see you homeless, and it will usually work hard to help you.

 

Mortgagee sale is a last resort

Whether or not your property is in a negative equity position, the mortgagee (usually a bank but also sometimes a private entity or person) always has the legal right to exercise their mortgagee’s power of sale where a borrower is in default on their loan.

The bank’s right to sell your home when you are in default (and the process to do so) is set out in the Property Law Act 2007. The legislation states that the bank owes a reasonable duty of care to obtain the best price obtainable at the time of sale. This means that the bank cannot simply sell for a price that covers the principal debt and its own costs; it must get the best price possible. After a mortgagee sale is settled, the balance of the bank’s debt any penalty interest and the bank’s costs are paid and any remaining balance goes to the borrower.

In a negative equity position, where the best price for the property is insufficient to repay the loan amount, the mortgagee will usually transfer the unpaid balance of principal debt, interest and costs to a personal loan; it will be up to the borrower to negotiate the interest rate applied for that loan.

While banks always have the power to sell as a last resort, in practice, borrowers can find themselves months in default without their bank exercising this power. It is always in the bank’s interest for borrowers to repay rather than force a sale. Usually, the borrower will receive several notices setting out the default and the penalty interest payable.

If the mortgagee believes that there is any chance of repayment, they are likely to agree to facilitate a repayment arrangement.

 

We can help

Going through this process can be intimidating; talking with us will help determine your rights, obligations, or what options you may have and can help limit any further debt or penalty being incurred.

Working together with us may also help you realise that the issue isn’t as serious as the notice seems. We can help you negotiate an amicable way forward with your lender and, most importantly, do our best to ensure you get to keep your home.

 

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

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

+64 7 872 0236 [email protected]