February 2008
The Property Law Update is produced to keep you up to date with the
developments in the law relating to property. We look at legislation
and cases covering property and personal law issues (such as leases,
mortgages, easements, sale of land, family law, trusts and assets management
etc.), as well as environmental concerns and local government matters.
If you would like to know more about any of the topics covered in this
update, please contact us.
This update is produced by our Property and Private
Services Group and the Resource
Management teams.
This issue:
- Boundary Disputes Can Cut Both Ways
If you are using part of your neighbour's
land as a driveway, or part of your neighbour's house
is situated on your land, you may lose your
rights over that land. more
- Trust Us!
Every five years the New Zealand Law Society requires lawyers trust
accounts to undergo a rigorous audit. Brookfields' recent audit showed
that we rate among the best. more
- Affordable Housing
The Affordable Housing: Enabling Territorial Authorities
Bill will, if it becomes law, have a significant effect on developers,
councils and potential home owners. more
- Publications
Brookfields is committed to keeping its clients up to date and produces
regular updates on the law. You are welcome to subscribe to any
of these. more
Boundary disputes can cut both ways
Keil v Thomson (High Court)
If you are using part of your neighbour's land as a driveway, or part
of a building belonging to your neighbour is situated on your land,
you should be aware that you may lose your rights over that land if
a dispute arises.
In this case, K purchased his property in 1950, just before his neighbour
L bought the adjacent property. K allowed L to drive his
trucks over K's property to access the rear of L's house, eventually
forming a concrete driveway. To avoid further encroachment K erected
a low wall well within his own property. L also erected a garage which
partly encroached on K's property and which K allowed to stand along
with the wall for 44 years together acting as the practical boundary
of the two properties.
The Ts became the owners of L's land in 1997, finding out a year later
that there was an issue with the boundary. In 2005 they pulled up the
old driveway to lay a new one. At this point, before the new driveway
had been laid, K carried out a survey showing the extent of the encroachment
and notified the Ts that he wanted his land back.
K brought court proceedings for the Ts to deliver up his land including
removal of the parts of the driveway and garage situated on K's land.
The Ts counterclaimed under s129 of the Property Law Act 1952. This
section enables the court to use its discretion to allow property to
vest in the encroaching party if a building is erected on it and the
owners of the building are either not responsible for or are unaware
of the encroachment. The District Court found in favour of the Ts in
the first instance but both parties were dealt a mixed hand when K
appealed.
The High Court Judge found that s129 allowed only for the land under
a building built on encroaching property to vest in the encroaching
party. The land under the garage was therefore allowed to vest in the
Ts. However the judge found that when the driveway was removed the
encroachment ceased to exist and the land went back to being bare land.
He saw the new driveway as a separate encroachment from the previous
driveway. As the Ts were now both aware of and responsible for this
new encroachment they could not make a claim under s129. The Judge
therefore ordered that part of the driveway encroaching on K's land
be returned to him.
So if you are aware of a structure, be it a fence, a driveway or a
building which has been erected on your land by your current neighbour
you must ensure that they remove the encroachment before passing the
property on, or risk losing that land altogether. If you become aware
that one of your structures is encroaching on your neighbour's land
you should be aware that if you remove it, for any reason, you might
forfeit any rights you otherwise may have had over that property.
Trust us!
An NZLS auditor recently spent a daunting eight days examining every
aspect of Brookfields' trust account for the regular five yearly NZLS
audit. To
put the length of this audit into perspective, internal auditors usually
spend on average three days completing their quarterly audit.
Our Trust Account Partner, Deborah Miller and Finance Manager,
Maureen Sue-Wai, later attended a debriefing meeting. The auditor had
no issues of concern to raise at all.
He commented that we run a very tight ship here and our trust account
systems are amongst the best he has come across in all the big firms.
These comments are a wonderful reflection on the fantastic efforts put
in by our accounts department. Brookfields takes it obligations
to its clients very seriously and we congratulate Deborah, Maureen and
their team for their "tight ship".
For more information please contact: Deborah
Miller, (Partner, Commercial Property)
Affordable Housing: Enabling Territorial
Authorities Bill
Home ownership rates in New Zealand have fallen from 74 per cent in
1991, to 67 per cent in 2006. The problem is particularly
acute in Auckland and Queenstown. The Government sees owning
a home as part of our national identity and psyche. It therefore
introduced the Affordable Housing: Enabling Territorial Authorities
Bill in late 2007 to counter this downward trend in home ownership.
Drawing on a UK model, the Bill proposes to give local authorities
the power to require developers to either include affordable housing
in their developments, make payments towards the cost of providing
such housing elsewhere, or provide land for the construction of affordable
housing.
Councils that choose to utilise the proposed legislation must first
assess the affordable housing need in their areas. They may then
decide to develop a policy to address the need for affordable housing
in their district and seek consultation on the policy. Costs
incurred by developers might be offset by the offer of incentives to
them, including the waiving of development contributions, or permitting
greater densities in developments.
Councils must also consider how to administer the resultant
affordable housing. The options may include adding it to
the Council's stock, vesting it in a housing trust, entering into shared
equity arrangements with first homeowners, or selling them on the open
market with deed restrictions to ensure the housing remains affordable
in the longer term.
However there are some real pitfalls for developers, councils and
homebuyers alike. Developers in particular may suffer, as the
Bill does not require compensation to be paid for land set aside. This
is, in effect, a "contribution" from the developer. The
Council is not obliged to do anything to offset the development costs. Compliance
costs will increase.
A significant feature of the Bill is that it will void future title
covenants if their principal purpose is to exclude "social or
affordable housing, including supported accommodation". This will
have a particularly significant effect on high end developments where
developers want to control the type or cost of housing.
Councils may struggle to understand their powers and discretions and
when to apply them. The current version of the Bill is considered by
some legal commentators to be vague and too broad. Costs on Councils
may also increase – from administration of the legislation through
to dealing with a lengthy and expensive appeals process. The cost of
getting it wrong will be significant.
Potential homeowners should be aware that while this type of housing
may assist them into the market and allow them to build some equity
in a property, it may not be useful for capital gain, because they
may be restricted in terms of on-sale. Transfer restrictions
may be put in place to ensure that affordable housing will be protected
against significant price increases.
The Bill is currently before the Local Government and Environment
Select Committee. Submissions close on 29 February 2008. As we
go to print, we note that Auckland City Council's submission does not
support the Bill. The Committee's report to Parliament is due on 10
June 2008.
For more information please contact: Linda
O'Reilly (Partner, Local Government) or John
Young , (Senior Associate, Local Government)
Publications
Brookfields produces a range of newsletters and updates on legal developments.
These include:
The Property Law Update
LGLaw and Public Law
Immigration
i-News
Employment Law
TrustLaw
If you would like to be notified when any of these publications are
issued, please contact
us.
Notice:
The items contained in this update are intended to be brief in nature
and should be used for information only. They should not be relied
on as legal advice.
Last updated: February 2008 |
