April 18 2016

Legal Boundaries: Why titles matter

You have just moved into your new home and your neighbour knocks on your door. They say that your garage is two metres into their boundary, and that they need this space to widen their driveway. Suddenly you wish you had known where your boundary was before you purchased the property.

There is a great deal of information now available which shows the boundaries on properties that were previously not apparent without a survey. With the rise of the internet, prospective purchasers are raising issues as to the location of legal boundaries that existing owners may never have known about previously.

Most local council websites provide GIS-Mapping or other forms of aerial maps that give an indication of legal boundaries in relation to the land and dwellings for any given property. These provide invaluable information, given that most real estate agents include clauses in sale and purchase agreements in which the purchaser declares that they do not rely on the agent or vendor to point out the legal boundaries.

Real estate agents often limit their liability in relation to pointing out the boundaries of a property. A 2013 decision of the Real Estate Agent’s Disciplinary Tribunal found that an agent should simply recommend that the purchaser consults a surveyor where the boundary pegs are unable to be located on the property. Unfortunately with older properties, survey pegs may have long disappeared.

It’s important for a purchaser to make these enquiries. If a significant part of a dwelling is outside the legal title boundaries, this could have consequences for the transaction. As legal ownership and securities are registered on land, and the dwelling is simply a fixture on that land, many lenders are not prepared to accept such properties as security for a loan, and an insurer may have difficulty providing cover.

Finding out after you’ve signed the agreement

If you have already signed an agreement to purchase and you find that the dwellings are outside the legal boundaries, you may be able to ‘requisition’ the title. A requisition is a request that a restriction or matter causing a defect on the title is removed by the vendor. However, in light of a recent High Court case, issues may arise if the title is ‘limited as to parcels’. These titles were created when the New Zealand system for governing titles to land was restructured between 1870 and 1924. During this process, the land was surveyed and accepted by the Land Registry Office before the Crown guaranteed the title. To speed up this process, owners could also apply to have their land title converted into the new system without a survey, but the land area and boundaries would not be guaranteed. Consequently the title would be noted as ‘limited as to parcels’.

In the Forde case, Justice Gendall recommended that if a title is ‘limited as to parcels’ and has dwellings outside of the title area, then it’s the purchaser’s responsibility to obtain a survey and resolve the title defect. Although this decision is under appeal, it suggests that a purchaser would not be entitled to make a requisition for dwellings outside the boundaries in a situation where a title is ‘limited as to parcels’.

There are several steps that we recommend both purchasers and vendors take so that you can avoid unpleasant surprises during your property transaction:

Discuss this with us. We can search land titles online and look at the GIS-maps, or provide you with links for your own research.

  • Google to find your local council’s GIS-maps or ‘cadastral survey maps’. Check that the fence lines and structures are all inside the lines which represent the legal title to the property.
  • Inspect the property for survey pegs if the property is relatively new or it’s on a vacant section. If you are buying a vacant section (which is not limited as to parcels), the vendor is obliged to point out the legal boundaries and have survey pegs in place.

   Rae v REAA & Burch [2013] NZREADT 3

   Forde v Li[2016] NZHC 219