(by Graham Strez, Claims Director)In theory, the owner is required to provide the architect with the legal description of the land and associated site levels, boundaries and legal constraints, but it often defaults to the architect to source that information. The task includes determining how those issues affect the proposed works, and if there is any doubt or uncertainty the architect should insist upon the appointment of a surveyor and/or a lawyer experienced in such matters. Boundaries (including easements, ROWs, external boundaries) should be pegged, a topographical survey carried out, specific height controls plotted, and the legal issues clarified and explained in writing. Any of these matters may require to be reviewed as the building design evolves.Before preliminary design, the relationship of bulk and location controls to the easements or boundaries should be specifically checked with the territorial authority: interpretations seem to vary! Be aware that there may be issues around the legal constraints on the use of the land that will not be on a LIM report.For those who want an in-depth understanding, especially in the Auckland context, see “Arrested (re)development? A study of cross leases and unit titles in Auckland.” Craig Fredrickson, Auckland Council Technical Report 2017/025, from which the figures and some of the information below is drawn. (http://www.knowledgeauckland.org.nz/assets/publications/TR2017-025-Arrested-redevelopment-cross-lease-unit-titles-Auckland2.pdf )In NZ, real property (land) ownership rights are registered by the Land Registrar and recorded by Land Information NZ (LINZ). The Torrens system of land ownership registration guarantees the accuracy of the survey, the title and ownership interest in the parcel of land. There is essentially one form of ownership and that is freehold or fee simple; but there are subsections of this which include leasehold, Maori freehold and Unit Titles (UT). Additionally, there is the Cross Lease (XL) which combines some of the feature of some of these. Occasionally, there are examples of shareholding rights to land-ownership companies.
Freehold interest implies a free and unencumbered ownership of land, including the ground below and the air above, subject only to a pre-emptive right of the Crown to retain - for example - subterranean oil and certain mineral deposits, and to acquire land for public works etc, as prescribed in various legislation e.g. Public Works Act.Freehold rights may be varied by agreement, but to become effective they must be recorded and registered by the Land Registrar. Generally, these variations are in the form of easements or series of easements, or alternatively by covenants. These agreements are registered upon the Certificate of Title (CT) as “interests”. In addition, property rights may be subject to certain licenses and/or leases. It is the lack of understanding and appreciation of the underlying nature of these licenses and leases which is the cause of professional grief occasionally experienced by some architects.As architects, we commence our design process by perusing the CT to confirm the client’s ownership of, or interest (e.g. leasehold) in the parcel of land and to establish the survey references in the Deposited Plan (DP). The CT and DP will delineate the property boundary dimensions and bearings relative to true north. This information is two-dimensional. An architect should always refer to the DP for boundary definition. The client should typically provide this information in accordance with NZIA AAS, but otherwise an electronic copy can be obtained from LINZ for a small fee. In addition, a cadastral survey plan (survey sheet) which provides additional site-survey information, can be sourced. (Council’s property file may include a copy of the subdivision plan which may identify various topographical features, including contours, that existed at the time of subdivision application.)The first thing to consider when perusing the CT or DP is to determine whether the dimensional references are in metres, or in links which was typical in NZ’s pre-metric era. (1 link = 0.66 foot = 0.201m). The CT will record the various interest in the title. Some of these (e.g. easements) will be referenced within the DP. The easement will refer to the Dominant tenement (the property owner who benefits from the easement) and the Servient tenement (the property owner that suffers from the easement.)An easement should record, with dimensional accuracy, the extent and limits of the easement rights and obligations of the various interests. Some easements (e.g. easements in gross) are general in their prescription. Examples might include a right to permit power cables to cross land, to receive a water discharge from a neighbouring property or to permit pedestrian traffic over a historical pathway on the land, or to receive light and air from an adjoining property.The existence nature and location of such easements may impact the design of the proposed building. The site plan will need to demonstrate that these constraints to property use are recognised, respected and accommodated. In many District Plans, building bulk and location rules may refer to Right of Way (ROW) boundaries, or Access Strip boundaries, rather than CT boundaries. These may permit a greater opportunity for site development. New easements may need to be considered and acquired from neighbours in order to maximise a site’s development potential and may need to be considered at preliminary and developed design stages. Such proposed easements will affect property rights and therefore require a sale and purchase agreement between the affected property owners and require registration within a newly-issued CT.
Of more subtle effect is the registration of various covenants as noted in the “interest” summary within the CT. Typically, these are restrictive covenants and relate to an obligation of the land-owner to respect certain building height limits and/or building location limits which are intended to protect neighbouring views, sunlight or privacy. Some covenants may restrict the use of the property, or part of the property: for example not permit the housing of pigs or poultry or to conduct a particular type of commercial or manufacturing operation. It is also possible for a covenant to be framed positively, as opposed to being restrictive: requiring buildings to be constructed with a minimum plan area, minimum building value or in accordance with certain design guides and materials are examples of this type of covenant.These private property interests are of little or no concern to building consent authorities whose statutory interest is solely with District Plan and Building Consent matters. Many architectural projects have been ankle-tapped when an affected property interest discovers that their particular covenanted rights have been unwittingly ignored or abused. In such circumstances, buildings have had to be demolished or substantially demolished and/or reconfigured to comply with the terms of the covenant. A breach of covenant is effectively a breach of contract or deed. A disaffected interest can serve a High Court notice of injunction to restrain a person from breaching the covenant. Damages for breach of covenant can be substantial, including the cost of demolition and/or property reinstatement plus time/money costs and general damages, or alternatively the loss of property valued suffered by the affected neighbour together with general damages.
Another form of covenant is the Cross Lease (XL) which was a legal device dating from the late 1950s to circumvent the minimum subdivision area rules of many District Schemes - the fore-runner of today’s District Plans. Larger residential properties could thereby accommodate intensification without subdivision and its associated development costs of access, upgraded servicing and reserve contributions. This was the opportunity seized upon by later sausage-flat developers in the late 1960s and 1970s, until their wings were trimmed by changes to the bulk and location and amenity rules of District Plans and the introduction of the Resource Management Act 1991, which treated XLs as a form of subdivision.XL title ownership is unique to NZ. In Mar 2016, there were 100,145 XL titles in Auckland City. Together with 73,376 Unit Titles (UT), this accounted for 31% of all residential titles in Auckland City.A XL is a covenanted interest in a freehold title which is owned by two or more interests who each own an undivided equal share of the freehold property. The CT is accompanied by a Flats Plan which delineates the location and extent of flats or dwelling on the property, and in some cases the exclusive use areas of the various XL interests. The Flats Plan delineates the external face of the exterior walls or structure.The associated covenant determines the rights and obligations of the cross-lease owners in respect of their freehold interests. It is the interpretation of the covenanted wording that is paramount when considering these interests and obligations. Typically, the covenant wording is that provided in a template prepared by the Auckland District Law Society, but other formats are possible. The covenant typically permits alterations and/or additions within or to an individual flat, but “subject to the written consent of the other cross-lease owners, such consent not to be unreasonably or arbitrarily withheld.” This clause is the Achilles heel of the covenant. Because consent cannot be assured, XL titles typically are sold at a discount of between 4 – 9% of equivalent unencumbered freehold titles. The greater the number of XL interests, the greater the discount within the above range. A difficult XL neighbour can suffocate the development aspirations of another by withholding their written consent and alleging concern about the structural nature and extent of the proposed alterations/additions or their visual appearance, their effect upon the privacy and enjoyment of their amenities, including loss of sunlight, views and privacy.The Auckland District Law Society has acknowledged and considered the inherent difficulties posed with the ownership of XL titles and recommended legislative changes to the Law Commission. Its concern then was the covenanted impediment to proposed alterations in response to impending building age deterioration and changes in residential lifestyle. It proposed a method of converting XL titles into Unit Titles, but this was not adopted by Parliament. Instead, it legislated the Unit Titles Act 2010.It would be unwise for architects to interpret the intricacies of the wording and meaning of a XL covenant. Deference should always be afforded to a lawyer knowledgeable in this aspect of the law. There are horses for courses. Architects should insist that the client’s solicitor explain and advise them of the nature and implications of these XL covenants and any other covenants and easements.
Some CTs are noted as being limited as to parcels. These are generally found on CTs which relate to early surveys or DPs. This is a caveat that the boundary locations are not necessarily accurate and therefore not guaranteed. Where the architect’s design proposes building near or on the site boundary of a property “limited as to parcels”, the site should be re-surveyed and the new survey plan deposited with the Land Registrar and a new CT registered.