Selling a property where a title is still to be issued can be a complex process.  Purchasers are often surprised at what is involved and how long it can take to obtain a title.  It helps if agents can explain the process to their clients, including how long it can take and guide them through it so that there are no surprises.  

When a property is subdivided there is a lot to be done before a certificate of title can be issued for the newly subdivided lot.  The vendor needs to engage a surveyor to prepare a subdivisional plan (also known as an LT Plan) to show the proposed subdivision.  This plan will include details of the easements that will be in place over the land, such as a right of way or the right for neighbouring properties to bring services across the newly subdivided lot. 

The surveyor liaises with the Council through the resource consent process, to ensure that the subdivision is correct and compliant. The subdivisional plan is then deposited with Land Information New Zealand (“LINZ”), and the vendor’s lawyer prepares title documents to lodge with LINZ.  LINZ then generates a certificate of title for the property. 

Wherever possible, purchasers should receive a copy of the subdivisional plan along with documents for any easements (including any land covenants) that will be registered before signing the Agreement for Sale and Purchase (“ASP”). 

Purchasers may raise concerns at this stage, for example:

  • Is a party wall to be built between neighbouring properties and if so how will the costs of building and maintaining the wall be split?
  • Is the empty section next door going to be built on at some stage, and if so do any conditions or restrictions apply?

A good ASP will give the purchaser the right to cancel by a particular date if the process takes longer than expected (also known as a ‘sunset clause’). It should clearly set out that costs of the subdivision are covered by the vendor, and if relevant should also address the vendor’s responsibility to obtain a code compliance certificate in respect of the property prior to settlement.

If you have any concerns about the process for selling a property where a title is still to be issued, talk to a legal advisor.  As always you should strongly recommend that your clients get legal advice before signing any paperwork.

Therese Greenlees
Registered Legal Executive