The New Zealand Law Society welcomes the modernisation of the Land Transfer Act but is concerned about how some of its new provisions will work.
The Land Transfer Bill is set to amend the Land Transfer Act 1952, which the Law Society says will bring this key piece of property legislation into the 21st century.
This morning the Law Society presented its submission at a select committee meeting.
A Law Society spokesperson, Ian Haynes says a law change is well overdue but aspects of some provisions proposed in the legislation need some explaining.
He says two new clauses allow the High Court to alter the land title register in cases of manifest injustice, which introduces a challenge to the fundamental concept of indefeasibility of title.
"These clauses create a very wide field within which the High Court may operate to alter the land title register. This in turn has the potential for profound impact on banks and other lenders, who lend money on the security of land," he says.
The Law Society's Property Law Section chair, Duncan Terris says a proposed compensation clause in the Bill would allow a person who is deprived of their interest in land the right to claim compensation from the Crown.
"This right has always existed, but the proposed clause suggests that a person needs to invest time and money into litigation before they can seek compensation and this could make access to compensation more difficult.
"The clause needs to be redrafted to make it very clear that a person may apply for compensation immediately," he says.
The Bill also proposes that compensation will be assessed using the market value of the land in question, which could potentially result in unfairness to the person receiving compensation. The Law Society recommends that in the event of a compensation claim, the land's value should be assessed at what has been lost from a claimant's perspective.
Mr Haynes says the Law Society is also concerned with proposed increased obligations placed on mortgage lenders to verify the identity of borrowers.
"It is assumed that the reason behind this is because mortgage fraud is increasing in Australia yet there has been only one known instance of attempted identify fraud in New Zealand land dealings since Landonline was introduced.
"There is adequate protection in place imposed by regulations and the Registrar-General's published Land Information New Zealand Standard for verification of identity of a borrower. This already minimises the opportunity for fraud in New Zealand, "he says.
The Law Society says it would welcome any opportunity to provide further advice on the proposed Land Transfer Bill.
You can watch a Question and Answer session with Duncan Terris here.