New Zealand Law Society - A new Land Transfer Act

A new Land Transfer Act

A new Land Transfer Act

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The main thing I remember from the land law class I took at law school was the notion of ‘indefeasibility’, a word I have still never heard used outside land law (by way of comparison, words like caveat, and even moiety, have a place in other contexts). Fels v Knowles, and Frazer v Walker, and all that. One of my theses – opinions – has been that Frazer v Walker was such a lightning bolt to a generation of land law scholars that questions of immediate and deferred indefeasibility supplanted discussion of almost all other topics for a significant length of time, leading our land law study to focus attention on the register above almost all other topics.

The Land Transfer Act 2017

It is entirely appropriate that 50 years after Frazer v Walker, new land transfer legislation will finally see the light of day. The Land Transfer Bill received its third reading on 4 July 2017, and at the time of writing is awaiting royal assent. It has had a reasonable gestation: the Law Commission’s Issues Paper was released in 2008, and its formal report and draft bill in 2010. A bill was introduced to Parliament in early 2016, and received the Royal Assent on 10 July 2017.

Terminology

The terminology ‘Land Transfer Act’ goes back to 1870, but invites comment. There can be no doubt that it facilitates transfer, by providing clarity and certainty on land ownership, but the Act applies whether or not land is transferred, and arguably ‘Land Titles Act’ would be a more apposite description.

Some terminology is fixed; other terminology is more flexible. Lawyers should now get used to the phrase ‘record of title’ (rather than ‘certificate of title’, or ‘computer register’): see section 12. Title, we are reminded, is obtained by registration: ‘Title by registration’, section 51.

Manifest injustice

In one notable reform, a person (A) who is deprived of an estate or interest by the registration of a void or voidable interest by another person (B), or who suffers loss or damage by the registration of a void or voidable interest by another person (B), may apply to the court for an order cancelling the registration of B. This remedy is only available if the court is satisfied it would be “manifestly unjust” for B to remain the registered owner, and forgery or other dishonest conduct does not of itself constitute manifest injustice. The notion of an ‘section 57 application’ may yet gain traction in LTA parlance.

Covenants in gross

Section 115 allows for ‘covenants in gross’ to be noted on the register, and sections 240 and 244 of the Land Transfer Bill insert a number of new provisions into the Property Law Act. These reforms have been in the works for some time, though it is useful to remember that it was only in the mid-2000s that the enforceability of encumbrance instruments was decisively determined. Encumbrances, of course, often protect covenants in gross (that is, covenants in favour of a person, rather than covenants in favour of other land). My assessment is that it is likely that covenants in gross will become a common tool of land lawyers, though encumbrances still have their place. Notably, the courts retain the power to modify or extinguish covenants in gross, as they do with positive and restrictive covenants, but this will not extend to existing covenants in gross contained in encumbrances.

Conclusion

The timing is both appropriate and interesting: it’s not like technical land law reform is an election issue. But modernising the Land Transfer Act is important. Property is a significant part of the economy: our largest industry (see the New Zealand Property Council's Economic Significance Report). Land is an important component of household wealth (conversely, mortgages are an important component of household debt). It remains important that land transactions can be carried out in a way that provides and promotes confidence. We have all got used to Landonline, and further reform is ahead with the ASaTS (Advanced Survey and Title Services) project.

If land transfer legislation can be made clearer and more modern – more accessible – it should be, and the modernisation of this critical area of legal practice is therefore to be welcomed.

Thomas Gibbons thomas.gibbons@mccawlewis.co.nz is a director of McCaw Lewis Lawyers in Hamilton and specialises in property and commercial law. He is the author of Unit Titles Law and Practice (LexisNexis, 2nd edition, 2015) and co-author of a number of other titles on property law

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