From The Legal Beagle Team 02/07/2015

Between finding the right property and getting the bank to say yes, there’s a tonne of info a home buyer has to read and understand.  Often one of the first docs a home buyer will see about a property is the certificate of title (aka “the title”).  A certificate of title is a legal doc that tells you who owns a property and other juicy info like the size the land area and whether there are any restrictions on the property, like a mortgage.

You might have looked at a certificate of title in the past and gone cross-eyed at all the law references and boring legal words.  But don’t fear,  because here are 5 steps to help you read and make sense of that title.

Step 1:  Make sure you’re looking at an up to date title

A certificate of title can become out of date real fast so it’s important that the one you’re looking at is current.  Ideally you want to be looking at a title search copy that’s dated the same day you’re looking at it, or is no more than 1 week old.  To see the date of the title search copy, see the date being pointed to with the big orange arrow in this example:

If you need to order an up-to-date title search, head on over to the Cheap Titles website and order one. Or get one from your lawyer.

Step 2:  Check the plan

The plan of the property is usually on page 2.  Check it and make sure the property in the plan is the one you’re looking at buying.  You should be able to recognise the property in the plan by its legal description.  You can find out what the legal description is on page 1 of the title here:

Then you turn over to page 2 and look for the legal description in the plan.  In the above title, the legal description is “Lot 23 Deposited Plan 313591”, and you can match this to the plan on page 2 like this:

Use your knowledge of the property and its boundaries and its location on the street to make sure the property you’re buying matches the property on the title.  If you have any concerns please talk to your lawyer.

Step 3:  Find out the type of title

In NZ there are 4 main title types:

• Fee Simple
• Leasehold
• Cross lease
• Strata (also known as “unit title” or “stratum estate”)

You can find out the type of title (also called the “Estate”) here:

It’s important for you to understand the type of title you’re looking at buying and you should talk to your lawyer about this.  Here is some quick info about each title type:

• What does fee simple mean?  A fee simple title is the type of title that gives an owner the most enjoyment and use.  The biggest pro of fee simple is that you own the whole of the land and are able to make any additions or alterations without having to get the consent of neighbouring property owner – but don’t get too excited, you still need Council consent for these things!

• What does leasehold mean?  Leasehold means you own the buildings and any other improvements on the site, but you lease or rent the land from a land owner.

• What does cross lease mean?  A cross lease is where a number of people own an undivided share in the ownership of a piece of land and the homes that they build on the land are leased from the other owners. The houses are often flats or townhouses.

• What does a unit title (or strata) mean?  This type of title is usually in an apartment type development. Unit title properties are are managed by a body corporate.  This is a fancy name for a group of people who own apartments in the same building who manage and look after the expenses for keeping those apartments in good shape.

Step 4:  Find out about the restrictions on the title

The restrictions are on a title are listed under “Interests”:

In this example, the only restriction is a mortgage registered over the property to ANZ Bank.  Other kinds of restrictions you might see are easements, covenants, caveats, building line restrictions….the list goes on.  It is important you get your lawyer to search and explain the details of each restriction so that you fully get how the use of the property will be restricted if you buy it.

Step 5:  Get your lawyer to check the title

Buying a house is an expensive time but please don’t tighten your belt when it comes to getting good legal advice about the property you’re buying.  After all, buying a property will probably be one of the biggest investments you’ll make.   Bring up all niggly issues with your lawyer, and make sure you really understand what’s on the title of the fabulous property you end up buying.

Disclaimer: The information on this page is general information only and must not be relied on as legal advice. Legal Beagle is not a law firm or a substitute for a law firm. We are unable to provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defences, options, selection of legal documents or strategies.