The team at Morrison Kent lawyers and JUNO Investing have partnered to answer your legal questions. This month it’s Jamie Nunns, an expert in property, trusts, and business law.
If you have a question you would like us to answer in an upcoming article, please submit your question today – we’d love to hear it!
Q: I have a KiwiSaver first-home buyer question. Can you still access your KiwiSaver if you are a director of a company that owns property? I’m not a shareholder, just a director only. I meet all other criteria, like never owning property before. Thank you. – Name Withheld
A: This is a question that falls slightly between the lines of the law, on the point and the rules of most of the KiwiSaver schemes.
The answer, unfortunately – is maybe.
You would need to enquire with your KiwiSaver provider and disclose this interest. No doubt, the provider will ask you to answer more questions on how you came to be a director of a property-owning company without having ownership of it.
As the rule stands, if you are already a property owner, you may still qualify for a withdrawal if you are in a first-home buyer’s financial position. But, you need to meet specific criteria, which includes:
- You have not previously withdrawn your KiwiSaver funds to buy a home.
- You have been a member of KiwiSaver for at least three years.
- You have previously owned property, but no longer hold any interest or share in a property.
- You do not have assets to the tune of more than 20 per cent of the house price cap for an existing/older property in the area you are looking to buy. Such assets may include:
- Money in bank accounts (including fixed and term deposits).
- Shares, stocks, and bonds.
- Investments in banks or financial institutions.
KiwiSaver is an excellent tool for first-home buyers when actioned correctly.
It’s best to get advice from a property law expert to help you complete your KiwiSaver first-home withdrawal application.
For more information please read our first home buyers guides.
Q: I own a rental house and I’m considering selling a quarter share to my daughter. Am I right that she will be added to the ownership title and, after that, will collect a quarter share of the rent collected, pay rates, insurance costs and maintenance on the property?
Is there any other thing I should take into account before going ahead with this deal?
How would I word this in my will, because I have two other children who would be beneficiaries? – Heather
A: You’re right. Your daughter would go on the title and be entitled to a quarter of the incomings and outgoings.
In terms of the will, whatever you have would (presumably) be divided among the children. However, the quarter share wouldn’t be part of that because it would already belong to your daughter.
We would recommend entering into a co-ownership agreement between the two parties which will cover many situations, especially for decision-making and the possible future sale of the property.
Entering into a co-ownership agreement in these situations is usually necessary for several reasons. A good lawyer will help you identify and consider issues that aren’t always top of mind.
While it’s not a complete list, as circumstances will vary from one collection of co-owners to another, here are some of the more common issues you might need to consider in a co-ownership agreement:
- Who the parties are. This might seem obvious, but there are many possibilities – such as couples, family members, or businesses, in all sorts of combinations. Each type of owner has different considerations.
- Who’s responsible for managing the different aspects of the property, such as paying the outgoings, doing work on the property including maintenance, dealing with tenants when it’s rented.
- What happens if one person wants to sell the property or their share? Is there a buy-out mechanism, or do all the parties need to agree?
- If the property is sold, how will any gains or losses be divided?
- Are there insurance requirements, such as life insurance to repay a share of a mortgage if one of the parties dies, or income protection insurance in case someone loses their job?
The idea of buying or dividing property with others needs careful consideration, planning, and good quality legal advice.
Here’s a link to some information that might help:
Q: What is a charging order? And how long can a charging order be placed on a property? What if that person is now deceased? – Name Withheld
A: You can get a charging order from the court when it’s proven that one party owes another money (in other words, a court judgement ordering the payment of money).
A charging order is registered against a title to land.
If the debtor wants to sell property, a charging order prevents them from selling it until the debt has been paid. The debtor must settle the money owing in order to remove the charging order.
These charging orders lapse after two years but can be renewed in certain circumstances. Where the beneficiary of a charging order is deceased, then the charging order belongs to that person’s estate.
Before making an application, it is best to talk to a lawyer who can advise you on your case and highlight the options available to you.
Q: I have a ‘life interest’ in a property. What does that mean for me as an individual? Another two parties have an interest in the same property. Can I buy their life interest out? – Name withheld.
A: A life interest means that you have the right to use or benefit from certain property (which can be money, land, or other types of property) for the rest of your life.
At the end of your life, that property goes to whoever was specified as getting it after your life ends in the original document that created the life interest (which is often a will). That person is called the remainderman.
A life interest can be surrendered, but only with the agreement of both parties. It cannot be done unilaterally.
Q: Can leasehold land be for less than 21 years, say five years from the first date of signing the property’s lease? – Name withheld.
A: Yes, a lease can theoretically be for any term.
That term could be a number of years, decades, centuries, or even 1,000 years.
A leasehold property owner has the right to live in it for a specific term and extend or change the term with the freehold owner’s agreement.
One thing to note, you cannot lease a part of a property for more than 35 years without a subdivision permit from the local council.
Q: I live in Kerikeri [address supplied] and have been here since 1990. I was sold the property without a boundary fence and I thought it was OK.
In 2008, a person who bought the property next door pulled out the survey pegs. But I’m still paying rates on it.
The Far North District Council surveyor has reconfigured my land map, but I still pay rates on land he has penned out, and now I am worried for future generations.
Is there any way I can claim the land or adjust rates to the size of the land, please?
I’m just wanting to know if I can fence it now that I can afford to, or does it now belong to the council?
Can the council confiscate private land that rates have been paid on?
Thank you for the opportunity to voice a concern. – Barbara.
A: This is a complex question, and to answer it would require significantly more information but, in short, if you have a good title to the land, you can’t generally be dispossessed of it.
The council can only sell land where the rates haven’t been paid.
New Zealand land ownership operates under a system of ‘indefeasibility of title’. As you might imagine from the terminology, if you have good legal title to your land, it is by operation of law not able to be lost, annulled, or overturned.
Logically, this makes sense – ownership rights should be absolute, particularly in respect of our most important assets.
When we consider your backyard or your fence line, it’s possible, and more probable than you might imagine, that the physical reality does not reflect the legal boundary, especially considering the contours of some New Zealand suburbs.
Surprisingly, given the peculiarity of this niche area of land law, the process of formalising the possession and legally changing your land’s boundaries is reasonably straightforward.
With the right advice and support, there’s often merit in evaluating your situation regarding making a claim or getting advice on a claim against you.
If you’re not sure of your boundaries or you think you may be in a position to make a claim for land, you can seek advice from a property law expert.
To contact Jamie Nunns, email him at Jamie.firstname.lastname@example.org. Using his expertise, Morrison Kent has successfully made and defended many claims in this area and have the knowledge and experience to assist even the most technical of queries.