Commonly Asked Property Law Questions
What is a Requisition?
A requisition is a demand by a purchaser to a vendor to remove from a land title, before the purchase is completed, some encumbrance, easement or restriction which makes the title different from that which the parties entered into when executing an Agreement for Sale and Purchase of land.
Clause 5.0 of the Eighth Edition of the Real Estate Institute/ Auckland District Law Society Sale and Purchase Agreement sets out the provisions relating to title, boundaries and requisitions. A purchaser has ten working days from the date of signing the Sale and Purchase Agreement to give notice to the vendor of any requisition. If no requisition is made within that time the purchaser is deemed to have accepted the title. The vendor then only has a limited time to reject the requisition (“the vendors notice”) otherwise the vendor is deemed to have accepted the requisition and it must be complied with prior to settlement. If the purchaser receives the vendors notice, then the purchaser can waive the requisition OR either the vendor or the purchaser may cancel the Agreement.
There are also provisions in the Sale and Purchase Agreement that apply to the requisitioning of cross lease and unit titles. Any alterations to the external dimensions of a flat (that are attached and enclosed) are requisitionable as are any encroachments from a unit on a stratum estate property.
All requisitions must relate to a defect in title and include such things as easements, restrictive covenants and fencing covenants or when the vendor’s title is materially different from the title that purchaser has contracted to buy.
One important factor to remember is that a Sale and Purchase Agreement is not unconditional until all the special conditions in the Agreement have been satisfied and until the requisition period has passed.
What Is a Caveat?
A Caveat is an instrument registered against a land title which prevents certain actions taking place with the title. For example, an owner of a property may not be able to register a new mortgage or transfer the property without the consent of the Caveator (the person or organisation that has registered the Caveat).
There are five specific types of Caveat in the Land Transfer Act. However the most common and the one you are most likely to come across is a Caveat against dealing with land. A Notice of Claim pursuant to the Property (Relationships) Act 1976 operates in a similar manner.
Caveats can only be removed by either an application to the High Court, by lapsing the Caveat under Section 145 or 145A of the Land Transfer Act or by the Caveator withdrawing the Caveat.
What is a Builders Report?
Registered builders and engineers can give a report on a property which helps confirm that the house is in a sound condition and not likely to have any structural problems. It is prudent to make any Agreement for the purchase of a property conditional upon obtaining and being satisfied with a Builders Report.
A Land Information Memorandum (“LIM”) on the other hand is obtained from the local Council and provides information on the property such as building permits and consents issued, special land features, storm water and rates information, zoning and protected trees.
As each report assesses different aspects of the property, we would always recommend that an Agreement be conditional upon obtaining and being satisfied with both a Building Report and a LIM.