Subdivisions - getting it right

Transcription

1 Subdivisions - getting it right 1. INTRODUCTION 1 The complexity of subdivision 1 The expertise team 1 Lawyer as the glue 4 Purpose of the NZIS/PLS Flow Diagram 5 Understanding the stages of subdivision and development 5 The legal team 6 (a) Land acquisition and due diligence 6 (b) Making the application for subdivision 7 (c) Works implementation 8 (d) Survey and title implementation 8 (e) Issuing of title BUYING LAND TO SUBDIVIDE 11 Contractual terms 11 The form of contract 11 The parties 11 The vendor 11 The purchaser 11 Nomination and cl 1.3(2) 12 GST and nomination 12 Address and legal description 12 Determining the price and the GST implications 13 GST payment date 14 GST and time of supply issues 14 Pros and cons of the Issue of title condition 14 Sale of land with curtilage provision 15 Deposit 15 Other issues relating to the front page of the agreement 16 Chattels 16 LIM clause 16 Overseas Investment Act 2005 compliance 16 Settlement date 16 Crops to harvest and tenants in situ? 17 Dividing off part the issues 17 Purchase and sell-back arrangements 18 General Term modifications 19 Special clauses 21 Due diligence 21 Conditions the standard or test 21 How long is long enough? 22 Access clause 22 Access v possession and settlement 23 Possession and builder s terms 23 Resource consent conditions 24 Drafting resource consent conditions 24 Application for consent under the Overseas Investment Act Specific finance clause 27 Vendor finance 28 Boiler plate clauses LAND OWNERS WANTING TO SUBDIVIDE 31 General issues 31 Preliminary considerations 31 The ownership status 31 The timing of ownership structures 31 What are the tax effective choices 32

2 Pros and cons of each structure Sole trader Partnership Trust Limited liability company Trading trust 34 Trading trusts and developments 34 A feasibility study 35 The resource management considerations of the owner s land 35 Planning investigations 39 Making the subdivision consent application 40 How long does it take? 41 Power to request further information 41 Commencement date if processed non-notified or if notified and no submissions were received 42 Is there a need for other consents? 42 Who can benefit from the terms of a consent? 43 Will changes to the plan impact on the owner s development after subdivision consent is obtained? 44 Is a certificate of compliance required? 44 Hearing and appeal processes 44 Objection and appeal rights/process 45 Environment Court 46 What are the costs of the council process? 46 Restrictions on subdivision s Engineering issues 47 Status of the title 48 Case note 48 Limitation as to parcels 49 Check all memorials, instruments and the title to adjacent land 49 Site visit 49 Neighbour s consent 50 Case notes CONDITIONS THAT CAN BE IMPOSED 53 What restrictions apply to conditions? 53 The ability to impose conditions relating to land use 55 Road access 56 Landlocked land 56 Conditions requiring works/services 57 Environment Court decision 57 High Court decision 57 Court of Appeal decision 58 Chambers J dissenting 58 Discussion 59 Servicing issues 59 Covenants consent notices encumbrance devices 59 Memorandum of encumbrance 61 Bonds ss 108(2)(e) / Consent Notices s Whether the consent notice is invalid or irregular and if so the character of the error 66 Whether indefeasibility of title precludes intervention 66 Whether or not the court should exercise its residual discretion 67 to intervene Removal of covenants s Subdivision and financial/development contributions 69

3 Financial contributions 70 Development contributions 71 Timing of payments 71 What if a contribution is not paid? 72 What right is there to challenge a development contribution? 72 Remissions 73 Works carried out SELLING DOWN THE DEVELOPMENT 75 Timing 75 The template agreement 75 The form of agreement 76 Pre-drafting issues Analysis of the resource consents or the application for the consents 76 Pre-resource consent agreements 76 Case note 77 Drafting the template agreement other resources needed 78 Drafting the template agreement issues 79 The front page 79 Purchaser s details 80 Address and legal description 80 Purchase price 81 GST 81 Time of supply 81 Deferral of time of supply mechanism 83 Zero rating for GST purposes 83 Price inclusive or plus GST? 84 Plus GST transactions 84 Deposit payment 84 When is the deposit paid? 85 Who is the deposit to be paid to? 86 Deposit bonds 86 Settlement date 86 Possession 87 Selling on builder s terms 87 Section 364 consideration and early possession 88 Shortcomings of granting s 364(2) waiver 88 LIM clauses 89 Chattels 89 Template agreement further terms 89 Extended definitions 90 Vendor s conditions general 90 The length of time to satisfy resource consent conditions 91 Purchaser s conditions 92 The test as to satisfaction of conditions 92 Title and survey issues 93 Essentiality of the issue of title 93 Vendor s savings provisions 93 Title exceptions 94 Savings as to resource consent conditions 94 No objection provisions 95 Land covenants building enhancement covenants 95 Special land covenants 96 Land covenants or rules for JOAW Lots 97 JOAW lots and Securities Act (Property Development 97 Exemption) 1999 Other land covenants 97 Compliance with s 225 of the Resource Management Act Cooling off period 98

4 Invoking s 225 to exit the contract 98 Contracting out of s Other special terms 100 No assignment or onsale clauses 100 Power of attorney 100 Buy back provisions 100 General terms and boiler plate clauses 101 Future developments 101 Building specific clauses 102 Practical completion a definition 103 Building savings provisions 103 Body corporate rules 104 Management agreement clause 104 Unit title development a purchaser s checklist FROM HEAD TITLE TO MULTI-TITLE ISSUING OF 107 NEW TITLES The lawyer s starring role 107 Timing 107 Partnership with the surveyor 107 Resource consent analysis 108 Survey plan analysis 108 Head title analysis 109 Third party documents or consents 109 Mortgagee s consents standard format 110 Vesting of road and reserves consent requirements 111 Third party consents - alternative solutions 112 Dedication rather than vesting 112 Easements and unit title developments 113 Easement, encumbrances and land covenants 113 Use of the memorandum procedure 114 Territorial Authority encumbrances and shortcomings of 114 consent notices Land covenants other issues 115 The date of issue of the s 223 certificate 116 Pre-section 224(c) issuing checks 116 Plan deposit checklists 117 Notification of release of titles and the shortcomings of 118 Landonline E-Survey and E-Certificates 119 The purpose of e-certification 119 Fast-Track COMPLEX DEVELOPMENTS 123 Introduction 123 Complex developments a definition 123 Essential elements of the complex development 124 Securities Act 1978 Compliance 124 The drivers for the evolution of complex developments 126 Examples of complex developments 127 Two case studies 128 APPENDIX 1 NZIS/PLS FLOW DIAGRAM 131 APPENDIX 2 SECTION 354 BUILDING ACT APPENDIX 3 REGISTRAR GENERAL S RULINGS 151 APPENDIX 4 JOHN SHEPPARD AND TIM JONES NEW 155 ZEALAND SURVEYORS INSTITUTE RIGHTS OF WAY AND JOINT ACCESS WAY LOTS APPENDIX 5 SECTION 225 RESOURCE MANAGEMENT 165 ACT 1991 APPENDIX 6 UNIT TITLES CHECKLIST 169 APPENDIX 7 ANNEXURE SCHEDULE CONSENT FORM 173

5 APPENDIX 8 DEPOSITED PLAN MANGERE 177 APPENDIX 9 FAST-TRACK PROCESS MAP 181 APPENDIX 10 SECURITIES ACT (JACK S POINT 189 DEVELOPMENT) EXEMPTION NOTICE (2006) APPENDIX 11 PROCESS MAP 203