All posts tagged ian mellet

Will Month 2012 – No Will or is your Will out of date?

According to Public Trust figures, 57 per cent of Aucklanders don’t have a will.

Consider these  recent statistics.
• Those living north of Auckland were the next worst for not making provisions in the event of their death, with 52 per cent not having a will, followed by those in the central North Island, 46 per cent, and the South Island, 42 per cent.
• Those aged 25-39 are the worst, with only 34 per cent having one.

NO WILL

Dying intestate can be costly.

If you die without a will or your will is deemed to be invalid, then you are said to have died intestate. In this event, administration of your estate is entirely determined by legislation and not you. Your wishes are not relevant.

Reviewing your Will
It is good practice to review your Will on a regular basis. Life takes its course and situations change. We have compiled a list indicating some of the situations that could prompt you to alter your Will:

  • The birth of a child
  • The commencing of a relationship
  • The ending of a relationship
  • The death of a family member, executor or beneficiary
  • The changing value in any of your assets
  • The receiving of a large inheritance
  • Moving countries, or
  • The purchase of a home or business.

There are certain events that will automatically change your present Will. Under these circumstances, a revision or renewal of your Will should necessarily be conducted. These events include

  • Getting married
  • Getting divorced and
  • The birth of a child or adoption of children.
  • Dying intestate

We are often asked what happens if a person dies without a Will. If this situation occurs you are said to have died intestate. The administration of your estate is then governed by the provisions of the Administration Act 1969 which sets out a statutory regime to be strictly followed. Your wishes are unfortunately not relevant.

What else should you consider?

We also recommend that you regularly review your entire estate planning structure. People are inclined to view estate planning in terms of investments, property, finances and assets. Yes, it is all of these things but the focus of proper estate planning should be the individuals who will benefit from your efforts and legacy. This may initially be yourself and your partner but will obviously need to include your children and possibly other loved ones after your death. Failure to have an appropriate estate planning structure in place can have disastrous consequences for all concerned.

Our lawyers at Auckland law firm, Quay Law (situated in Remuera) recommend that you seek professional legal advice with regard to both your Will and any related estate planning aspects. Your lawyer can provide you with the requisite advice and guidance to ensure that your affairs are in order and that your wishes can effectively be implemented once you have passed away. This will give you the certainty and peace of mind that your loved ones are looked after in the manner you intended.

Please feel free to contact Ian Mellett (BComm LLB H Dip Tax) at Auckland law firm Quay Law for more information, or if you have any questions regarding your will or estate planning needs visit our law firm website www.quaylaw.co.nz or www.yourwill.co.nz for more information.

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by Auckland Law Firm, Quay Law on 08/10/2012  •  Permalink
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Posted by Auckland Law Firm, Quay Law on 08/10/2012

http://aucklandlawfirm.co.nz/2012/10/08/will-month-2012-no-will-or-is-your-will-out-of-date/

New Zealand Trust Law under review by Ian Mellett of Quay Law, Auckland, NZ.

Family Trust / Trusts Article by Quay Law NZ

March 2011

Based on current records, New Zealand has one of the highest numbers of trusts per head of population in comparison to other countries.  It is estimated that there are at least 237,500 trusts in New Zealand but this figure could be as high as 400,000.

The Law Commission has been asked to review the Trustee Act 1956 and trust law generally.  The Commission plans to tackle the review in 3 stages:

  • Stage 1 will look at the Trustee Act 1956, the Perpetuities Act 1964 and trust law generally. The first paper was released in November 2010 and focused on the history of trusts.  The second paper was released in December 2010 and focused on the uses of family trusts in New Zealand.  This paper included the potential concerns surrounding the current use of trusts.
  • Stage 2 will consider the Charitable Trusts Act 1957.
  • Stage 3 will consider the trustee companies legislation.

There is an intention to abolish gift duty with effect from 1 October 2011.  Whilst this legislation is yet to be passed, it seems that from this date gift duty will no longer be a relevant factor for people settling trusts.  The result of this proposed legislation will be an easier movement / transfer of assets into trusts.

So where does this leave Trusts as we focus on 2011?

The proposed abolition of gift duty together with major changes to the qualifying companies regime and the Law Commission’s re-examination of trust law means this will be a momentous year for those with trusts.

Of current concern to the Law Commission is the transferring of assets into trusts to avoid obligations to, for example, creditors and / or spouses or partners under the Relationships (Property) Act 1976.  The Law Commission is considering whether:

  • legislation should address the need to look through trusts in certain circumstances in order that trust property can be made available to a creditor, spouse or partner or for government asset testing.
  • legislation should address sham trusts and the problem of trusts that are not really trusts.

With specific reference to treating trusts as “look through” entities, the Law Commission is evaluating if it should allow trust assets to be made available to creditors, spouses and partners, and to be considered as a part of the assets of the settlor or a person with control over the trust for assessing eligibility for government assistance.  As an alternative, the law could continue to leave it to individual statutes to address how a disposition of property or income to a trust is to be treated in a context where such a disposition defeats a government policy. Because of the difficulties in creating look-through provisions that meet the needs of the various contexts to which they must be applied, the latter may be the preferred approach.

As a result of the relevant legislation being reviewed, and regardless of the outcome of the proposed law changes, now is the time for New Zealanders to review their trusts.

Relevant considerations during such a trust review might include:

  • The intentions of the settlor in establishing the trust;
  • The intentions of the trustees;
  • Whether the trustees were indifferent as to whether a valid trust was intended to be established;
  • How the affairs of the trust have been conducted;
  • Whether property of the settlor has been intermingled with trust property;
  • Whether the settlor has treated trust property as his or her own;
  • The degree of control exercised by the settlor over the affairs of the trust;
  • Whether the trustees have acted independently of the settlor in carrying out their duties;
  • The real nature of the arrangement irrespective of how it is described;
  • The implications of the repeal of gift duty, which may exacerbate some of the problems associated with trust use and may reduce the effectiveness of the existing legislative approaches to trusts.

Whilst the review of trust law is in progress and the Law Commission invites comments, it is recommended that you consult a family trust specialist in order to discuss these proposed law changes and their impact on your existing or proposed trust. A focus for this discussion could be:-

  • The role of the independent trustee.
  • Ongoing trust administration and reporting.
  • Separation of trust affairs from personal affairs.

If you have any further questions regarding your current or proposed trusts, please do not hesitate to contact me.  My name is Ian Mellett and I am the principal of Auckland Law firm, Quay Law.  My contact details are (09) 5232408.

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by Auckland Law Firm, Quay Law on 21/03/2011  •  Permalink
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Posted by Auckland Law Firm, Quay Law on 21/03/2011

http://aucklandlawfirm.co.nz/2011/03/21/new-zealand-trust-law-under-review-by-ian-mellett-of-quay-law-auckland-nz/

Legal entities available to you for your NZ business

PUBLISHED QUAY LAW LEGAL ARTICLE

 In this legal article, Auckland lawyer Ian Mellett reviews the various entities that are available to you when deciding upon the appropriate operating structure for your New Zealand business.

 In a previous article, I discussed the matters that should be considered when deciding to purchase a business.  A key aspect in this process is necessarily the choice of the most appropriate purchasing entity.  It is important that you obtain the requisite advice from both your lawyer and accountant, as they will be in a position to explain issues such as limited liability protection, tax and succession planning to facilitate an informed decision being made.   

There are four main entities that are predominantly used to operate businesses in New Zealand, namely the sole proprietorship, partnership, limited liability company and trading trust.  Each of these is discussed briefly below.

Sole Proprietorship

Also known as a sole trader, this is a type of business entity that is owned and operated by one individual on his or her own.  The key characteristic is that the owner is inseparable from the business, in other words there is no legal distinction between the owner and the business.  The owner controls, manages and owns the business, is entitled to all the profits but is also personally liable for all losses, debts and taxes.  A sole trader is usually able to establish the business without following any formal or legal process and can employ other people to assist in running the business.

The obvious advantage of a sole proprietorship is that it is easy to start and run, and there is no requirement regarding registration.  The major disadvantage is that the business owner/s has unlimited personal liability for all business obligations (including amongst others debts and taxes), which means that personal assets are potentially at risk.  Sole traders also often lack credibility in the marketplace, and it is invariably more difficult to sell this type of business.

 Partnership

A partnership is an arrangement where individuals and/or entities agree to co-operate to advance their business interests.  Most frequently, a partnership is formed between one or more businesses in which the partners (namely the owners) work collectively to achieve and share any profits or losses.  It is recommended that the partnership be established by way of a formal partnership agreement.  The partners share responsibility for running the business, share in any profits or losses as stated in the partnership agreement and are liable for any debt within the partnership.  The partnership itself does not pay income tax, but instead distributes the partnership income proportionately to the partners who then pay tax on their own respective shares.

The main advantages of a partnership are that no registration is required to commence business, and this entity can provide an effective way to share business operation costs.  The disadvantages are that partners may be held liable for debts incurred by the other partners, personal assets are potentially at risk and complications may arise if a partner dies or wishes to leave the partnership.

Limited Liability Company

This entity is by far the most popular and successful form of business structure.  A company is a formal and legal entity in its own right, being separate from its shareholders or owners.  The protection that a limited liability company affords to its shareholders is the primary reason for selecting this type of operating entity.  If the company is unable to pay its debts, the shareholders are not liable for the business debts of the company unless their shares are not fully paid up, or they have given personal guarantees to lenders or creditors, or they are also directors of the company and have traded recklessly.  This situation should be contrasted with a sole proprietor or partner who will always be exposed and personally liable for any business debts that cannot be met by the business.

The advantages of a limited liability company are continuity of existence (a company will continue to exist until it is removed from the Companies Office register), transferability of shares (making it easier to sell a company or pass on to others such as children) and marketplace credibility.  The disadvantages are that directors need to clearly understand their responsibilities under the companies legislation, and the fact that the limited liability protection can easily be eroded in practice by the requirement to provide personal guarantees to certain lenders or creditors.

 Trading Trust

Until relatively recently, the choice of business structures in New Zealand was generally limited to the entities discussed above.  However, trading trusts have increased in popularity over the last ten to fifteen years and have now emerged as an alternative option to owning and operating a business.  Essentially a trading trust is a discretionary trust similar to a family trust, but instead of merely holding investment assets it actively carries on a business and derives business profits.

One of the key advantages of using a trading trust is the flexibility that it provides, particularly with regard to the allocation of business profits to the beneficiaries of the trading trust.  Trading trusts are, however, a topic on their own, and I would suggest that anyone interested in utilising this type of business vehicle contact our offices to obtain more detailed information.  

 It goes without saying that it is critical to “get the structure right upfront”.  This is also particularly important in light of the Inland Revenue Department’s stance that a change in operating entity “downstream” has occurred not for commercial but rather for tax (and possible tax avoidance) reasons.

Please feel free to contact Ian Mellett (BComm LLB H Dip Tax) at Auckland law firm Quay Law for more information, or if you have any questions regarding your business or other legal needs please call me on (09) 5232408 or visit our website http://www.quaylaw.co.nzor blog http://www.aucklandlawfirm.co.nzfor more information.

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by Auckland Law Firm, Quay Law on 28/01/2011  •  Permalink
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Posted by Auckland Law Firm, Quay Law on 28/01/2011

http://aucklandlawfirm.co.nz/2011/01/28/legal-entities-available-to-you-for-your-nz-business/

Purchasing a Business

In this article, Auckland lawyer Ian Mellett of Quay Law Barrister and Solicitors discusses some of the legal matters that you should consider when deciding to purchase a business.

The decision to purchase a business is both exciting and daunting. On the one hand it signifies the start of a new venture, yet on the other it raises the uncertainty and risk inherent in any commercial undertaking. You may also be unsure as to whether to buy an existing business or to start your own from scratch. Generally speaking when you buy an existing business, there should be existing customers from day one which will ensure an instant cash flow. However if you start from scratch, then you will need to generate new customers. Both approaches have their own hurdles that you will need to overcome, and particularly so in light of the tough economic climate currently prevailing. It is important that you engage your professional advisors at an early stage in the process. Your lawyer and accountant, along with a business broker if there is one involved, are well placed to give you the necessary input and advice to enable you to make an informed decision. There are various aspects which require careful consideration. Some of these are set out below:

 

The Agreement

It is preferable to use the standard Legal Areement for Sale and Purchase of a Business which has been compiled, and amended over the years, by the forms committee of the Auckland District Law Society. The agreement, much like its counterpart for residential and commercial property transactions, is designed to cater for the needs of both the vendor and the purchaser. Always ask your lawyer to cast his eye over the agreement before you sign the document. There are a number of things that need to be considered, including the names of the vendor and purchaser; what is being sold; the price; terms of payment; warranties by the vendor; conditions such as the obtaining of suitable finance, solicitor’s approval (if appropriate) and due diligence; possible restraints of trade and all issues relating to existing employee contracts.

 

Purchasing Entity

It is recommended that the purchaser be reflected as (name)….. “and/or nominee.” This will give you the opportunity to discuss the most appropriate purchasing entity with your lawyer and accountant. Issues such as limited liability protection, tax, succession planning and the like, all need to be considered prior to settlement. There are various options, including but not limited to sole proprietorship; partnership; limited liability company and trading trusts. I will discuss the advantages and disadvantages of these entities in an article sometime in the new year.

 

Due Diligence

This is the most important aspect of any business purchase, as it provides you with an opportunity to perform an in-depth analysis across the entire spectrum of the business. Your accountant will be able to assist you in inspecting the financial statements for the past 3-5 years (this will vary from business to business) in order to judge the “financial health” of the business, and to raise any concerns or request further information if necessary. Your lawyer will be able to assist you with all the legal aspects of the due diligence process. These include, but are not limited to, reviewing all lease and/or licensing agreements; patents and copyright (if any); stock valuations, and evidence of ownership of equipment and assets (and whether these are unencumbered or not). He will also ascertain what is being sold namely the business and its assets, or the shares. The last issue is extremely important, as it will determine how certain aspects of the purchase need to be dealt with from a taxation perspective. Generally, due diligence only needs to be done once you have signed the Agreement. However, in practice, much of this work is often done in finding out about the business and in determining what amount to offer. Now you will need to decide! Due to space constraints, I have only briefly touched on some of the more significant aspects which you need to consider when purchasing a business. My recommendation is that you consult your lawyer (and accountant) early in the process to ensure that the proposed transaction proceeds smoothly. There is a cost associated with obtaining professional advice, but it is my experience that this will be far cheaper than the cost of getting it wrong.

Please feel free to contact Ian Mellett (BComm LLB H Dip Tax) at Quay Law.  (Phone 09 5232408)

 

Our Legal Website:  http://www.quaylaw.co.nz

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by Auckland Law Firm, Quay Law on 19/01/2011  •  Permalink
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Posted by Auckland Law Firm, Quay Law on 19/01/2011

http://aucklandlawfirm.co.nz/2011/01/19/purchasing-a-business-and-things-to-consider/

Remuera Business Association – New Executive Committee

The role of the Remuera Business Association is to promote the interests of its members within the Mainstreet area. This includes representing the Remuera shopping centre as a desirable place to visit, shop, work and invest in. This will positively affect the community and provide residents with a strong sense of belonging and pride in the Remuera town centre.

Remuera Business Association (R.B.A.) Executive Committee

Scott Dargaville - Chairman
Ian Mellett – Treasurer
Mark Sanders
Tom Davies
Adrian Barkla
Sarah Clark
Elise Harper
John Lee
Sue Webber		 Remuera Gallery
Quay Law
Sanders of Remuera
Gracious Living
New World
Hedgerow 
Poppies Books
Jems of Remuera
Living at Home
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by Auckland Law Firm, Quay Law on 21/11/2010  •  Permalink
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Posted by Auckland Law Firm, Quay Law on 21/11/2010

http://aucklandlawfirm.co.nz/2010/11/21/remuera-business-association-auckland/

Fixed prices for Standard Property Residential Transactions

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by Auckland Law Firm, Quay Law on 19/11/2010  •  Permalink
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Posted by Auckland Law Firm, Quay Law on 19/11/2010

http://aucklandlawfirm.co.nz/2010/11/19/fixed-prices-for-standard-property-residential-transactions/

Family Trusts Explained

What is a Family Trust?

Legal article by Ian Mellet (Auckland lawyer and principal of Quay Law Barrister and Solicitor)

In this article I intend to cover Family Trusts and the value that such an entity can provide to you.

At the outset, it should be borne in mind that the reasons for implementing a trust structure are extremely important. Your family circumstances clearly play a pivotal role in this regard.

 

Outlined below are a number of reasons why implementing a trust structure could possibly be of benefit to you and your family:

  1. Protection of core family assets for present and future generations (this has been the traditional use of family trusts and should be the prime consideration when any trust is established).
  2. Protection from business creditors (separation of core family assets such as the family home from business risks).
  3. Protection of particular beneficiaries (example, children with special needs, educational trusts).
  4. Protection from matrimonial property claims and de facto claims.
  5. Protection against possible income tax consequences and future taxes.
  6. Protection against the likely consequences of inflation.
  7. Incidental benefits in relation to means testing and rest home subsidies.

Background

The prime purpose of the trust would be to protect core family assets which you have built up for the benefit of your children and grandchildren, but at the same time ensuring that you have the use and access to trust funds during your lifetime without interference from others. The primary concern of the trust would, in the interim, be your well being, but in due course you may provide for your children and grandchildren who ultimately will have the control and benefit of the trust fund. Transferring any assets at this stage would be prudent in the sense that you can cap the value, and any increase in value of the assets after the date of transfer to the trust would be an increase in the hands of the trustees. This is particularly pertinent in the event of the re-introduction of estate duty at some later stage.

When acquiring an asset such as a property, it is important that you make provision for the trust to purchase the property at the onset. You are able to do this by stipulating that the property is to be purchased by yourself “and / or nominee” This will allow you to set up a family trust or other legal vehicle and for that entity to complete the purchase. You should also consult with your professional advisors regarding the structuring of any borrowing that is required.

It is important that the administration of the trust is properly attended to. This includes performing the annual gifting programme wherein yearly gifts of $27,000 each are filed with the Inland Revenue Department. Keeping an adequate “paper trail” will ensure that the trust records are up to date for any audit purposes.

Legal documents

Various legal documents need to be put in place when establishing a trust, including of course the Trust Deed. There are three main groups of parties involved. The Settlors are the persons who set up and transfer assets to the trust. The Trustees are the people who hold the legal ownership of the trust assets on behalf of the beneficiaries. The Beneficiaries hold the beneficial ownership in the trust assets and include, amongst others, yourselves, your children and grandchildren.

I also recommend that a Memorandum of Wishes is completed. This is not binding on the trustees, but sets out the manner in which you would like the trust to be administered and is a valuable guide for the trustees. It is an effective way of ensuring that on your deaths specific requests that you had in mind may be given effect to by the trustees.

Trusts are an invaluable asset protection tool and mechanism for preserving one’s weath.

Please contact Ian Mellett at Quay Law for more information, or if you have any further questions on Trusts and Asset Planning.

Ian Mellett BComm LLB H Dip Tax is a Barrister and Solicitor at  Quay Law in Remuera, Auckland. This Auckland law firm provides services in Wills and Estate administration, Estate Planning, Trusts and Asset Protection, Relationship Property, as well as Conveyancing, Commercial, Immigration and other areas of law.

Phone number:  New Zealand (09) 523-2408

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by Auckland Law Firm, Quay Law on 03/11/2010  •  Permalink
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Posted by Auckland Law Firm, Quay Law on 03/11/2010

http://aucklandlawfirm.co.nz/2010/11/03/family-trusts-explained/

Your Will is law – regularly reviewing your Will

Your Will and Your Intent by Ian Mellett, Auckland Lawyer - Quay Law

By Auckland lawyer, Ian Mellett of Quay Law.  Quay Law is situated in Remuera, Auckland, NZ.

In this legal article, Ian Mellett of New Zealand Law Firm, Quay Law discusses the importance of regularly reviewing and updating your Will, which is a very important document that formally sets out how your assets are to be dealt with upon your death.  A recent media article has highlighted this aspect as follows:-

Will and your intent

Don Wilkinson, a police officer tragically slain in September 2008, executed a Will with the Public Trust in 1985, when he was 23 years old.  At that stage his assets comprised two guitars and a second-hand car.

It appears that Don Wilkinson was a frugal individual who had remained unmarried and childless and by the time he was killed, his estate had grown to $2 million.

His Will effectively bequeathed “the whole of my estate both real and personal” to Ron Wilkinson.  Ron was Don’s adoptive father and the wording contained in the Will has resulted in Ron being the sole beneficiary of the Will leaving Don’s mother, Bev Lawrie, without a penny.  His parents have been separated since 1983.

According to the media, Ms Lawrie and other family members and friends say Don Wilkinson and his mother were very close, and he would not have wanted her left with nothing.

As Don was killed two years ago his mother is now unable to contest the Will under the Family Protection Act, as potential claimants have 12 months after a Will is probated to bring a claim.

Reviewing your Will

It is good practice to review your Will on a regular basis.  Life takes its course and situations change.  We have compiled a list indicating some of the situations that could prompt you to alter your Will:

  • The birth of a child
  • The commencing of a relationship
  • The ending of a relationship
  • The death of a family member, executor or beneficiary
  • The changing value in any of your assets
  • The receiving of a large inheritance
  • Moving countries, or
  • The purchase of a home or business.

There are certain events that will automatically change your present Will.  Under these circumstances, a revision or renewal of your Will should necessarily be conducted.  These events include

  • Getting married
  • Getting divorced and
  • The birth of a child or adoption of children.

Dying intestate

We are often asked what happens if a person dies without a Will.  If this situation occurs you are said to have died intestate.  The administration of your estate is then governed by the provisions of the Administration Act 1969 which sets out a statutory regime to be strictly followed.  Your wishes are unfortunately not relevant.

What else should you consider?

We also recommend that you regularly review your entire estate planning structure.  People are inclined to view estate planning in terms of investments, property, finances and assets.  Yes, it is all of these things but the focus of proper estate planning should be the individuals who will benefit from your efforts and legacy.  This may initially be yourself and your partner but will obviously need to include your children and possibly other loved ones after your death.  Failure to have an appropriate estate planning structure in place can have disastrous consequences for all concerned.

We at Auckland law firm, Quay Law recommend that you seek professional legal advice with regard to both your Will and any related estate planning aspects.  Your lawyer can provide you with the requisite advice and guidance to ensure that your affairs are in order and that your wishes can effectively be implemented once you have passed away.  This will give you the certainty and peace of mind that your loved ones are looked after in the manner you intended.

Please feel free to contact Ian Mellett (BComm LLB H Dip Tax) at Auckland law firm Quay Law for more information, or if you have any questions regarding your will or estate planning needs visit our law firm website www.quaylaw.co.nz or www.yourwill.co.nz for more information.

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by Auckland Law Firm, Quay Law on 04/10/2010  •  Permalink
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Posted by Auckland Law Firm, Quay Law on 04/10/2010

http://aucklandlawfirm.co.nz/2010/10/04/your-will-is-law-regularly-reviewing-your-will/

Family Trusts and Trustees

 A trustee must manage the trust and its assets properly, investing with diligence and prudence. 

 Choosing the trustees is your most important act when forming your trust.  You should also consider what your trust is likely to own when selecting your trustees.  

When approached regarding the role of trustee, you should consider this position carefully as the position of the trustee is not one to be accepted lightly. 

For more information regarding family trusts and your potential role as trustee please contact Auckland lawyer, Ian Mellett.

Auckland lawyer and principal of Auckland law firm, Quay Law

Ian Mellett

Website: http://www.lawyerinauckland.co.nz

Ph: +64 9 5232408

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by Auckland Law Firm, Quay Law on 13/07/2010  •  Permalink
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Posted by Auckland Law Firm, Quay Law on 13/07/2010

http://aucklandlawfirm.co.nz/2010/07/13/family-trusts-and-trustees/

Types of Property Ownership

QUAY LAW LEGAL UPDATE

In this issue, Auckland lawyer Ian Mellett describes his business visit to India and the various forms of property investment available to new immigrants

Since my last article in this magazine, I have had the wonderful experience of being involved in a fantastic business trip to India.  It was incredible to be exposed to the social and cultural elements that exist in India on the one hand, contrasted against the might of the Indian economy on the other.  We even managed to squeeze in a visit to the Taj Mahal, one of the seven man-made wonders of the world.  The focus of the trip was “New Zealand Invest 2010” – promoting New Zealand from both an investment and immigration perspective.

The delegation included legendary New Zealand cricketer Sir Richard Hadlee, one of the keynote speakers, along with a group of property developers, real estate professionals and an internationally acclaimed property investment speaker.  I was invited to accompany the delegation in the capacity of an independent legal adviser.  During the various seminars, held in Delhi (23-24 January), Ludhiana (28 January) and Chandigarh (30-31 January), seminar attendees were provided with valuable information to enable them to explore lifestyle, investment and business opportunities in New Zealand.   During the numerous break-out sessions, I was called upon to provide expert independent legal advice and assistance to potential investors.  This has subsequently resulted in Quay Law now having quite a few Indian investor clients on its books, and the distinct possibility exists that there will be more to come in the future.

It goes without saying that this was a truly memorable and unique experience.  Not only was our entire delegation exposed to the broad spectrum of the Indian economy but being a cricket fanatic myself, I had the added bonus of meeting and spending two weeks with Sir Richard Hadlee.  What a nice guy, and a truly great ambassador for New Zealand.

One of the questions frequently raised by the potential Indian investors pertained to the type of property ownership involved.  I find that local purchasers in New Zealand often have the same query, so I thought that it would be useful to set out the most common forms of ownership below.

1) Fee simple: This represents a form of freehold ownership and in essence represents absolute ownership of the property. 

2) Leasehold: This is a form of property tenure where one party buys the right to occupy land or a building for a given length of time.  Until the end of the lease period the leaseholder has the right to remain in occupation as an assured tenant paying an agreed rent to the owner. 

3) Cross lease: This is a hybrid form of multi-unit tenure in which each owner has an undivided share of the underlying freehold as tenants in common, and is granted a registered leasehold estate of the particular unit or flat occupied.  Effectively the property owners share ownership of the land and each owner leases their building from the other owners, which together form the cross lease title.

4) Stratum estate: Under the Unit Titles Act 1972 the deposit of a unit plan has the effect of creating in each unit (usually multi-unit dwellings, shops, offices or industrial premises) a new kind of statutory estate called a stratum estate in freehold, or a stratum estate in leasehold, depending on whether the land which was subdivided into units was freehold or leasehold.

It is essential to determine, upfront, the exact nature of the form of property ownership when embarking upon a purchase of any property.  My experience is that it is beneficial to have your lawyer cast his/her eye over a potential purchase agreement, before you sign the document, to ensure that you fully understand the nature and form of property ownership involved.

Please feel free to contact Ian Mellett at Auckland Law Firm, Quay Law for more information, or if you have any questions regarding your conveyancing or other legal needs visit our website www.quaylaw.co.nz for more information.

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by Auckland Law Firm, Quay Law on 10/06/2010  •  Permalink
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Posted by Auckland Law Firm, Quay Law on 10/06/2010

http://aucklandlawfirm.co.nz/2010/06/10/types-of-property-ownership/

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