10 Jun 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.