Subdivision of land can be a
complex and expensive process that requires careful
planning. Oversights in the process can lead to
delays and omissions which will inevitably impact on
costs. For this reason a subdivision requires a team
effort from those involved. These parties include
your surveyor, the local Council, your lawyer, your
accountant and various contracting companies.
Ideally, you should instruct your
lawyer to oversee the process from the very start.
This will minimise risks or delays by ensuring a line
of communication exists between the various parties
involved.
If you don’t already own the land:
a) An agreement for the purchase of
land that is to be subdivided will need to be
prepared. This can be a complex document. In
particular, there may be cash flow and taxation issues
to consider and your lawyer and accountant will need
to work together to ensure those issues are adequately
dealt with in the agreement.
b) A due diligence
investigation will need to be undertaken. This can be
completed either before or after an agreement has been
signed. However, most developers will not wish
to incur costs unless they are able to secure the land
first. The purpose of due diligence is to investigate
the feasibility of the subdivision taking into account
the costs, the time it will take and the ultimate
return to the developer.
For existing landowners wishing to
subdivide, check whether the current ownership status
is appropriate for completion of the subdivision,
particularly for tax implications.
Confidentiality: subdivisions can
be a sensitive issue, particularly where neighbours
are concerned. Parties involved in the due diligence
process should be aware of the importance of not
disclosing the proposal to third parties until a
decision has been made whether or not to proceed.
Check the title: your lawyer can
provide you with a detailed analysis of the title at
the outset. Analysis can include information on
restrictions that run with the land (e.g. easements)
and whether or not those restrictions are compatible
with the purpose and layout of the subdivision.
Regardless of whether the
subdivision involves the sale of one or fifty
sections, it is prudent to decide at the outset how
the sales will be managed. This process includes:
·
Setting a date for the sale of
sections.
·
Ensuring the agreements for sale of
the sections reflect the stage at which that the
subdivision has reached.
·
Briefing and appointing real estate
agents.
·
Setting the amount of the deposit
to be paid by a prospective purchaser and the point at
which those funds can be released to fund the ongoing
costs of the subdivision.
Planning and co-ordination are
vital for a successful subdivision. Your lawyer’s
involvement throughout the subdividing process will
ensure that delays are minimised and benefits
maximised.
Section 59 of
the Crimes Act 1961 (“Section 59”) allows parents and
any person in place of a parent justification to use
reasonable force against a child for correctional
purposes.
In June 2005,
the Crimes (Abolition of Force as a Justification for
Child Discipline) Amendment Members Bill (“the Bill”)
was introduced to Parliament by Green Party MP Sue
Bradford. The Bill originally sought to repeal
Section 59 entirely, removing reasonable force used
against children for correction purposes as a defence
to offences involving assault. The effect of
repealing Section 59 is that the defence of reasonable
force against a child for the purposes of correction
would not be available to parents. Instead, the use of
force against a child would have the same legal
ramifications as the use of the force against an
adult.
In November
2006 following referral to Select Committee, the
Justice and Electoral Committee (“the Committee”)
reported back to Parliament recommending by majority
that the Bill be passed subject to recommended
amendments. The substantive amendment recommended by
the Committee does not envisage an outright repeal of
Section 59. Rather, the Committee recommends that
Section 59 be replaced with a provision enabling
reasonable force to be used
against children for purposes such as protecting a
child from harm, providing normal daily care and
preventing a child from doing harm to others.
The United Nations Convention on
the Rights of the Child (“the Convention”) was
ratified by New
Zealand in March 1993. The UN
Committee on the Rights of Child issued a general
comment in June 2006 concerning the use of violence
against children. The comment emphasised elimination
of violence and humiliating punishment of children
through law reform and other measures as an immediate
and unqualified obligation for ratifying states of the
Convention. More than a third of European countries
now afford children equal protection from assault
including Germany,
Norway and Sweden. The Bill, if adopted by Parliament,
will be a step towards aligning New Zealand with its
commitments under the Convention.
Interestingly,
United Kingdom legislation is at odds with this trend
towards equal protection for children from assault.
United Kingdom legislation that came into force on 15
January 2005 allows the assault of children to
continue to be justified as “reasonable punishment”.
The United Kingdom has twice been rebuked by the UN
Committee on the Rights of the Child since it ratified
the Convention in 1991 for failing to afford children
equal protection from assault.
It is clear
that parental rights to chastise children and the
rights of children to be protected from violence are
at odds with one another. It is also clear that the
issues the debate raises are sensitive and topical
having received a fair degree of media attention. The
Committee received 1,718 submissions on the Bill prior
to issuing its report of which 1,471 came from
individuals and 248 from organisations. However, it
does appear likely that the Bill will be adopted by
Parliament in one form or another.
Trusts are a
popular choice for people who are concerned about
protecting their assets for themselves and for their
children. However, the formation of a trust by the
execution of a trust deed and transfer of assets to
the trust is only the start. A successful trust is
one that is regularly monitored by the trustees and
where there is a clear paper trail evidencing the
ongoing administration of the trust by the trustees.
If the trust is
not properly administered, there is a risk that it may
be seen to have either “lapsed” or that it is simply a
“sham”. This usually occurs where the assets which
form part of the trust fund are treated by the
trustees as if they are their own personal property
held for their own benefit rather than assets held by
them for the benefit of the beneficiaries of the
trust. Given that trustees are frequently both
trustees and beneficiaries of the trust, it is all the
more important that a clear distinction exists in the
minds of the trustees regarding assets which are held
by them personally and those which belong to the
trust.
The
administration of a trust will depend very much on the
nature of the assets which make up the trust fund. A
trust fund that consists of the family home in which
the beneficiaries reside will not require the trustees
to do a great deal for so long as that situation
continues. If there is a debt owing by the trust to
the settlors of the trust (i.e. the persons who
originally set up the trust and transferred assets to
it) then the debt should be gifted by the settlors in
annual increments of $27,000.00 (for each settlor)
until the entire debt has been forgiven. As house
prices continue to rise, the gifting process is taking
longer and trustees should be vigilant in ensuring
that gifting continues as this will maximise the
benefit of the asset for the beneficiaries of the
trust.
In addition to
gifting, trustees should meet at least once a year to
review the trust fund and the manner in which the
trust fund has been applied for the benefit of the
beneficiaries. There may be no need for the trustees
to make any decisions but the important point is that:
a) the trustees
have turned their minds to their duties and
responsibilities, and
b) a trustee
resolution records how those duties have been
discharged over the previous 12 month period.
In the case of
trusts that hold income producing assets (such as
investment properties and shares), the matters which
trustees should attend to include:
·
Regularly reviewing
the performance of investments.
·
Preparing and filing
a tax return.
·
Ensuring that the
trustees meet at least annually and possibly more
frequently, depending on the nature of the investments
which they are monitoring.
·
Ensuring that any new
investments and/or transactions that the trust may
enter into are properly documented and supported by
appropriate resolutions.
Minutes of
trustees’ meetings should be kept and particular care
taken to record decisions taken concerning investment
of trust funds and distributions to the beneficiaries.
In summary, the
advantages of keeping the paperwork for your trust up
to date cannot be overstated. A trust which is
properly administered will provide a much greater
degree of protection than one which is effectively
dormant because the trustees have not turned their
minds to their duties and responsibilities under the
terms of the trust deed.
If you have any
doubts as to whether your trust is being properly
maintained, consult your lawyer.
Apartments
are often a popular choice for New Zealanders because of
their low maintenance living and convenient
localities. This choice may also introduce concepts to
home owners such as the body corporate, common property,
covenants and redevelopment. Briefly, those terms can
be defined as follows:
·
A body
corporate is made up of all of the individual owners
within a development and is responsible for the overall
management of the complex.
·
A covenant is
a promise or agreement recorded by deed that can bind
successive owners of land to do or not to do something
regarding the land.
·
Redevelopment
can include subdividing, demolishing and rebuilding.
A Recent Case
The collision
of these concepts has been discussed in a recent
decision by the High Court of New Zealand in the case of
Myers Park Apartments v Sea Horse Investments Limited.
The case
involved an inner city building containing three levels
plus a basement area. The building housed a number of
shops. The third level contained a cinema complex that
had not been used for some time. An application was
made to redevelop level three by demolishing it and
erecting another six storeys containing 180 residential
apartments. The existing body corporate refused to
unanimously agree to this request. The developer
therefore sought to enforce a covenant that the previous
owners (as members of the body corporate) had agreed to
concerning future redevelopment. The Court made an
order enforcing the covenant.
The impact of
this decision on apartment owners is that an existing
covenant or agreement to consent to redevelopment
overrides the requirement of the Unit Titles Act for
unanimous consent for redevelopment. For this reason,
the title of the property needs to be looked at very
carefully to check whether or not the body corporate is
bound by an existing covenant that effectively permits
future redevelopment without the need for the consent of
the body corporate.
If you are
considering purchasing an apartment or commercial
building in a unit title development, ask your lawyer to
check this point.
Below are some of
the terms commonly used in trust deeds:
Trustee(s):
The person(s) who are responsible for ensuring that the
trust is administered correctly and who hold the trust
fund on trust to be applied for the benefit of the named
beneficiaries.
Settlor(s):
The settlor(s) are the person(s) who establish the trust
and transfer assets to it.
Trust Fund:
The assets that are transferred to the trust by the
settlor and held by the trustees for the beneficiaries.
Beneficiaries: The persons
or entities who are entitled to benefit from the trust
fund.
Vesting Date:
The date upon which all assets held on trust by the
trustees must be distributed to the beneficiaries. A
vesting date cannot exceed eighty years from the date
the trust is established.
Appointor:
The person who has the power pursuant to the trust deed
to appoint a new trustee or advisory trustee and/or to
remove any or all of the trustees.
