What is Indefeasibility of Title in New Zealand? | LegalVision (2024)

When you own land in New Zealand, you have certain rights attached to that ownership. However, these rights can be difficult to understand amongst documents full of legal jargon. Understanding what rights and legal protections you have as a landowner is important. These rights determine what you can do if something goes wrong. One of those rights is indefeasibility of title. This article will explain how indefeasibility of title works.

What Does Indefeasibility of Title Mean?

When you own land in New Zealand, you own the ‘title’ of that land. That title is recorded on a central public register governed by the Land Transfer Act (LTA). This title is ‘indefeasible’, meaning that it cannot be overturned or put aside by competing claims for your land.

Indefeasibility is a crucial part of how New Zealand’s land ownership system works. You receive legal protection against adverse claims to ownership or usage of the land made by other parties without a registered interest if your land is registered.

For example, if your neighbour tells you they had an arrangement with the previous landowner to use your land, you can confirm this by checking the property register. If there is no evidence of registration, you do not have to legally honour this interest.

There are three critical reasons as to why land ownership works in New Zealand in this way, being:

• the register accurately mirrors the reality of who owns the property;
• when buying land, purchasers should not have to worry about any hidden interests in the land; and
• the state can guarantee the title on the registry and provide for losses due to errors.

This register system simplifies the process of dealing with land, as the register takes priority over competing interests, making deals more certain.

How Do I Register My Interest in Land?

When you buy new property or gain some other registrable interest, your lawyer will register your interest with Land Information New Zealand (LINZ). They can do this registration online.

For example, consider you are buying a new commercial property. Part of the transfer of ownership will include your lawyer submitting legal documents and notifying LINZ that the registered title has been transferred to your name.

Exceptions and Limitations

Fraud

Indefeasibility of title may not apply if you obtained your land by fraud. Here, the court can overturn your ownership. Under the law, this kind of fraud means forgery or any other dishonest misconduct on the part of the registered owner or the registered owner’s agent in acquiring their interest in the land.

For example, forging a signature on legal documents when transferring ownership would count as fraud. In that case, the court could order the forger to pay compensation. If they are the registered owner, the Court may strike off their ownership completely.

However, if you have a registered interest in the land and played no part in the fraud yourself, you might receive protection. Factors that would help this include:

• completing a thorough customer due diligence process;
• taking reasonable steps to verify signatures;
• confirming agreements; and
• acting reasonably, fairly and in good faith.

Manifest Injustice

The Land Transfer Act 2017 has an exception to the principle of indefeasible title. This exception allows the Court to alter the register in instances of ‘manifest injustice’. ‘Manifest injustice’ refers to where an outcome is so unreasonably harsh that it requires the Court to step in and reverse the indefeasible title.

When determining whether the Court should alter the register on the grounds of manifest injustice, they will consider a variety of factors, including:

• how the person acquired the estate or interest;
• the length of time of ownership of the land;
• any improvements that have been made to the land;
• the conduct of any persons in relation to the acquisition of the estate or interest.

Forgery or other dishonest conduct is not enough for a ‘manifest injustice’ to have occurred. Instead, the Court will only exercise their discretion if they consider that compensation or damages could not rectify the issue.

Other Registered Interests

Indefeasibility of title does not protect you against other registered interests on the register. If you buy land and someone else already has a registered interest in it, you have to honour that interest in most cases.

The table below outlines other registered interests in land.

Māori Title

Some land in New Zealand is owned through a parallel system – Māori freehold land. This is land that has never been transferred from Māori ownership. Therefore, it is not dealt with under this registry system. The Māori Land Court must approve most dealings with Māori freehold land.

With two systems running like this, there can be conflicts as to which method of owning land prevails. Under the current law, if you own land using the system given by the LTA, that interest will usually have priority because of indefeasible title.

Key Takeaways

Having a land registry system means that dealing with land transactions is simplified. It also provides a degree of certainty to these dealings. If your name is on the title on the property registry, then indefeasibility of title gives you superior property interest against any unregistered interests. However, it is important to note that:

• indefeasibility of title does not protect you against other registered interests over your land; and
• you are liable if you obtain your interest in the land fraudulently.

If you need assistance with your land dealings, our experienced property lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.