Introduction
Selling a property in New Zealand comes with its share of challenges, but few are as potentially deal-breaking as title restrictions. Whether it's a land covenant limiting what you can build, an easement giving neighbours access across your land, or a consent notice from the local council, these encumbrances can make buyers hesitate — and sometimes walk away entirely.
The good news? Title restrictions don't have to kill your sale. With the right knowledge and preparation, you can navigate these hurdles and close the deal on your terms. Here's how.
Understanding Common Title Restrictions in New Zealand
Before you can address title restrictions, you need to know what you're dealing with. The most common types include:
Land Covenants
Covenants are rules attached to the land that bind current and future owners. They might restrict building height, require specific fencing, or ban certain activities. Negative covenants (what you can't do) are far more common than positive covenants (what you must do).
Key point: Covenants run with the land, meaning they apply regardless of who owns it. A 20-year-old covenant doesn't expire just because the original developer is long gone.
Easements
An easement gives someone else the right to use part of your land for a specific purpose — a right of way for driveway access, or a right to run pipes under your property. The most common in NZ is the right-of-way easement for shared driveways.
You can check if a property has an easement by ordering the Record of Title, which lists all registered easements.
Consent Notices
Under Section 221 of the Resource Management Act, councils can register consent notices on titles. These typically relate to conditions imposed during subdivision — things like geotechnical requirements, stormwater management obligations, or restrictions on further building.
Mortgage Registrations
An existing mortgage registered on the title needs to be discharged at settlement. This is routine but must be handled correctly — your conveyancing lawyer will coordinate this with your bank.
Caveats
A caveat is a formal warning that someone claims an interest in the property. It effectively prevents dealings with the title until the claim is resolved. If there's a caveat on your title, it must be addressed before sale.
Step 1: Get Your Record of Title Before Listing
The very first step in selling a property with restrictions is knowing exactly what's on your title. Order a current Record of Title ($42.90) to see every encumbrance, easement, covenant, and notation.
Don't rely on old copies — titles change. A mortgage might have been discharged, or a new covenant added. The current title is your definitive document.
Pro tip: Also order the Historical Title ($42.90) to see the full history. This helps answer buyer questions about when and why restrictions were placed.
Step 2: Disclose Everything Upfront
In New Zealand, the vendor has a legal obligation to disclose known defects — and title restrictions count. Trying to hide or downplay restrictions almost always backfires:
- Buyers will discover them during their own title search
- Undisclosed restrictions can lead to sale cancellations, legal disputes, or price renegotiations
- Transparency builds trust and can actually speed up the sale
Include restriction details in your marketing materials and pre-sale information pack. This filters out buyers who won't proceed and attracts those comfortable with the restrictions.
Step 3: Assess Which Restrictions Can Be Removed
Not all title restrictions are permanent. Here's a practical breakdown:
Can Potentially Be Removed
- Outdated covenants — If the covenant no longer serves its original purpose or the person who benefits agrees to release it
- Easements — If the person who benefits no longer needs access and agrees to surrender it
- Discharged mortgages — If the mortgage has been paid off but not formally discharged from the title
Generally Permanent
- Council consent notices — These require council agreement and often resource consent processes
- Infrastructure easements — Right-of-way and utility easements rarely get removed
- Heritage or conservation covenants — These are designed to be permanent
Removing a restriction requires applying to the appropriate authority — usually the entity that placed it. This might mean negotiating with neighbours, applying to the council, or going through the Environment Court. It can take months and cost thousands, so weigh this against the impact on your sale price.
Step 4: Price Accordingly
If restrictions can't be removed, your pricing must reflect them. A property with a shared driveway easement might sell for 3-5% less than an equivalent property without one. A building covenant that limits height or design can reduce value by 5-10%.
Be realistic. Overpricing a restricted property leads to extended time on market, which creates its own stigma.
Step 5: Market to the Right Buyers
Different buyers have different tolerances for title restrictions:
- First-home buyers are often flexible on easements and covenants if the price is right
- Investors care most about whether restrictions affect rental potential or future development
- Developers will be the most concerned about covenants that limit subdivision or building
- Owner-occupiers might actually prefer covenants that maintain neighbourhood character
Frame the restrictions as features where possible. A covenant requiring minimum house sizes might limit your buyer pool, but it also guarantees neighbourhood quality.
Step 6: Prepare for Buyer Due Diligence
Expect buyers to order their own Guaranteed Search ($45.90) — this shows the current state of the title as of the search date, guaranteed by the official land registry. It's the gold standard for due diligence.
Smart sellers order one themselves before listing, so there are no surprises. Consider the Pre-Purchase Package ($189.90) for the most comprehensive view — it includes the Record of Title, Guaranteed Search, Historical Title, Instruments, and Survey Plans all in one bundle.
When Restrictions Kill the Deal
Some restrictions genuinely make a property unsellable at market rates:
- A defective title with unresolved ownership disputes
- Active caveats blocking transfer
- Covenants that prohibit any building or occupation
- Severe contamination or hazard notices
In these cases, consider whether the cost of resolving the restriction is less than the discount you'd need to offer. Sometimes investing $5,000–10,000 in legal work to clear a title issue can recover $50,000+ in sale price.
Working with Your Conveyancing Lawyer
Your lawyer is essential when selling a property with restrictions. They will:
- Review the title and explain each restriction in plain language
- Advise on which restrictions can be removed or varied
- Prepare disclosure documentation
- Handle negotiations with the buyer's lawyer regarding restriction-related conditions
- Coordinate mortgage discharge and caveat removal
Choose a lawyer experienced in property transactions with encumbered titles — not all conveyancers handle complex title issues regularly.
FAQ
Can I sell a property with an easement in New Zealand?
Yes. Easements are common on NZ titles and don't prevent sale. The easement transfers with the land to the new owner. What matters is whether the easement significantly affects value or usability — a shared driveway easement is routine, but a right-of-way through the middle of your section could deter buyers.
Do I need to disclose all title restrictions when selling?
Yes. Under NZ law, vendors must disclose known defects and encumbrances. Title restrictions are discoverable through a title search, so attempting to hide them is pointless and potentially grounds for the buyer to cancel the agreement or seek damages.
Can a land covenant be removed from a title in New Zealand?
It depends. You need the consent of the person who benefits from the covenant, or an order from the Environment Court. If the covenant is outdated and no longer serves its purpose, removal is possible but not guaranteed. The process can take 6–12 months and may cost $5,000–15,000 in legal fees. Sometimes it's more practical to sell with the covenant and adjust your price accordingly.
