Land covenants over land that is vesting in a subdivision

An issue that sometimes arises in the context of a subdivision plan is the question of consent requirements for the extinguishment of land covenants, where affected allotments are to vest as road or reserve, upon the deposit of plans for subsequent stages of the subdivision.

Under section 224(b) of the Resource Management Act 1991, the consent of registered interest holders is required where allotments are to vest as road or reserve, upon the deposit of a subdivision plan. This applies to any interests that may affect the land, including land covenants, which are extinguished when the vesting occurs.

Consent requirements may become particularly problematic in cases where, following the implementation of earlier stages of the subdivision, there are numerous landowners who enjoy the benefit of the covenants.

A practitioner approached LINZ with a creative solution to this vexed question.1

The proposal is that difficulties could be avoided by including a termination condition in the instrument creating the land covenants. In essence, the instrument would provide that the covenants will automatically cease to have any effect on any allotment that will vest as road or reserve, in any subsequent stage of the subdivision.

Such an approach is feasible, provided the termination of the covenants is linked to some easily ascertainable event, prior to deposit of the plan, such as its approval by the territorial authority, or approval as to survey by LINZ.

1 LINZ gratefully acknowledges the contribution of Mr Jeff Walters of Chapman Tripp