Creating easements in leases

Under the Land Transfer Act 1952, easements which were ancillary to a lease could be granted or reserved in a lease instrument. The Land Transfer Act 2017 specifies the type of instrument which must be used to register an easement so lease instruments can no longer be used.

Prior to the commencement of the Land Transfer Act 2017 (LTA 2017), LINZ allowed easements which were ancillary to a lease, such as a right of way, or for telecommunications or electricity, to be registered using a lease instrument.

As section 108 LTA 2017 requires an easement instrument or transfer instrument to be used to register an easement, lease instruments can no longer be used to register an easement.

This also affects existing easements which were created by a lease as these easements will determine (cease) on the expiry of the lease. A lease in renewal of the expired lease can no longer be used to re-create the easement, except in the limited circumstances outlined below.  Generally, if the parties wish to re-create the easement, they need to do so using another method, such as an easement instrument.

The terms and conditions of a lease may contain references that suggest the lessee and lessor have agreed to an easement. This is still an acceptable practice provided that the parties do not intend the lease to register that easement (i.e. for it to be memorialised separately on the record of title).

In limited circumstances, section 95 of the LTA 2017 will apply and the replacement lease will be issued subject to the existing easement.  It must be clear in the original lease that the easement in that lease does not terminate at the end of the initial term, which would usually mean it is expressed in the lease as continuing for the term of the lease plus any renewals. All of the following must also apply:

  • the easement was created within a lease prior to the commencement of the LTA 2017;
  • the lessee or interest owner applies to register a replacement lease under section 95(2) LTA 2017;
  • the lease is a replacement lease as defined in section 95(1) LTA 2017; and
  • the owner of the burdened land consents to the continuation of the easement (section 95(3)(ii) LTA 2017).

In all other circumstances the general rule that easements must be created by an easement instrument still applies.

If the lease and its registration is authorised by another Act such as the Land Act 1948, section 108 LTA 2017 will not apply to the creation of any easement relating to the lease and therefore other instruments may be used to register the easement.