A covenant under section 240 of the Resource Management Act 1991, or a certificate under section 77 of the Building Act 2004, requires that certain land be held together. The restriction prevents any part of that land from being transferred, leased, or disposed of except in conjunction with the remaining land.
The restriction does not prevent registering a mortgage over part of the land. However, the mortgagee should be aware that they cannot exercise a power of sale until the covenant is cancelled or the certificate is removed.
When lodging a new mortgage that affects only part of the land:
- Prepare the mortgage in complex mode.
- Add text to the Additional Clauses, Conditions or Intent field that makes clear the mortgagee is aware of the limitation on exercising power of sale.
- As a safeguard, the T065 failure message displays noting that the record of title is affected by a covenant or certificate and cannot be dealt with independently – this will not prevent you from submitting the dealing.
- The dealing steps down to Lodge so that LINZ can confirm that the mortgagee is aware of the limitation on power of sale (either by the wording in the intent clause or by further enquiry with the practitioner).