New Mortgages of land subject to s240 Resource Management Act 1991 or s77 Building Act 2004

A covenant under s 240 of the Resource Management Act 1991 (RMA) and a certificate under s 77 of the Building Act 2004 (BA) hold allotments together and prevent separation by transfer, lease or disposal.

Whilst there is no limitation on mortgaging the affected allotments separately, a new mortgage of one or some of the allotments only would mean the mortgagee could not complete a transfer in exercise of its power of sale until the limitation was lifted (or the registered owner simultaneously transferred the land that is not mortgaged).

Section 242(1) RMA and s 80 BA specify that only a registered mortgage, affecting less than the whole of the land, existing at the time of registration of the covenant or certificate is deemed to have always affected the other land.

Landonline runs a business rule that will cause a new mortgage of amalgamated allotments to step down to Lodge. The customer is also warned of the limitation when creating the dealing.

Before registration of a new mortgage that does not affect all of the amalgamated allotments LINZ staff may contact the lodging customer to notify the customer of the implications of the amalgamation for the mortgagee. LINZ will seek written confirmation that the customer acknowledges the effect of the limitation on the power of sale but seeks registration anyway. Written confirmation can be included with the mortgage when it is lodged in which case LINZ will not contact the lodging customer.

Alternatively, LINZ can facilitate withdrawal of the dealing to enable all of the affected allotments to be included in the mortgage.