There is a lot of discussion around the physical design of subdivisions and how that impacts the community that is created and the ultimate owners’ use and enjoyment of the land. The legal design is just as important.
Recent agreements I have reviewed for some new developments cause me concern as to what we are all creating. Future communities will be over-burdened with internal rules and regulations. Disputes will have more complexity and be more expensive to resolve. Some of the rules will not be appropriate in the future, yet will still apply. Owners might have less say over their home and castle than what they expect. The ultimate value of the property might be affected and obtaining bank funding for these properties might become more difficult.
Onerous obligations on owners
I have reviewed 3 developments recently where investigating the future title meant considering over 200 pages. The private interests created, i.e. requirements that had not been imposed by Council or utility companies, were a large proportion of this content. The obligations for individual owners included:
ompliance with Incorporated Society rules, attending an AGM and paying levies. Failure to do so might mean a mortgage is registered on the title and liquidated damages of $200/day payable for every day these rules are breached.
- In addition, in one case, compliance with the body corporate operational rules also. Attending that AGM also and paying levies.
- Compliance with land covenants for 999 years, regulating design and the use and enjoyment of the property.
- Rules covering everything from the permitted trees and the height these can grow to, the letterbox staying the same, fences using the same materials if repairs are needed, furniture types permitted in outdoor areas, regulating changes to buildings, how many guests are permitted at a property at a time for a social gathering …
In the case of the latter covenant, those obligations could be enforced by the neighbours individually. Disputes between neighbours are unfortunately all too common. These create handy tools for neighbours to use against one another.
No future proofing
Obligations being registered on titles are not sufficiently future proof. A good example are design controls, including some of the items I mention above. I do not understand why design controls need to last 999 years? I do not believe making these last longer will maintain the quality of the development.
10-25 years is long enough. Buildings will change in the future – materials used in building; how our future dwellings are used; what trees survive our climate; letterboxes replaced by drone landing pads; garages by central hubs for driverless cars to collect us from.
Why is there a need to entrench the present in this manner as a means to control future quality of developments? Quality control is important whilst a development is built out and the community establishes itself but these controls, if they are going to be long lasting, need to be sufficiently future proof. Amending or removing a land covenant registered on multiple titles is not an easy task and the penalties for non-compliance are real in the meantime.
The examples above include multiple organizations that owners need to be members of. Common facilities might commonly be under the management or control of an incorporated society and owners are required to participate. For some developments this can extend to membership of multiple organizations – a society for the precinct as a whole then a body corporate for the building they occupy. For some the body corporate can then be layered – so that there are effectively two body corporates they are members of. Decisions to use these structures need to be taken only where it’s actually necessary. Auckland Council thankfully pulled back on this requirement which seemed to be in resource consents too often. Developers can still favour them, even where the common assets under management do not really need them, for example where there are simply swale drains within a right of way.
Forward-thinking legal design of subdivisions is so important in the creation of our future communities.