Introduction

We trust you will find this publication both newsy and useful. For further information regarding us and our services, including full Land and PPSR search and registration, please visit www.landinfo.net.nz

.:: AN EXTENSION OF YOUR OFFICE ::.

As predicted in our last newsletter business has continued to be strong for the first quarter of 2003.
LANDinfoNET Limited has been working hard to keep abreast of the dynamic world of New Zealand Land Transfer and PPSR.
We recently attended the Taking Torrens into the 21st century conference run by the University of Auckland, Faculty of Law. It provided considerable history of the workings of the Torrens system within New Zealand and other countries and then went on to what is in store for us in the future with the onset of eDealings. It was also a good opportunity to say hello to many of our clients who also attended the two-day Conference.
Six of us also attended a private specific seminar regarding issues involved with PPSR. It confirmed our strong understanding of the Personal Property Security Act. We are now acting for a considerable number of solicitors in this relatively new world of registering securities over assets and personal property. Please take the time to read some interesting and beneficial information on PPSR later in this newsletter. We are looking forward to more customers utilising our service in this area of our expertise.
Please read on through our newsletter and as always we trust you will find the content informative, interesting and of benefit to your business.
Wishing you ongoing prosperity for 2003.

Latest LINZ Rulings and updates

Forms of Paper Instruments copied from the Land Transfer Regulations 2002

Some practitioners are preparing instruments by copying the new forms prescribed in the Regulations. This is quite acceptable while licensed printed forms are not available.

When copying a prescribed form please include the 'title' or type of instrument at the heading of your instrument
e.g. "Encumbrance instrument", or "Mortgage priority instrument"

Discharges of Mortgage

Form 11 "Mortgage discharge instrument" may be used unaltered to register a discharge of a mortgage as to all of the land charged by the mortgage. The form includes a requirement to enter the Unique Identifier(s) or C/T(s) of the land affected. If the discharge is intended to be a 'full' discharge then it is the responsibility of the practitioner to determine all of the references for all the affected land and enter those references.

Often, instruments that purport to be 'full' discharges fail to specify all of the computer register references for the land intended to be discharged. This can cause a rejection, or a need to register a further discharge later on.

If the discharge is intended to be a partial discharge (that is, as to only part of the land affected, or as to only part of the secured sum), then the form should be amended to clearly indicate the intention.

Please advise should you wish LANDinfoNET Limited to search the register for all extant land still registered against mortgages you are intending to fully discharge.

Regulation 16 of the Land Transfer Regulations 2002

Since the removal of duplicate certificates of Title LINZ have introduced additional controls around the execution and witnessing of instruments.
If the instrument is witnessed by a solicitor or certified correct by a solicitor then LINZ will generally accept the execution at face value.

If the instrument is not witnessed by a solicitor and not certified correct by a solicitor then LINZ may require the execution to be verified by a statutory declaration given by the executing party or the witness pursuant to Regulation 16(3).

Consent of Mortgagee

Since the 2002 amendment to the Land Transfer Act 1952 came into force there are more documents that require a mortgagee's consent for registration purposes than there were before the amendment.

Please note that the term mortgagee also includes an encumbrancee of an encumbrance document too.

As a result of the amendment, we are being asked the question 'Do I need the existing mortgagee to consent to my new document?' more frequently than ever before.

It isn't always a simple yes or no answer because it is clear that in some cases customers are interested in consent requirements beyond just the issue of whether or not a document can be registered at Land Information New Zealand (LINZ) with or without a mortgagee's consent.

There are 3 main concerns our customers seem to have in relation to mortgagee's consents that we have identified so far:

Firstly - Registration requirements under the Land Transfer Act 1952

This is usually a simple yes or no answer. The Section or Part of the Land Transfer Act 1952 that authorises registration of a particular document will contain the consent requirements.

For example Section 115, in the case of Leases, contains the consent requirements under subsection (4).

It is worth mentioning too that mortgagee consent requirements in respect of the creation, variation and surrender of Easements and Land Covenants are contained in Section 90E(3) below.

90E. General provisions relating to easements
(3) Consent is needed as follows:
(a) the creation or variation of an easement under any of sections 90A, 90B, or 90C needs consent by any mortgagee of the land that is to become the servient tenement:
(b) the variation of an easement under section 90C needs consent by any mortgagee of the easement or dominant tenement:
(c) the surrender of an easement under section 90A or section 90B needs consent by any mortgagee of the easement or dominant tenement.
(4) If a mortgagee gives a consent under subsection (3), the mortgagee and all persons who subsequently derive any interest from the mortgagee are bound by the easement or profit a prendre, variation, or surrender.

Secondly - Contractual requirements under a mortgage document

An existing mortgage, registered on a title, may contain a clause relating to the obligations of the mortgagor to obtain the mortgagee's consent or permission if they want to register any further documents against their title.

It may be good practice to inform a mortgagee of any proposed dealing with the land otherwise the mortgagor could be in breach of the covenant and therefore serious consequences upon the mortgagor are a possibility.

A consent or permission arising under these circumstances might be relatively informal and provided by way of letter from the Bank to the mortgagor. LINZ would not be interested in seeing this sort of consent because it is not critical to the registration process, it should be kept by the mortgagor or placed on the Solicitor's file.

Thirdly - Section 105 of the Land Transfer Act 1952

Upon the mortgagee exercising their power of sale under their registered mortgage, Section 105 Land Transfer Act 1952 provides that estates and interests subsequent to the power of sale mortgage will be automatically discharged. However, if the power of sale mortgagee has consented to the registration of any subsequent estate or interest that subsequent interest will not be discharged.

There is sometimes a bit of debate about whether the power of sale mortgagee's consent is effective if it has not been attached to the document that was registered subsequently.

For the avoidance of any doubt we recommend that if you are going to obtain the consent of a prior mortgagee to the registration of your new document, then that consent should be a formal consent attached to the document that you are intending to register.

Just a reminder that we have the electronic re-usable formal consent form available for use with land transfer documents. This form can be used for any consents e.g. mortgagee, caveator etc.

Please contact Ken Hix on free phone 0508-534-251 kenh@landinfo.net.nz office if you want to arrange for a copy to be sent to you. This electronic form is a read only document; you will not save over this, keeping it clean for the next use. NB - When opening the form you will notice a protection window appear requesting a password. You do not need to enter a password, simply click on the READ ONLY button and the document will open. This is a LINZ requirement to protect the form from further amendments. Please don't hesitate to contact Carmel or Ken by email carmelp@landinfo.net.nz and kenh@landinfo.net.nz we will gladly assist.

Points of Interest - LINZ issues - Avoid time delays and rejections

• LINZ Registry is policing new sec 90 (3) (b) Land Transfer Act 1952 which requires the execution of the Dominant Tenement to any new Easement or Profit a Prendre
• A new concept regarding Mortgagee Consent and new Easements. LINZ Registry now additionally require consent when an amalgamated new title is generated from subdivision, where an easement lies over one of the allotments, but the other allotment in the subdivision is also affected by a Mortgage. Registrar General Land national ruling.
• We would like to again reiterate that the new style Easement Instrument can be utilised to create new Land Covenants. Please advise should you require assistance in drafting.
• In relation to Easement Instruments it is noted that when defining the servient/dominant land LINZ Registry only require a title reference (the identifier); therefore the allotment is not required to be defined unless an easement is appurtenant to only one or some allotment/s in an amalgamated title i.e. the easement is appurtenant to only part (not all) of the land in a title.
• Drafting assistance with LINZ Registry forms is offered to the LANDinfoNET Limited client base as well as technical assistance with the myriad of Land Conveyance issues of today.

Our Land Transfer Consultants Roger Fielding and Barry Green are always available for consultancy and technical advice issues on these and any other matters. Please do not hesitate to contact them with queries.

Roger 0508 524251 LANDinfoNET Limited Hamilton rogerf@landinfo.net.nz
Barry 0800 106206 LANDinfoNET Limited Auckland barryg@landinfo.net.nz

Roger and Barry have a prior cumulative experience of working with LINZ as senior Land Registrar for over 40 years please ensure you utilise their ongoing knowledge and recourses as an "extension of your office". Roger and Barry are supported by a team of our registration agents to ensure they are available for high-end consultancy.

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PPSR Update

A LIABILITY ISSUE YOU CAN UNBURDEN YOURSELF FROM

Financing Statements registered on the PPSR are restricted to five years and must be renewed before they expire to maintain the same priority. Failure to notify a client of upcoming expiries may result in liability for your firm. LANDinfoNET Ltd has systems in place to allow us to notify you prior to the expiration of financing statements that we have registered on your behalf.

PMSI's (Purchase Money Security Interest) - Retention of title and Hire Purchases, Lessor of goods under a lease for a term of more than one year, Commercial consignments.

A secured party will not acquire PMSI super priority (a super priority takes priority over a security interest in the same goods, even if that security interest was perfected prior to the PMSI arising) unless it is perfected in accordance with the specific rules set out in the PPSA. The financing statement will have to be registered within the prescribed timeframe. For most collateral types, the financing statement must be registered within 10 working days after the debtor takes possession of the collateral (sec 73). If the collateral is intangible, the financing statement must be registered within 10 working days after the security interest attaches to the collateral (sec 75). Attachment would generally occur when the debtor signs or assents to the security agreement. If the collateral is inventory, the financing statement must be registered prior to the debtor obtaining possession of the collateral (Sec 74). Example of priority relating to sec 74: XYZ Financing Ltd makes a loan to a car dealer for the purchase of inventory (cars). XYZ Financing Ltd registers a financing statement in respect of the cars the dealer intends to buy (inventory) before the car dealer obtains possession of the cars. However before XYZ Financing Ltd registered their financing statement, ABC Ltd registered a financing statement in respect of the car dealer's inventory. XYZ Financing Ltd PMSI in the car dealers inventory (as to the cars purchased by the loan) has priority over ABC Ltd's security interest in the dealer's inventory.

Under the PPSA a debtor cannot grant a PMSI, it is the conditions on which a PMSI depends that must exist. Whether or not a PMSI exists is a question of fact and does not depend on the intention of the parties, as it would have done pre PPSA. However registration timeframe requirements dictated by the act must be complied with. It is not a requirement of the act that the secured party indicate in any way on a financing statement that a security interest relating to the financing statement is a PMSI. Determining whether the security interest is a PMSI requires an examination of the factual elements surrounding the granting of the security interest. A lender or seller will have to factually establish that their security interest relating to a financing statement is in fact a PMSI.

Another significant difference relating to PMSI's, is the preferential creditors regime. Under the PPSA upon a company's liquidation, preferential creditors have first bite at a companies accounts receivable and inventory and priority over non Purchase Money Security Interests (e.g.: general security agreements). (Schedule 1 - PPSA amendment Act 2001). Under the old regime there used to be no requirement to register ROT clauses, unlike other forms of security. In Today's world however, for a creditor with a ROT clause to be at the top of the list, it must be registered and if done so in the correct way, will obtain a PMSI. In other words, to enjoy the benefits of the protection given under the act, a supplier with a ROT clause should register on the PPSR.

WERE YOU AWARE?

That the collateral type "all present and after acquired personal property" does not include serial numbered goods such as motor vehicles and aircraft.

If the debtor is a trust or partnership, you must use the partnership or trust name rather than the names of the individual partners or trustees.

Our PPSR Consultant Janelle Weir (supported by Marian Kempster) is available for consultancy and technical advice issues. Please do not hesitate to contact Janelle or Marian with queries.

Janelle 0800 106 206 LANDinfoNET Limited Auckland janellew@landinfo.net.nz
Marian 0508 534 251 LANDinfoNET Limited Hamilton mariank@landinfo.net.nz

LANDinfoNET Limited has been registering financing statements since the conception of the PPSR, although there is no case law to provide rulings, our knowledge is forever increasing from our policy of having the latest resources available along with discussing issues with liquidators, accountants and financial institutions. Please ensure you utilise our ongoing knowledge and resources as an "extension of your office". Both Janelle and Marian are supported by a team of our PPSR search and registration agents.

A full PPSR search and registration service is available on our web site www.landinfo.net.nz alternatively www.ppsrinfo.net.nz will also take you the same site.

ATTENTION EX PINNACLE CLIENTS:
(PPSR registrations/ Maintenance)

If Pinnacle (no longer operating) registered financing statements on your behalf and utilised Pinnacle's email address in the secured party group, we feel it would be in your best interests to change this to either your email or LANDinfoNET Limited's email address to ensure debtor change demands and other communications from the Ministry are received. The Ministry is assisting LANDinfoNET Limited to assist you in this area. If you would like us to register the change of email address, or any other changes, then please don't hesitate to instruct us on your behalf.

Due to LANDinfoNET Limited's relationship with the Ministry we may also be able to help if the Pins and Passwords weren't released to you from Pinnacle on registration. Pins and Passwords are necessary for future maintenance of financing statements in terms of discharges, renewals, and financing change statements etc…

If Pinnacle registered your financing statements, but you would still like to be notified of upcoming expiries, we can also help you with this. We are also able to register and maintain any new security interests you may have.

(please contact Janelle Weir should you require any further clarification on:
0800 106 206 or janellew@landinfo.net.nz)

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National Service - Out of registry charges abolished

To reflect the spread of business we are now achieving trough out New Zealand LANDinfoNET Limited has decided to abolish the charge for out of registry work.

This means to you that should you submit a document for registration through our team in Auckland or Hamilton for registration in Canterbury, Otago or Wellington (anywhere you may work in New Zealand) you will only incur our standard charge plus disbursements, no additional charge will be made.

At LANDinfoNET Limited we are continuing to focus on a full National service and progressively fine tune our systems to create efficiencies so you benefit. Watch this space for more innovation and effencies from LANDinfoNET Limited.

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Real Estate Statistics

Real Estate statistics continue to show excellent volumes being experienced. Number of days to sell has reduced to twenty-nine days, the lowest in the 12 moths in the table. Median house sale prices continue to rise with this ongoing demand. Trends look set to continue as our country's population growth continues and with the recent Official Cash Rate lowering to 5.5% (-.25%).
Click here to view a table which depicts averages across New Zealand.

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Westpac NZ Housing Market

A roundup of New Zealand Market Indicators as at 31 March 2003

Click here to view this invaluable information. We are grateful to have this supplied by:
Nikki Hodge of Westpac Banking Corporation.

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Getting The Basics right

Being legal agents we take our role and responsibility very seriously. What this means to you as a valued client is; our experienced staff are monitored and coached to ensure your search requests are executed accurately and timely, as we treat every instruction as urgent you will be notified of any delays to our "normal time" search and registration delivery, you only get your mail no one else's, your invoices are accurate, they arrive in a timely fashion and they carry the correct author and client reference.

We invite your comment good and bad to ensure we are making ongoing improvements to the service you receive.

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"an extension of your office"

A phrase we both promote and stand by, what does "an extension of your office" mean?
We want you to feel that we are in your office employed by you to alleviate stress and provide efficiencies. Should your legal executive want leave or workloads are peaking at unusually high levels, we can assist with the workload. We have qualified legal executives on staff as well as ex LINZ Land registrars for the more complicated land transfer issues. This enables us to be able to respond to a myriad of requests to assist your business in delivering excellence and goodwill to your clientele.

Remember we are supported by Brookers statutes of New Zealand updated monthly by CD or daily online and can provide you with copies of relevant sections you may require, we subscribe to the Conveyancing Bulletin, Torrens Talk, offer an extensive precedent library and have an excellent working relationship with the RGL Robbie Muir, and key staff in all the five LINZ offices throughout New Zealand.

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