Property Law

Law of Property: Main Branches

The two primary classifications of property under the law: Real Property and Personal Property.

Real Property: Definition

Land and anything permanently fixed to the land, such as buildings, paths, fences, and retaining walls.

Are buildings considered Real Property?

Yes, because they are fixed to the land.

Are paths and fences Real Property?

Yes, they are classified as real property because they are fixed to the land.

Are retaining walls Real Property?

Yes, they are physical structures fixed to the land.

Personal Property: Definition

All property that is not real property, divided into tangible chattels and intangible choses in action.

Chattel: Definition

Tangible personal property capable of physical possession, such as cars, computers, or furniture.

Is a car a chattel?

Yes, a car is a tangible, moveable piece of personal property that can be physically possessed.

Is a computer a chattel?

Yes, it is physical personal property capable of possession.

Is office furniture a chattel?

Yes, furniture is a tangible personal item that can be physically possessed.

Chose in Action: Definition

An intangible personal property right that cannot be physically possessed; the right can only be asserted by taking court action.

How is a Chose in Action asserted?

It cannot be asserted by taking physical possession, but only by taking court action.

Are book debts a Chose in Action?

Yes, because a debt is an intangible right to money that must be enforced via legal action.

Are company shares a Chose in Action?

Yes, shares represent intangible ownership rights that cannot be physically held.

Are negotiable instruments (like cheques) Choses in Action?

Yes, the physical paper represents an intangible legal right to the underlying money.

Is paper money a Chose in Action?

Yes, because the right to the value of the money cannot be asserted by mere physical possession, but by court action.

Property as an Expanding Concept

The legal reality that "property" continually evolves to include modern, non-traditional intangible rights.

Intellectual Property: Expanding Concept

Exclusive rights granted by law to ideas and their physical/artistic expression.

Licences as Property: Example

A regulatory permission or quota that holds commercial value, such as a fishing quota.

Goodwill as Property

The established reputation and commercial connection of a business, recognized as an intangible property asset.

The "Bundle of Rights" Metaphor

The legal concept that ownership is not a single right, but a collection of distinct rights over an item or land.

Bundle of Rights: Selling

The owner's right to sell the property to another party.

Bundle of Rights: Wills and Gifts

The owner's right to dispose of the property by will after death, or as a gift during their lifetime.

Bundle of Rights: Possession

The owner's right to retain physical possession of the property.

Bundle of Rights: Destruction

The owner's right to completely destroy the property if they choose to.

Bundle of Rights: Security

The owner's right to use the property as collateral/security for a loan.

Who is the "Owner" of property?

The person who holds the greatest number of rights in the "bundle of rights" for that property.

Who can legally own property?

Only a recognized "legal person," which includes human individuals and incorporated bodies (like companies).

Title to Goods: Common Law Rule

At common law, title to goods depends on possession; the possessor is assumed to be the owner or entitled to possession.

Torrens System: Primary Purpose

A land registration system in New Zealand designed to facilitate proof of title to estates in land.

What does the Torrens System record?

It records the owner of the land, any restrictions, securities (mortgages), and other registered interests.

Who owns land absolutely in New Zealand?

Only the Crown can own land absolutely in New Zealand.

What does an individual own under the NZ land system?

An individual cannot own the land itself absolutely; they can only own an "estate in land."

Restrictions on Land Use: RMA 1991

The Resource Management Act 1991, which places environmental and planning restrictions on how land can be used.

Restrictions on Land Use: Building Act 1991

Statutory rules regulating building standards, construction, and safety on private land.

Restrictions on Land Use: Public Works Act 1981

Statutes allowing the government to compulsorily acquire private land for public infrastructure works.

Common Law Nuisance

A common law restriction on land use preventing owners from using their land in a way that unreasonably interferes with a neighbour's enjoyment of theirs.

Rylands v Fletcher (1868)

A landmark common law case establishing strict liability for land owners if a dangerous thing escapes from their property and damages another's.

Three Methods of Acquiring Ownership

(1) Purchase, (2) Gift, and (3) Vesting by operation of law.

Gift "Inter Vivos"

A gift of property made by an owner to another person during their lifetime.

Gift Under a Will

A gift of property that is transferred to a beneficiary after the owner's death.

Vesting by Operation of Law

An automatic transfer of property ownership dictated by legal statutes, such as bankruptcy or estate administration.

Nemo Dat Quod Non Habet (Translation)

"One cannot give what one does not have."

Nemo Dat: Core Rule

No person can transfer a better legal title to property than they themselves currently hold.

Statutory Exceptions to Nemo Dat

Specific pieces of legislation that protect an innocent buyer's title even if the seller did not have the right to sell.

Nemo Dat Exception: Mercantile Law Act 1908

A statutory exception protecting transactions made by mercantile agents in the ordinary course of business.

Nemo Dat Exception: Land Transfer Act 1952/2017

A statutory exception where registering an interest under the Torrens system defeats previous defective titles.

Ownership vs. Possession: The General Rule

A possessor has better title against the entire world except for the true, legitimate owner.

"Possession is 9/10 of the law" meaning

A legal adage suggesting that the person who physically possesses an object is highly likely to be its legal owner.

Can an owner not possess their property?

Yes, an owner can temporarily transfer possession (e.g., through renting or leasing) while retaining ownership.

Legitimate Ownership: The 3 Core Rights

(1) The right of possession, (2) The right of enjoyment, and (3) The right of disposition.

Right of Enjoyment (Ownership)

The owner's right to use and experience the benefits of their property without interference.

Right of Disposition (Ownership)

The owner's right to alter, sell, gift, destroy, or otherwise transfer their property rights.

Property as Security

Using an asset (like a house or personal property) to guarantee a loan, giving the lender rights to the asset if the borrower defaults.

Doctrine of Estates: Concept

The legal principle that individuals do not own the physical soil of NZ, but rather own a slice of time ("an estate") in that land.

Four Classifications of Estates in NZ

(1) Fee Simple, (2) Life Estate, (3) Stratum Estate, and (4) Leasehold.

Fee Simple Estate: Duration

The duration is uncertain and can potentially last forever.

When does a Fee Simple estate end?

It only ends when the owner dies without leaving any legal heirs.

Life Estate: Definition

An estate in land granted to a person for the duration of their lifetime.

Is the duration of a Life Estate certain?

No, its duration is uncertain because it is tied to the lifespan of the estate holder.

Life Estate: Restriction on "Waste"

The holder of a life estate must not damage or diminish the long-term value of the land.

Life Estate: Alteration Restriction

The life estate holder cannot structurally alter the property without the consent of the future interest holder.

Stratum Estate: Definition

An estate created by statute where land is divided into separate units (such as apartment complexes).

Stratum Estate: Owner Rights & Obligations

The owner has fee-simple-like rights over their individual unit, but shares maintenance obligations for common areas.

How is a Stratum Estate created?

It is strictly created by statutory legislation (unit titles).

Leasehold Estate: Definition

An estate in land where the tenant has the right to occupy and use land for a specified period subject to terms.

Leasehold Estate: Duration

The duration is normally specified in the lease document and is therefore certain (especially in commercial leases).

Leasehold: Notice of Termination

A common feature, especially in residential tenancies, where the lease can be ended early by giving notice.

Right of Renewal (Leasehold)

A contract clause giving the tenant the option to extend the lease for a further specified period.

Estate in Possession

An estate that gives the holder an immediate, current right to occupy and use the land.

Estate in Expectancy

A future interest in land where the holder's right to possession is deferred to a later date.

Estate in Expectancy: Reversions

An estate that returns (reverts) to the original grantor or their estate after a temporary estate (like a life estate) ends.

Estate in Expectancy: Remainders

An estate that goes to a third party (not the grantor) after a temporary estate ends.

Enforceability of Legal Interests

Legal interests in land are strong and are enforceable against absolutely anyone.

Enforceability of Equitable Interests

Equitable interests are weaker and can be defeated by a "bona fide purchaser for value without notice."

Bona Fide Purchaser for Value Without Notice (BFPVw/oN)

An innocent buyer who purchases legal title to property for fair value, completely unaware of any pre-existing equitable claims.

How are Legal Interests created or transferred?

They require strict compliance with statutory legal formalities (such as registration on the title).

How are Equitable Interests created or transferred?

No strict formal documents or registrations are legally necessary, though informal agreements often exist.

Where did the Torrens System originate?

It originated in South Australia in the 1850s.

Who was the registered proprietor under Torrens?

The person whose name is officially recorded on the register as the owner of the estate in land.

Deeds System: Key Characteristics

The old land system prior to Torrens where title was recorded via unrecorded physical deeds held in private collections.

Deeds System: Major Flaws

No public central record; buyers had to trace complex history; high risks of lost, unreadable, or forged documents.

When was the Deeds Registration System introduced in NZ?

In 1841, but it was not an ideal system for proving clear title.

When was the Land Transfer System first introduced in NZ?

It was first introduced by legislation in 1870.

What NZ Act currently governs the Land Transfer System?

The Land Transfer Act 2017.

Registration of Title vs. Registration of Documents

The Torrens system registers the title state itself, rather than just acting as a filing cabinet for transaction documents.

Land Survey: Torrens System

Every individual piece of registered land under the Torrens system must be clearly identified by an official survey.

Record of Title (electronic)

An electronic ledger that records the exact ownership and any legal interests or encumbrances currently registered against a specific property.

How is legal title to land achieved in NZ?

Title depends entirely on successful electronic registration on the Record of Title, not on signing deeds.

Indefeasible Title: Core Principle

The registered owner's title is paramount and cannot be set aside, protecting them from flaws in previous transactions.

What overrides an indefeasible title?

Only registered interests recorded on the Record of Title (e.g., mortgages, easements, rights of way).

Exception to Indefeasibility: Fraud

If the registered owner or their agent engaged in actual fraud/dishonesty to acquire the property.

Exception to Indefeasibility: Multiple Titles

A registered owner's title can be challenged if there is a claim under an older, valid record of title for that same land.

Exception to Indefeasibility: Boundary Mistakes

If a portion of a neighbour's land was accidentally included on the registered title due to a mistake in boundary descriptions.

Definition of Land Transfer Fraud

Forgery or dishonest conduct committed by the registered owner (or their agent) in acquiring the estate or interest.

Does Constructive Fraud defeat Indefeasibility?

No, constructive fraud (negligent failure to investigate) does not override indefeasibility; actual dishonesty is required.

Wilful Blindness as Fraud

Deliberately turning a blind eye to obvious red flags of fraud or dishonesty to claim ignorance; this constitutes actual fraud.

Frazer v Walker [1967]: The Forgery

Mrs. Frazer forged her husband's signature to secure a £3,000 mortgage from the Radomskis over their joint farm.

Frazer v Walker [1967]: Role of the Law Clerk

The law clerk signed the mortgage document witnessing both signatures, even though Mr. Frazer was not present.

Did the Radomskis know about Mrs. Frazer's forgery?

No, the Radomskis had absolutely no knowledge of the forgery when they advanced the money and registered the mortgage.