Property Law Bill introduced to the House

Hon Clayton Cosgrove

Associate Minister of Justice

30 October 2006 Media Statement

Property Law Bill introduced to the House

Proposed legislation to clarify and improve existing property law has been introduced to Parliament today, says the Associate Justice Minister Clayton Cosgrove.

Mr Cosgrove said the Property Law Bill aims to reform the Property Law Act 1952.

“The Property Law Act 1952 needs to be updated. Some of its provisions are obsolete and do not work well with other legislation,” Mr Cosgrove said.

“The Bill is largely based on Law Commission recommendations that aim to create modern, more user-friendly legislation for people buying or selling property, or mortgaging their property to raise finance," he said. "The Bill also applies to commercially leased property."

Mr Cosgrove said the changes would provide certainty for people and protect their rights over property transactions, as well as ensure the relationship between the parties to a lease is reasonable and fair.

The Bill does not propose any wholesale changes to property law. Most of the Bill either restates or clarifies existing law, although it does include some small reforms recommended by the Law Commission.

Examples of the reforms proposed by the Law Commission include:

- Mortgagees (such as banks) will have to notify other interested parties (such as a friend or relative who guaranteed the mortgage) when exercising rights over a property after a mortgagor defaults on a mortgage. Currently only mortgagors have to be notified.

- Unless otherwise agreed, commercial tenants will be required to leave a property in good condition at the end of a lease only if it was in good condition at the start of the lease. Currently they may be required to do so regardless of the condition of the property at the outset.

Mr Cosgrove said he would like to thank the Law Commission for clearly identifying the changes needed to make property law work even better for New Zealanders.

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Background Information

What is the Property Law Bill all about?
The Property Law Bill rewrites existing property law in a modern statute making it more streamlined and user-friendly, thereby also reducing costs for businesses. Although a significant piece of legislation, the Bill mostly restates and clarifies existing law with some small reforms recommended by the Law Commission.

Why is the Bill needed?
The Bill is intended to replace the Property Law Act 1952. Some of this Act’s provisions are obsolete and do not interact well with other legislation. A Law Commission report recommended replacing the Act with more user-friendly legislation. This involves restating the existing rules clearly in modern language, modifying parts that are no longer satisfactory and updating the general law principles. The Bill is largely based on the Law Commission’s recommendations.

What will the Bill do?
The Bill will clarify rules applying to commercial or residential property transactions. The rules apply when people buy, sell, or mortgage property. The rules also apply to commercially leased property and ensure that the relationship between the parties to a lease is reasonable and fair.

How will the proposed changes affect New Zealanders?
The proposed reforms to clarify and improve existing property law will provide more certainty in peoples' property dealings, and help protect their rights. The reforms will also help ensure the relationship between parties to a lease is reasonable and fair.

What are the reforms recommended by the Law Commission?
The Bill carries forward much of the existing law and does not substantively change it. There are many small reforms to the law of mortgages, which overall clarify and improve them. The Bill codifies the existing law relating to the cancellation of leases that is currently found in several sources. The Bill also codifies the law relating to the cancellation of agreements for sale and purchase.

Are there any Law Commission recommendations that are not in the Bill?
Yes. Some of the Law Commission’s recommendations are not included because they are no longer necessary due to case or statutory developments since the report was written. The Law Commission supports these decisions.

Are there any reforms in the Bill that don’t originate from Law Commission recommendations?
Yes. Some additional reforms have been necessary to address issues that have arisen because of inconsistencies or overlaps with provisions in new or amended legislation since 1994, such as the Personal Property Securities Act 1999 (PPSA) and the Land Transfer (Computer Registers and Electronic Lodgement) Act 2002.

What happens next?
The Property Law Bill was introduced to the House on Monday 30 October 2006, and is awaiting its First Reading debate. Information on the Bill’s progress through the legislative process will be available on the website www.parliament.govt.nz. The full text of the Bill will be available on www.legislation.govt.nz

ENDS