Issue 52, Property Speaking, Winter 2026
Structuring your development and considerations for buyers in new subdivisions
The relationships between neighbours in a subdivision and the rules, regulations and the way these are enforced have evolved significantly from handshakes and agreements over the fence.
In the last few decades, in order to protect the value of each property, developers have become increasingly concerned with not only managing the look and feel of their subdivision, but also prescribing the rights and obligations of property owners within those developments.
There are a number of ways that developers can do this; the arrangements vary depending on a number of factors – each coming with its own pros and cons for prospective owners.
Residents’ societies
These are becoming increasingly popular in larger scale developments. Residents’ societies are usually incorporated societies; their structure and requirements are governed by the Incorporated Societies Act 2022. Membership to these societies is often mandatory by virtue of a land covenant registered on the record of title to each property in the development. The society’s rules can be found on the Incorporated Societies Register.
Residents’ societies are usually responsible for the maintenance of any shared property within the development such as communal greenspaces or perhaps a tennis court. Each property owner is required to pay an annual levy for the maintenance of these areas.
A benefit of a residents’ society is that generally it will enforce the rules that individual property owners within that development must adhere to. In that way, as an individual property owner you won’t have to seek your own legal advice and incur cost if, say, your neighbour refuses to trim their hedge. However, a dispute with the residents’ society itself would require you to seek your own legal advice.
Due to residents’ societies falling within a statutory framework not designed specifically for them, there are a number of inflexibilities that means they may not always be the most desirable option when setting up a governance structure in a development.
One problem is that the minimum membership for an incorporated society is 10 members. Therefore a development comprising fewer than 10 properties/members cannot be an incorporated society. There are some exceptions to that membership requirement whereby a body corporate comprises three ordinary members.[1] In that instance a residents’ society may work for smaller developments.
Failing that exception, however, the developer will most often need to choose between a unit title or another mechanism to provide for governance between the property owners.
Further, when the residents’ society is wound up, any surplus assets held cannot be distributed to members of the residents’ society, instead they must be advanced to a nominated not-for-profit entity. This is very problematic as those assets will be critical to the development.
Unit title developments
Unit title developments exist within their own statutory framework - the Unit Titles Act 2010. They are usually administered by a body corporate which is responsible for collecting levies from the property owners, maintaining common buildings and assets, and administering the body corporate rules.
The body corporate manages the maintenance of the shared facilities – and in some instances the units themselves – in a similar way to a residents’ society. The body corporate will have an ability to issue levies to contribute to a maintenance fund.
The benefit of buying a unit title property is that the legislation prescribes minimum disclosure requirements before you enter into a contract for sale of a unit title property and before settlement.
This transparency can appeal to a buyer who would otherwise need to rely on their own due diligence in reviewing a residents’ society rules to ascertain any additional financial contributions they may have to make.
Land covenants
Property developers may use land covenants where there is little desire for a formal separate governance or management entity to administer the rules. The developer can simply prescribe requirements and obligations on the property owners through a land covenant registered on each record of title. These are enforceable by the owners of benefitted land, and often the developer.
A land covenant can be a cost-effective way to impose some obligations on the property owners, but without requiring annual levies or fees to be paid.
This can, however, become complicated when adjoining properties need joint insurance policies to be held by the property owners over their adjoining properties. Having to explain to a prospective purchaser that they must work out insurance arrangements between themselves and the other owners can be off-putting for a buyer.
As a consequence of this, a unit title structure, particularly where homes are adjoining, is probably a better structure for a developer to use.
Get advice early on
If you are considering doing any development work you should talk with us about the best structure for your purposes and whether any covenants should be registered on the titles.
If you are buying a property within a development bound by one or a combination of these structures, we can advise about what rules and obligations you may be bound by before signing on the dotted line.
[1] Section 14 of the Incorporated Societies Act 2022.
Revised Law Association Agreement for Sale and Purchase of Real Estate
Signatories should become familiar with changes
The majority of property sale and purchase agreements are recorded on The Law Association of New Zealand’s (TLANZ) Agreement for Sale and Purchase of Real Estate. TLANZ recently released the fourth revision of the Eleventh Edition of the Agreement for Sale and Purchase (ASP); most conveyancing transactions are now being completed using this revision.
There are a number of changes in the new revision of the ASP, so it is important that anyone signing the ASP is familiar with these changes and the implications of signing this document. We discuss some of the changes below, although this is not a full list of the amendments.
New warranties
Both buyers and sellers must now provide a warranty that they (or their real estate agent) have not altered, removed or added any wording to the standard ASP, unless any alterations are easily identifiable (for example, a clause has been crossed out using a strikethrough, or an addition is easily identifiable). The use of PDF editing software has meant that it is possible to change the wording in the ASP without making it clear that these changes have been made.
The new warranty provides both parties with reassurance that they can safely assume that all of the standard terms apply, unless it is abundantly clear that they have been modified. If you are the seller, it is important that your real estate agent also understands this warranty. If the agent has made any alterations to the agreement without these changes being easily identifiable, you have breached this warranty; this could have financial consequences for you.
Another additional warranty that the seller now provides is the situation where they have completed any ’restricted building work’ (as defined in the Building Act 2004, and typically involving work that is required to be carried out by particular qualified professionals such as a licensed building practitioner, chartered professional engineer or registered plumber/gasfitter or electrician) on the property on or after 13 March 2012, that this work was carried out or supervised by a suitably qualified person.
The effect of this new warranty is that the seller is warranting that they have actually complied with the exemption requirements, and may be liable for any loss the buyer suffers if it turns out that they did not.
Examples of restricted building work that may be exempt from building consent requirements include a carport between 20 and 40m2 in floor area, which needs to be carried out or supervised by a licensed building practitioner or a chartered professional engineer, or replacing sanitary plumbing fixtures (such as a toilet), which must be carried out by a registered plumber. This warranty will also apply to any building work completed using the new granny flat exemption.
Changes to conditions
The requirements regarding cancelling due to non-fulfilment of the finance condition have changed. Now, instead of having to provide a ‘satisfactory explanation of the grounds relied upon by the Purchaser,’ the buyer must provide a ‘reasonable explanation of the steps taken by the Purchaser to arrange finance.’ This change means that, while the buyer still has an obligation to take reasonable steps to obtain finance, the buyer does not end up in a dispute with a seller over whether the grounds relied upon by them are ‘satisfactory.’
If a buyer needs Overseas Investment Office (OIO) consent, the seller must now take reasonable steps to enable this condition to be fulfilled by the buyer. Previously, the seller was not required to do anything to enable the condition to be fulfilled. While OIO consent is primarily the buyer’s responsibility, this new clause acknowledges that the seller may need to take steps as well to enable the buyer to satisfy the condition.
Claims for compensation
The claims for the compensation process have changed slightly. Now, the claimant (typically the buyer, but not always) must raise a claim for compensation as early as reasonably practicable, but no later than the working day prior to settlement, and they now may raise multiple claims for compensation.
The previous revisions only required a claimant to raise a claim no later than the working day prior to settlement, and limited a claimant to raising only one claim for compensation. Removing the number of claims the claimant may make is necessary to enable them to make a claim as soon as reasonably practicable.
Chattels
The chattels list has been altered slightly. Previously, the agreement listed blinds, curtains and drapes separately as chattels. Now, there is just a catch-all ‘window coverings.’ ‘Automatic garage door facility’ has also been added as a chattel; this clarifies that a garage remote is a separate chattel to the actual door, and further clarifies that the door itself (if there is a garage door) should also be in reasonable working order on settlement.
What does this mean for me?
Any time you sign a legally binding document, you should ensure that you fully understand your rights and obligations under that agreement. We strongly recommend that you talk with us before signing an ASP, whether you are signing as a buyer or as a seller.
DISCLAIMER: All the information published in Property Speaking is true and accurate to the best of the authors’ knowledge. It should not be a substitute for legal advice. No liability is assumed by the authors or publisher for losses suffered by any person or organisation relying directly or indirectly on this newsletter. Views expressed are the views of the authors individually and do not necessarily reflect the view of this firm. Articles appearing in Property Speaking may be reproduced with prior approval from the editor and credit being given to the source.Copyright © NZ LAW Limited, 2026. Editor: Adrienne Olsen. E: [email protected]. M: 029 286 3650. ISSN 1174-2658 (Print) ISSN 2744-3973 (Online)