Month: June 2024

Top Tips for managing your Ahu Whenua Trust

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Ahu Whenua Trusts

Ahu Whenua Trusts are trusts set up to manage one or more blocks of Māori land or General land owned by Māori.  The trustees have legal responsibility for the whenua (land) and make decisions about how it is used and who may occupy it, on behalf of the beneficial owners.

Having an ahu whenua trust in place is a great way to bring owners together to make decisions and take positive steps toward developing, utilising or preserving their whenua.  However, managing a trust can be complex and time-consuming and trustees have legal obligations they must comply with.  Our tips for the smooth running of your trust are set out below and include engaging effectively with beneficial owners; managing the administration; and ensuring your trust order is up to date.

Engaging with beneficial owners

Engaging with beneficial owners is essential in guiding the trustees and in developing and pursing a moemoeā (vision) for the whenua.

Holding hui (meetings) is the main engagement tool for trusts and we recommend hui be held regularly, depending on how much mahi (work) the trust undertakes.  A hui will need to be called in accordance with the trust order and trustees should report on the activities of the trust since the last hui was held.  This will include financial reporting, recent projects and any proposed policies.  There should also be opportunity for beneficial owners to raise and discuss issues and any trustee vacancies filled.

We recommend trustees consider additional engagement with beneficial owners, such as via a trust page or website or the issue of a pānui (publication).  The more communication with owners, the more involved and engaged the beneficial owners will feel.  This can aid the smooth running of the trust, as any issues can be raised and addressed regularly before they become more serious.

Managing the administration

It is important that the administration of the trust is managed well, to ensure legal compliance and protect trustees, and provide transparency to beneficial owners to build confidence in the trustees.

Our tips for administration include:

  • Trustees should complete trustee training when appointed. Trustee training is available for free through the Māori Land Court.
  • Minutes need to be completed for all hui, both beneficial owner hui and trustee hui. The minutes should include an attendance list and clearly record resolutions made and payments approved.
  • Financial statements should be prepared to present at AGMs. If the income of the trust is significant, we recommend having them prepared by an accountant.
  • Relevant documents should be kept electronically, which can be accessed easily. This includes the trust order, trustee orders, policies, any updates of those documents, financial reports.
  • Check the Māori Land Court records periodically for updates to beneficial owners’ list and ask for owners to update their details at all hui. This ensures the widest possible engagement.
  • Reasonable queries and requests for information by beneficial owners be dealt with promptly. This maintains confidence in the trustees.

Trust orders

A trust order is required for ahu whenua trusts and sets out the powers and obligations of the trustees.  The trustees must know and follow the trust order and it is important that the trust order is kept up to date and is relevant.  The trust order can explicitly incorporate relevant tikanga to guide both the trustees and owners.

Our tips for updating your trust order include:

  • Ensure simple language is used that is easy to understand.
  • Update clauses to provide for advances in technology and changes in the law. This keeps the trust order relevant and can help the trust to engage wider and more easily with beneficial owners and reduce administration costs.
  • Consider adopting policies to sit alongside the trust order. This is helpful for matters that may not need to be detailed in the trust order but where it is important to have an agreed process.
  • Consider weaving tikanga into your trust order where appropriate.

Amendments to the trust order can be made as necessary, although must be supported by the beneficial owners.  A hui should be held to secure approval and notice of such hui should indicate proposed amendments are on the agenda.  Once approved, an application can be made to the Māori Land Court to formally amend the trust order.

Further assistance

Our team is experienced in providing advice and assistance in respect of managing your ahu whenua trust and amending or updating your trust order and policies.  Please get in touch with us for all your needs and we will be happy to assist.

Simplifying “Granny Flats”: Central Government Seeking Feedback to Shape New Housing Legislation

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The Central Government has released a discussion document proposing reforms to the rules for building small structures, commonly known as “granny flats.”  The Ministry of Business, Innovation and Employment and the Ministry for the Environment are seeking public feedback on the proposal, which aims to streamline the construction process for these dwellings.

This initiative forms part of the Government’s promise to require councils to permit the construction of small dwellings (60 square metres or less) in rural and residential zones without the need for resource consent.  The pānui sets out the proposal, the consultation process, and the potential impacts of these reforms.

The proposed changes aim to address the country’s housing crisis by facilitating the increased development of papakāinga.  These changes would provide hapū, iwi, and whānau with opportunities to quickly develop papakāinga on their land, potentially offering a practical solution to the widespread housing issues affecting many individuals across the nation.

What’s being proposed?

The Government plans to ease restrictions under local plans and relax building code requirements to make it significantly easier for New Zealanders to build granny flats.  They have stated that this effort is designed to increase the supply of affordable homes and provide alternative housing options for the aging population.

The proposal includes amending the Building Act 2004 and the Resource Management Act 1991 (RMA), as follows:

  • Building Act 2004 Changes:  While all construction must comply with the New Zealand Building Code, the new rules would exempt granny flats from needing building consent.  The Government seek feedback on the benefits, costs, and risks, as well as alternative ideas to save time and money.
  • RMA Changes: The proposed changes aim to establish a consistent nationwide approach to resource consents, including the introduction of a National Environment Standard to allow granny flats in both rural and residential zones without requiring resource consent.

What’s the risks?

While the proposal has been generally well-received, particularly among tiny home advocates, many emphasise the importance of balancing speed and quality in construction.  The Government have acknowledged the need to ensure safe, healthy, and durable homes while facilitating quick and cost-effective building processes.  Some of the key risks include:

  • A significant increase in small, randomly placed dwellings across the country.
  • Possible rushed construction leading to substandard buildings and health and safety risks.
  • Overlooking important checks and balances in the building sector that prevent health and safety issues.

How to submit feedback

You can provide feedback by completing an online survey or submitting a form via email to grannyflats@mbie.govt.nz or by mail to the Ministry of Business, Innovation and Employment.  Feedback is sought on:

  • The benefits and risks of the proposal.
  • Effects on the Resource Management system.
  • Local Government Infrastructure Funding.
  • Māori land, papakāinga, and kaumātua housing.

Submissions are due by 5pm, Monday 12 August 2024.  The Government will review all feedback, and changes to the legislation are aimed to be implemented by mid-2025.

If you want to learn more, you can access the Ministry of Business, Innovation and Employment’s webpage at the following link.

Get in touch

Our Te Taiao Team is able to assist with all resource management-related pātai that you may have.  We are also available to discuss any resource consent matters and any other bespoke environmental queries.

Kylee is a Director in our Te Taiao Team and can be contacted on 07 958 7424.

A tenant’s snapshot guide to commercial leasing

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Commercial leases are a core component of most businesses operating in New Zealand, and as a tenant it is essential to understand the key terms, and potential risks associated with your lease agreements, to ensure that your commercial endeavours can thrive.

Below, we will briefly discuss some of the key elements of which to be aware and advise on how to avoid some of the more common pitfalls.

Understanding the Legal Framework

Commercial leases in New Zealand are governed by the Property Law Act 2007 (the Act).  The Act outlines baseline requirements and rights of landlords and tenants, however many of the lease terms can be set or changed based on what works for the parties’ specific circumstances. It is up to you to ensure that your lease is fit-for-purpose and makes sense for your business.

Negotiation of Lease Terms

Commercial lease negotiations can involve a wide range of terms including rental amounts, term, renewal options and rent reviews as well as any special conditions specific to the parties or premises.

We recommend speaking with a lawyer at this stage before you sign, to make sure you are adequately protected and that the lease contains the rights and protections that you need it to.

Key Considerations of a Lease for a Tenant

  • Rent Review Mechanisms: Leases will usually include rent review clauses that outline the process for adjusting rent over time.  Often, these are built around regular market valuations, CPI increases, or a combination of the two.  You should make sure you understand how often reviews will occur, what mechanisms will be used, and what if any) limits there are on how much your rent could go up. Understanding of this mechanism can also ensure that you notice anything untoward occurring.
  • Business Use: The purposes for which you will use the premises must be recorded carefully.  For example, if the lease lists the business use of the premises as offices, yet you wish to open a retail store, you will need to seek additional permission from the landlord or risk being in breach of the lease.  You may need to think ahead: if it is foreseeable that you may pivot to a different kind of business, the use should be described more broadly.
  • Outgoings: There are additional costs that you will likely need to pay, known as outgoings. The lease should specify what these are and their estimated annual cost.  Some of the items that tend to be included in outgoings are rates, building services and maintenance, the landlord’s insurance premiums, utilities, and the collection of rubbish.  Outgoings can vary broadly depending on the use and specifics of the premises.
  • Maintenance, Repairs & Make Good: A lease will typically specify the responsibilities of each party relating to property maintenance and repairs.  As a tenant, you will usually be responsible for maintaining and repairing the interior of the premises, as well as glass, floor coverings and any garden or lawn areas. You must make good any damage caused either by you or by someone for whom you are responsible (for example, your employees, guests or customers). The landlord is responsible for any structural issues and building services contracts. Regular property inspections and thorough documentation of the property’s condition at the start of the lease can help avoid disagreements over maintenance and repairs issues.  It is also common for leases to contain “make good” provisions: at the end of your tenancy, you will return the premises to the state it was in at the beginning of the term.  It is advisable to keep a record of damages as they arise, as well as any alterations.
  • Dispute Resolution: Disputes may arise during the lease term.  Leases should include clauses for mediation or arbitration to provide a structured process for resolving disagreements.  Timely and amicable dispute resolution can help maintain a positive landlord-tenant relationship.  To avoid a costly dispute, communication is key, and if there are potential issues, get in touch with your lawyer soon rather than later.
  • Personal Guarantee: In some instances, the landlord may feel that it is necessary for the Tenant’s obligations under the lease to be personally guaranteed by someone. This is especially common when the Tenant is a company – the landlord would usually seek personal guarantees from the directors and/or shareholders.   If you agree to sign a personal guarantee, then you are personally taking responsibility for the Tenant’s obligations under the lease.  This means that if the Tenant is unable or unwilling to meet its obligations, the landlord can require you to step in, including to pay any money owing to the landlord.  If you are being asked to give a personal guarantee, you should speak with your lawyer before you sign.

Commercial leases are important legal documents which impose significant obligations and grant significant rights to commercial tenants.  Navigating these waters can seem daunting, however a good lawyer will be able to guide you through the process. Contact us to discuss how we can help you with your lease.

Ezrom is a Solicitor in our Commercial Team and can be contacted on 07 959 2313

Should I make my offer conditional on a Toxicology Report?

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On 29 May 2018, the Office of the Prime Minister’s Chief Science Advisor produced a report on Methamphetamine Contamination in residential properties.  Most of us will remember the various headlines in the newspaper and on the news and social media; “Meth house contamination debunked by PM’s science advisor” or “The Meth House is a Myth”.

Prior to the report toxicology reports, or “meth tests”, were commonplace and seen as an essential part of any purchaser’s due diligence investigation.  Since the report toxicology reports have fallen out of favour.  We have seen a rapid decline in purchasers opting to select “YES” to make their offer conditional on a toxicology report.

What was in the report?

The report mainly relates to health effects of third hand contamination in properties and compares the contamination levels from smoking meth to those from the manufacture of meth.

The report was produced to create discussion around the methods of testing, to establish more guidelines, and states that there is a clear need for more research.

In particular, the report noted that:

  • There is evidence of “adverse physiological and behavioural symptoms associated with third hand exposure to former meth labs”.
  • Lower levels of meth contamination do not rule out manufacture, and cleaning down to the former standard of 1.5 µg /100cm2 may be necessary if you suspect manufacture within the house. However, it is not possible to conclusively determine whether a property has been used for manufacture or smoking based on the levels of meth found.
  • That a level of 15 µg /100cm2 may be more realistic, compared to the former guideline of 1.5 µg /100cm2.
  • Decontamination is only recommended for identified former meth labs or properties where excessive meth use, indicated by high contamination, has been determined.

Our advice

Our advice to you as a landlord, purchaser or homeowner, is to still have the property tested for meth.

You will need to consider:

  • The “on sale” aspect of purchasing a contaminated house which may have the stigma of being a “meth house” and could prove harder to sell.
  • Your mortgagee/lender and insurance company, and what their requirements are in terms of a contaminated house.
  • Whether you (or your tenants) would expect the house to be entirely contamination-free. Occupants with respiratory issues or weakened immunity systems may be more susceptible to health issues associated with meth contamination, even at lower levels.
  • If it is an investment property, will a toxicology report be required by your Property Manager?

Putting aside these issues, it may come down to personal choice as to what you would accept as an acceptable standard of contamination, versus what the Ministry of Health guidelines state.  These differences may be vast.

If you are looking at purchasing a house, we suggest that you contact our office so that we can discuss these matters further and if necessary, provide you with a suitable condition to insert in your sale and purchase agreement, to cover your requirements.

Kerri is a Senior Legal Executive in our Property Team and can be contacted on 07 958 7423.

Contact us

HAMILTON OFFICE

P. 07 838 2079

E. reception@mccawlewis.co.nz

Level 6, 586 Victoria Street
Hamilton 3204
New Zealand

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P. 07 878 8036

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Te Kūiti 3910
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