Leasing Māori freehold land
There are many unique features of Māori freehold land. In particular, there are many legal intricacies of leasing Māori freehold land that are unknown even though a significant portion of Māori freehold land is leased.
According to the Māori Land Court, about five percent of land in New Zealand (about 1.3 million hectares) is now designated as Māori freehold land. Of that five percent, the Māori Land Court has identified that a significant proportion is leased, and that the majority of those leases are leases of rural land.
It is important both owners and those leasing Māori freehold land are aware of the requirements and responsibilities when leasing Māori freehold land.
There are a variety of ownership structures for Māori freehold land. The most common are:
- Ahu Trust;
- Incorporation; and
- Owners in common.
An AhuTrust is a land management trust designed to manage whole blocks of land. Ahu Trusts are often used for commercial purposes. Trustees of the Ahu Trust represent the beneficiaries/shareholders of the land.
Incorporations are also designed to manage whole blocks of land. Of all Māori land management structures, incorporations are seen as the most commercial, as the structure is similar to that of a company.
Owners in common (or shareholders) are responsible for the management of blocks of Māori freehold land where no other land management structure is in place. We recommend owners establish a land management structure, particularly if they intend to lease the property.
Te TureMāori Act 1993 (“the Act”) sets out the requirements to lease Māori freehold land.
There is no ability to lease any interest in Māori freehold land other than in accordance with the Act.
There are a range of specific rules set out in the Act. For example, there is a prohibition against leases which contain a provision enabling a tenant to purchase the land. This is because historically, Māori freehold land passed into the hands of tenants as a result of owners having to compensate tenants for improvements on the land. As a result, if owners did not have the financial resources to compensate tenants, tenants took ownership of land against the interests of the owners.
The Act also requires that AhuTrusts and Incorporations send a copy of each lease that exceeds 21 years (but is less than 52 years) to the Registrar of the Māori Land Court for noting. Owners in common are required to get a certificate of confirmation issued and noted by the Registrar where the lease term exceeds three years. For all ownership structures, leases exceeding 52 years require Māori Land Court approval and the consent of 50% of the shareholding in the land (see attached diagram). There are also special quorum requirements for owners in common to agree to a lease, with the exact requirements depending on the lease term.
Special lease terms
When acting for owners of Māori freehold land we incorporate special lease terms that are specific to Māori freehold land, including provision for the protection of wāhi tapu located on the land. We also incorporate provision for the surrender of part of the leased land, where owners may later wish to use or occupy the land for instance to establish papakainga or an urupā. These allow the unique nature of Māori freehold land to be balanced with commercial interests.
If you would like further information please contact Kylee Katipo on 07 958 7424.
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