Section 72 notices are appearing on rural titles more often. Here's what landowners need to know before they become a problem
Many landowners will not have heard of a Section 72 notice until it suddenly turns up on a LIM report, title search or subdivision consent.
Councils are using them more often now, particularly as they focus more heavily on flooding, erosion, climate risk and land stability.
The problem is that once these notices appear on a title, they can have significant consequences for the future of the property.
What is a Section 72 notice?
A Section 72 notice arises under the Building Act 2004. In simple terms, it is a warning placed against the title of a property saying the land may be affected by a natural hazard.
That hazard could be flooding, slips, erosion, rockfall, subsidence, liquefaction, river movement or other issues the council considers may affect the land in the future.
Importantly, these notices do not usually appear without some form of development trigger.
Normally the issue arises when somebody wants to build, subdivide or develop part of the property. The council then looks at the land and decides whether there is a hazard risk that needs to be formally recorded.
In practical terms, the council is effectively saying, “You can still build here, but everybody needs to understand there may be a risk attached to the land.”
That distinction matters.
Councils protecting themselves
A Section 72 notice does not necessarily mean the land is dangerous or unusable. A lot of the time it is more about councils identifying potential hazards and making sure future owners cannot later say they were never warned.
We are seeing these issues more often now in rural areas. Land that may never have attracted much attention years ago is now being looked at through flood modelling, climate reports, river mapping and geotechnical assessments.
An example
Recently, I dealt with a subdivision where the council raised liquefaction concerns over part of the land because it sat in a river valley with glacial soils. What made it slightly amusing was that a large part of the surrounding property was hill country. Still, once councils identify a possible issue, they generally take a cautious approach.
Be alert when developing your land
For farmers, the issue is often less about day-to-day farming and more about future development. You may still graze stock, crop land or run the farm much as you always have. The real issues usually arise later when somebody wants to build another house, put up worker accommodation, construct sheds or carry out further subdivision.
Once a Section 72 notice exists, banks, insurers, engineers and future purchasers may all start asking questions.
That can mean extra engineering costs, difficulties obtaining insurance, lending concerns from banks or reduced buyer confidence when the property eventually is on the market. Even where the practical risk may be relatively low, the existence of the notice itself can create hesitation.
One thing many people misunderstand is that these notices can still be applied even if the building itself is designed properly. A house built on piles above flood level may still attract a Section 72 notice because the underlying land itself is considered hazard-prone. The same can apply with liquefaction or erosion concerns.
A permanent warning for future owners
So the notice is often less about whether the building can safely proceed and more about creating a permanent warning for future owners.
That distinction is where a lot of frustration starts. Some landowners become understandably irritated where the risk feels theoretical or where neighbouring properties appear to have escaped similar scrutiny. Two properties beside each other can sometimes end up being treated very differently depending on when subdivision or building applications are lodged and how the council assesses the available information at the time.
Removing a Section 72 notice later is possible in some situations, but it is not easy. Usually the council would need to be satisfied the risk no longer exists or has been fully dealt with – and that process can become expensive fairly quickly.
Be aware
The main point for rural landowners is awareness. Before spending serious money on subdivision or building work – particularly near rivers, coastal areas, flood plains or unstable ground – it is worth understanding whether the council may classify the property as hazard prone land.
Getting advice early from planners, engineers, surveyors or lawyers can save a lot of stress and cost later on.
Whether people agree with them or not, Section 72 notices are likely to become far more common in rural New Zealand over the next few years. For better or worse, they are likely to become another part of modern rural property ownership.
John Sheddan is a director of Gore law firm, Sheddan Pritchard Law Ltd. He specialises in rural and commercial issues involving rural and residential property sales, business sales, leases and subdivisions. John also has a background in IT and a strong interest in technology and the legal issues it creates. Sheddan Pritchard Law Ltd is a member of NZ LAW Limited, an association of 62 independent law firms practising in more than 100 locations.
Information given in this column should not be a substitute for legal advice.
