Under the Property Law Act 2007, which covenant is implied into an instrument that transfers land for value?
Correct Answer
A) That the transferor has the right to transfer it free of encumbrances not stated
Section 284 of the Property Law Act 2007 implies the covenants in Part 1 of Schedule 4 into instruments that transfer land for value. The transferor covenants that they have the right and power to transfer the estate free of encumbrances other than those specified, that the transferee will have quiet enjoyment, and that they will sign any further documents needed. The Act implies no promise about defects, compliance or value.
Why This Is the Correct Answer
Section 284 and Part 1 of Schedule 4 of the Property Law Act 2007 imply covenants into an instrument that transfers land for value: that the transferor has the right and power to transfer free of encumbrances not specified, that the transferee will have quiet enjoyment, and that the transferor will give further assurance.
Why the Other Options Are Wrong
Option B: That the property is free from defects and fit for whatever use the buyer intends
No statutory covenant promises freedom from defects or fitness for purpose; buyers protect themselves through due diligence and contract terms.
Option C: That the buildings comply with the building code and every resource consent
Compliance with building and resource consents is not an implied statutory covenant; any warranty on that comes from the agreement, if at all.
Option D: That the property's value will not fall for a set period after settlement
No law guarantees a property's future value.
Deep Analysis of This Property Law Question
The question tests the difference between title covenants implied by statute and quality warranties. The law protects the buyer's title automatically, but quality issues are left to due diligence and to warranties in the agreement.
Background Knowledge for Property Law
Part 1 of Schedule 4 of the Property Law Act 2007 sets out the covenants for right to convey, quiet enjoyment and further assurance, implied into transfers for value by section 284 (these replaced the covenants in the Property Law Act 1952). Other implied covenants cover leasehold transfers, fiduciary and mortgagee sellers, and encumbrances. The standard agreement for sale and purchase adds contractual vendor warranties, for example about notices and consents.
Memory Technique
Remember 'title, not quality': the Act promises the seller can pass good title, never that the house is in good condition.
When options mix title promises with promises about defects, compliance or value, pick the title promise.
Exam Tip for Property Law
Implied statutory covenants concern the right to transfer, quiet enjoyment and further assurance. Defects and compliance are handled through the agreement and due diligence.
Real World Application in Property Law
After settlement a buyer discovers an unregistered charge the seller had agreed to. Because the transfer implies that the seller could transfer free of encumbrances not stated, the buyer can claim against the seller. By contrast, a leaking roof found later has no implied statutory warranty behind it.
Common Mistakes to Avoid on Property Law Questions
- •Thinking the Act implies a warranty against defects
- •Confusing contract warranties with statutory covenants
- •Believing building compliance is guaranteed by law
Related Topics & Key Terms
Key Terms:
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