When purchasing a property, most people naturally focus on the house, the section, the location and the price. But what happens when part of the property you think you are buying isn’t within the legal boundary?
This is something I have encountered in conveyancing transactions, and it is an issue that can be easily overlooked if the property is considered only from what can be seen on the ground.
One such issue is a road reserve encroachment.
What is a road reserve?
A road reserve is land legally set aside for road purposes. It does not necessarily mean that the land is currently being used as a road, nor does it necessarily look any different from the adjoining residential property. You may have a strip of land alongside your property which looks like part of your front yard, garden or driveway but is, in fact, legally road reserve.
This is where things can become interesting.
What is a road reserve encroachment?
A road reserve encroachment occurs where an improvement associated with a private property extends onto the road reserve.
This might include:
- decks;
- retaining walls;
- fences;
- driveways;
- sheds;
- landscaping;
- garages; or
- another structure or improvement.
The fact that something has been there for years does not necessarily mean that the owner legally owns the land underneath it. In other words, what you see on the ground, and what you legally own, can sometimes be two different things.
In a recent transaction in which I was involved, a purchaser was looking at buying a property where part of an existing structure extended beyond the property’s legal boundary and onto road reserve. To someone viewing the property, there was nothing particularly unusual about the structure. It appeared to form part of the property and had been incorporated into the way the property was used.
However, when the title and council information were examined more closely, the road reserve issue became apparent. Hidden issues, as such, typically appear in the Land Information Memorandum (LIM). This is an example as to why it is so important to include a LIM condition in your Sale and Purchase Agreement.
The important point for the purchaser was not simply that there was an encroachment. The purchaser needed to understand:
- What land was actually being occupied?
- Was the occupation authorised?
- Was there an existing licence or other arrangement with Council?
- Would Council require the arrangement to be formalised?
- What would that cost?
- Could the structure remain there in the future?
Those questions can have a very real financial and practical impact on a purchaser.
Ultimately, the issue was something that needed to be investigated and understood before the purchaser became fully committed to the transaction. I have deliberately kept the details of the transaction general, but the experience is a good example of why a purchaser should not assume that a long-standing structure is automatically legally acceptable simply because nobody has previously raised an issue with it.
One of the aspects of road reserve encroachments that purchasers can be surprised by is that resolving the issue may not be free.
The exact fees vary between Councils and can change over time. For example, Wellington City Council’s road encroachment policy provides for an assessment/landowner consent fee, an annual rental for use of legal road, and additional valuation costs in certain circumstances. Its residential annual rental is calculated according to the nature and size of the encroachment and is subject to periodic review. Wellington City Council has also indicated that its encroachment fees are adjusted periodically, including a proposed 5% increase for the 2026/27 year.
The important takeaway is therefore not to rely on a figure you find online or from another Council. Fees are Council-specific and should be confirmed with the relevant territorial authority at the time.
Does an encroachment mean you cannot buy the property?
Not necessarily. This is an important distinction. An encroachment does not automatically mean that a property is unsuitable for purchase. In some circumstances, an encroachment may have been formally authorised by Council, and the necessary documentation may already be in place.
In other cases, the issue may be capable of being resolved through a licence, consent or other arrangement. There may also be circumstances where the purchaser is comfortable accepting the position as it stands. The key is that the purchaser should make that decision with full knowledge of the position and its potential consequences.
What if the encroachment is on a deck?
Decks are a good example because they can be deceptively difficult to identify as an issue. A deck may appear to sit entirely within the property, particularly where the physical fence line does not accurately reflect the legal boundary. If part of the deck extends onto road reserve, the purchaser should establish the legal position before proceeding.
It may be that Council has previously consented to the occupation. Alternatively, there may be no formal arrangement at all. If the purchaser intends to renovate, extend or replace the deck in the future, the encroachment could become particularly relevant.
What about buying the road reserve?
In some circumstances, an adjoining owner may consider whether the road reserve can be formally acquired or stopped. However, this is not something a purchaser should assume will be available simply because the land is immediately beside their property. Road-stopping and disposal processes involve separate legal and Council considerations, and Council may not agree to dispose of the land.
For example, Wellington City Council’s road-stopping material makes clear that Council cannot guarantee that a road-stopping application will be successful and provides for application and processing fees. Accordingly, a purchaser should not base the value or desirability of a property on an assumption that the adjoining road reserve can eventually be purchased.
Drawing back from my personal experience with this, a Licence is typically needed with fees involved. The fees are Council specific, so I think it is best to check with the relevant Council before going unconditional or purchasing.
A road reserve encroachment is not necessarily a reason to walk away from a property. However, it is a reason to stop and ask questions. The most important thing is to understand the difference between what you physically occupy and what you legally own. A fence, deck or retaining wall may have been in place for decades. That history is relevant, but it does not necessarily resolve the underlying legal position.
For purchasers, discovering an encroachment after settlement can be considerably more difficult than identifying and negotiating the issue before signing the agreement. As with many property issues, there can be financial consequences – not only in terms of Council application or licence fees, but potentially survey, legal, valuation, alteration or removal costs as well.
These are questions worth asking before you sign on the dotted line.
This article is intended as a general overview and discussion of the subject dealt with and does not create a lawyer-client relationship. It is not intended to be, and should not be used as, a substitute for taking legal advice in any specific situation. We will accept no responsibility for any actions taken or not taken on the basis of this article.
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