As noted elsewhere on this website, the Encumbrance creates an obligation on the owners of encumbered sections to pay a specified amount per section per annum (the Infrastructure Payment). The Infrastructure Payments will be paid to Milldale Infrastructure, through Auckland Council, and represents each landowner’s contribution to the costs of developing and financing certain infrastructure required for the Milldale development.
The Encumbrance is registered on the Record of Title to each affected section. It will be a first ranking interest, ahead of any mortgages. It includes a schedule setting out the amount of Infrastructure Payments payable over its term. It will be removed from the Record of Title once all Infrastructure Payments have been made.
As with a mortgage, the Encumbrance includes a power of sale which can be exercised in the case of persistent default in payment of Infrastructure Payments. It is important that Infrastructure Payments are paid as and when due.
Download an example of the full Encumbrance form (220Kb .pdf). A plain English summary of the terms of the Encumbrance is set out below:
| Clause | Content | Implications |
| 1 | Definitions. The Encumbrancee is Milldale Infrastructure LP, and the Encumbrancer is the owner of the relevant section from time to time. | |
| 2 | The Encumbrancer must pay the scheduled Infrastructure Payments. These are payable on a quarterly basis. While Auckland Council is collecting the Infrastructure Payments, this will be done on the same periodic basis as landowners select for the payment of general rates. | |
| 3 | Payment may be made to Auckland Council in any manner in which it accepts payments of general rates. | Payment must be made via Auckland Council and not directly to Milldale Infrastructure. |
| 4 | Any payments are ‘plus GST’ (if any). | The expectation is that no GST will be payable on Infrastructure Payments. |
| 5 | A fee may be charged on late payment. This will be rebated if the fee charged exceeds Milldale Infrastructure’s costs and losses. | Late payment will be treated in a similar way to late payment of general rates, and the same late payment fees apply. |
| 6 | The Encumbrancee may appoint an agent from time to time, and may share information (including personal information) associated with the Encumbrance with its agents and other service providers. The Encumbrancer consents to the agent of the Encumbrancee (including Auckland Council if appointed as agent) providing information held by it (including information relating to general rates or personal information, whether obtained in its capacity as agent or otherwise) to the Encumbrancee. | |
| 7 | This clause sets out the methodology for calculating the amount payable by an Encumbrancer on full prepayment of the Infrastructure Payments. | See for further details on prepayment. |
| 8 | Prepayment will be due at the end of the then-current quarter, unless the Encumbrancer requires otherwise. | |
| 9 | Partial prepayments are not permitted. | |
| 10 | The Encumbrancee’s consent is required to the transfer of any section subject to an Encumbrance. Failure to obtain such consent will comprise a breach of the Encumbrance. | Milldale Infrastructure has obtained an exemption from provisions of the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and also a declaration that the Encumbrance is not a credit contract for the purposes of the Credit Contracts and Consumer Finance Act 2003. As stated on this website, the Encumbrancee’s consent is no longer required to transfer any encumbered property for the purpose of clause 10 of the Encumbrance. |
| 11 | Where the Encumbrancee provides written consent to a transfer, this is conclusive and can be relied on. | The Encumbrancee’s consent is no longer required to transfer. See our comment on clause 10 above. |
| 12 | The Encumbrancee may state (by notice on this website) that information is no longer required. | As stated on this website, Milldale Infrastructure is no longer required to gather information in relation to Encumbrancers. |
| 13 | The Encumbrancee consents to any subsequent registered instrument against the title to the land. | This is important to enable landowners to register mortgages over the land. |
| 14 | The Encumbrancee’s consent is required to any subdivision of the land. | |
| 15 | An Encumbrancer is only responsible for paying Infrastructure Payments while he or she owns the relevant land – the obligation runs with the land. The only exception to this is if clause 10 above is breached. | |
| 16 | If any part of the Encumbrance is held void, this provision amends or removes it. | |
| 17 | The obligation to pay the Infrastructure Payments under the Encumbrance must be transferred by the Encumbrancer from time to time to any subsequent purchaser of the Land. No additional amount is required to be paid for this transfer. | |
| 18 | The Encumbrancee is entitled to hold certain personal information associated with the Encumbrance. | |
| 19 | If the Encumbrancee exercises its power of sale, it can recover the same amount recoverable as if a voluntary prepayment was made. | |
| 20-23 | Modifies and disapplies certain statutory provisions that would otherwise apply to the Encumbrance. | |
| 24-28 | Standard provisions on notices, assignment, replacement of legislation, and cancellation. |