Selwyn Times: October 02, 2019

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[Edition datE]
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What is a cross lease property?
“Cross leases are a complicated form
of property ownership in New Zealand
and lots of people find them hard to
understand. In fact, they can be so
troublesome that the Law Commission
has recommended they are abolished,”
says Real Estate Authority chief executive,
Kevin Lampen-Smith.
There are four main types of property
ownership in New Zealand – freehold,
leasehold, unit title and cross lease. In a
cross lease, you own a share of the freehold
title with the other cross leaseholders and
a leasehold interest in the particular area
and building that you occupy.
“It’s important to understand what
buying a cross lease property might
mean for you. Many people don’t do their
due diligence on cross leases and find
themselves in a bit of a mess as a result,
Lampen-Smith says.
Cross leases are common in areas where
there has been a lot of subdividing of
larger sections, or in blocks of two to four
units – the houses may be standalone
homes, or they may be units/flats. In a
cross lease title, property owners share
ownership of the land and the buildings
on it.
If you hold a cross lease, you are a partowner
of every building on the plot of land
– not just the one you occupy – with the
other leaseholders. Each cross leaseholder
is granted what is known as a registered
leasehold estate of the particular area and
building that they occupy. These leases
are usually for 999 years for a nominal
rent, like 10 cents per annum. Each lease
sets out exclusive areas of occupation as
well as any shared or common areas. In
other words, your house or unit is set
apart just for you and your family, but you
have equal access to shared areas (like a
driveway, or garages, or a common garden
area). A cross lease title also includes a
plan of the footprint of the property, called
the flats plan, so you can see if it matches
the property you are looking at.
This form of shared ownership means
that any structural changes to the property
or shared areas must be agreed upon by all
the owners.
“Depending on the terms of the
cross lease, you may need to get the
other owners’ consent for things like
painting the exterior of your property,
building a deck or putting up a fence.
These provisions are usually referred
to as covenants. A covenant may place
restrictions on what you may do with
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the unit or building, so it is important to
understand what they mean – this is where
things can get tricky,” Lampen-Smith says.
“For example, let’s say that you own a
cross lease property that you want to sell.
You and your co-owners share driveway
access and some common garages, but you
have a buyer for your property who is only
interested if they can knock down one of
the garages. If the property was freehold,
where there is one sole owner, the new
buyer could do what they liked (within
the limits of the council restrictions).
However, because it’s a cross lease
property, the buyer would have to get all
the other owners to agree (and offer their
consent in writing),” Lampen-Smith says.
“Be careful when making enclosed
additions to a cross-leased property
(for example, adding an extra room or
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FLOCK ST
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BRANTHWAITE DRIVE
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30B
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conservatory). Even if you do get the other
owners’ consent to do it, it will change the
overall floor plan of the property and you
will have to have the flats plan altered so
the change is shown. This will cost money,
but if you don’t do it the land title will not
be accurate and this can cause problems
when you go to sell.”
“I strongly recommend engaging a
lawyer to review the terms of a cross lease
property. Their first step should be to
check that any property you are interested
in matches the one marked on the flats
plan. They will help you unpick all the
conditions of a cross lease agreement,
including finding out what the restrictions
are and how many other owners are
involved. A lawyer will also be able to
advise you if there are particular issues
with the property you are interested in and
find out what changes have been made by
other owners,” says Lampen-Smith.
“A Land Information Memorandum
(LIM) will also show you information
held by the local council about a certain
property and land. It may be worth getting
an independent assessment of a cross
lease property from an inspector who has
professional indemnity insurance and
carries out their work in line with the New
Zealand Standard for Residential Property
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Inspection (NZ S 4306:2005).”
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“As always, it’s smart to figure out as
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much as you can about a cross 17 lease
670m²
property at the start of your home-buying
process rather than 151 after the fact,” says
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Lampen-Smith.
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For independent guidance and
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information on buying or selling, check
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out www.settled.govt.nz
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LI
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BRANTHWAITE D
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