Cross lease titles were once a popular method of property ownership in New Zealand, particularly in the mid-20th century. However, as property laws and urban development have evolved, many of these cross lease titles have become outdated, leading to a range of issues for property owners. Outdated cross lease titles can cause confusion, disputes, and even legal complications, particularly when changes have been made to a property that are not reflected in the title or associated documents like the flat plan. In this blog, we’ll explore some of the common issues that arise from outdated cross lease titles and discuss practical steps homeowners can take to address these problems.

What is a Cross Lease Title?

A cross lease title is a form of property ownership that is unique to New Zealand. Under this arrangement, multiple owners share ownership of a piece of land, with each owner having a leasehold interest in their individual dwelling. The lease is typically for a long period and each owner also has shared rights to common areas such as driveways or gardens. The details of these arrangements are documented in the title, the flat plan, and the lease agreements.

Cross lease titles were widely used in New Zealand as a way to develop land more efficiently, allowing for more than one dwelling to be built on a single plot of land. However, while this model offered certain advantages at the time, it has also led to complications, particularly when the documents governing the property become outdated. As properties are modified over time—whether through renovations, extensions, or other changes—these modifications may not be reflected in the original cross lease documents, leading to a host of issues.

Issue 1: Unrecorded Property Modifications

One of the most common issues with outdated cross lease titles is that they do not reflect modifications made to the property. Over time, it’s natural for homeowners to want to improve or expand their living space. This might include adding an extension, building a deck, or even just reconfiguring the garden. However, if these changes are not recorded in the flat plan and title, it can lead to significant problems.

When modifications are made without updating the cross lease documents, it creates a situation where the legal documentation no longer matches the physical reality of the property. This can lead to disputes with other leaseholders, particularly if the modifications encroach on shared areas or change the use of the land in ways that were not originally agreed upon. Additionally, unrecorded modifications can cause problems when it comes time to sell the property, as potential buyers may be wary of purchasing a property where the legal documents do not match the current layout.

To address this issue, it’s important to update the flat plan and cross lease documents whenever significant modifications are made to the property. This typically involves hiring a surveyor to assess the changes and prepare updated documents that accurately reflect the property as it currently exists. These updated documents can then be registered with the local council and incorporated into the title, ensuring that the legal documentation is up to date.

Issue 2: Disputes Over Shared Areas

Disputes over shared areas are another common issue that arises from outdated cross lease titles. In a cross lease arrangement, certain parts of the property—such as driveways, gardens, or pathways—are designated as shared areas that all leaseholders have the right to use. However, if the boundaries or usage rights of these shared areas are not clearly defined in the cross lease documents, it can lead to disagreements among the leaseholders.

For example, one leaseholder might plant a garden in an area that another leaseholder believes should be used as a parking space. Alternatively, there might be disputes over who is responsible for maintaining shared areas, particularly if the original cross lease documents do not clearly outline these responsibilities. These types of disputes can be difficult to resolve, particularly if the documents governing the property are outdated or ambiguous.

To prevent disputes over shared areas, it’s important to ensure that the flat plan and cross lease documents clearly define the boundaries and usage rights of these spaces. If disputes do arise, it may be necessary to seek legal advice or mediation to reach a resolution. In some cases, updating the cross lease documents to provide clearer guidelines for the use and maintenance of shared areas can help to prevent future conflicts.

Issue 3: Difficulty Selling the Property

Outdated cross lease titles can also create challenges when it comes time to sell the property. Potential buyers are often cautious about purchasing a property where the legal documentation does not match the current state of the property. This is particularly true if there have been significant modifications that are not reflected in the flat plan or title. Buyers may be concerned about the potential for disputes with other leaseholders, the need to update the legal documents, or the possibility of non-compliance with local council regulations.

Additionally, outdated cross lease titles can make it difficult to secure financing for the purchase. Lenders may be reluctant to approve a mortgage on a property where the documentation is not up to date, as this can increase the risk of legal complications. This can further limit the pool of potential buyers, making it harder to sell the property and potentially reducing its market value.

To address this issue, it’s advisable to update the cross lease documents before listing the property for sale. This ensures that the legal documentation accurately reflects the current state of the property, providing potential buyers with the confidence they need to proceed with the purchase. Additionally, having up-to-date documents can make the property more attractive to lenders, increasing the chances of securing financing.

Issue 4: Non-Compliance with Local Council Regulations

Another significant issue that can arise from outdated cross lease titles is non-compliance with local council regulations. Over time, local regulations governing property use, development, and modifications may change. If the cross lease documents are not updated to reflect these changes, it can lead to a situation where the property is no longer compliant with current regulations.

For example, if the property has been modified in ways that are not reflected in the flat plan, it may not meet current building codes or zoning requirements. This can result in fines, enforcement actions, or even the need to undo modifications to bring the property back into compliance. Additionally, non-compliance with council regulations can make it difficult to sell the property, as potential buyers may be reluctant to take on a property that requires significant work to bring it up to standard.

To address this issue, it’s important to regularly review the cross lease documents and flat plan to ensure they are in compliance with current local regulations. This may involve consulting with a surveyor or legal advisor to assess the property and identify any areas of non-compliance. If necessary, the documents can be updated to reflect the current state of the property and ensure that it meets all relevant regulations.

Issue 5: Inaccurate Valuations

An outdated cross lease title can also lead to inaccurate property valuations. When a property is valued, the valuer will consider the flat plan and title to assess the layout, boundaries, and shared areas of the property. If these documents are outdated or inaccurate, the valuation may not reflect the true value of the property.

For example, if the flat plan does not include a recent extension or addition to the property, the valuer may not take this into account, resulting in a lower valuation. Similarly, if the boundaries of the property are not accurately defined, the valuer may undervalue the land, further reducing the property’s market value. Inaccurate valuations can have significant financial implications, particularly if the property is being sold or used as collateral for a loan.

To ensure that your property is valued accurately, it’s important to keep the cross lease documents and flat plan up to date. This involves regularly reviewing the documents to ensure they accurately reflect the current state of the property and updating them as necessary. By doing so, you can help to protect the value of your property and ensure that you receive a fair price when selling or refinancing.

How to Address Issues with Outdated Cross Lease Titles

If you’re dealing with issues related to an outdated cross lease title, there are several steps you can take to address the problem. The first step is to review the cross lease documents and flat plan to identify any discrepancies or areas of concern. This might involve comparing the documents with the current state of the property to ensure that all modifications and changes are accurately reflected.

Once you’ve identified any issues, the next step is to consult with a professional surveyor or legal advisor. A surveyor can help to assess the property and prepare updated documents that accurately reflect the current layout and boundaries. A legal advisor can provide guidance on the process of updating the title and flat plan, as well as any legal implications that may arise.

Finally, it’s important to register the updated documents with the local council and ensure that they are incorporated into the property’s title. This ensures that the legal documentation is up to date and that all leaseholders are aware of the changes. By taking these steps, you can help to prevent disputes, protect the value of your property, and ensure that it remains compliant with local regulations.