In New Zealand, a cross-lease is a type of land tenure arrangement that is common for some residential properties, particularly in older subdivisions. In a cross-lease, the ownership of the land is divided among several parties, typically two or more homeowners. Each homeowner has a share in the land, which is defined in terms of a cross-lease document.
Under a cross-lease, each homeowner owns both their individual dwelling (e.g., a house or apartment) and a share of the land on which the entire property is situated. This share of land is typically defined as a specified portion of the total land area. Homeowners usually have exclusive use of a particular area of land around their dwelling, like a yard or garden.
Here’s an example of what is a cross lease in NZ,
If you and your neighbour have a cross-lease arrangement, you both are the leaseholders of the land with equal shares. Under a cross lease agreement, you both have predefined boundaries of the land and you both are responsible for maintaining common areas like garden, driveway, parking space or any other common area.
Any significant changes to the property, like adding a structure or making major alterations, require the mutual consent of you and your neighbour.
While you and your neighbour own your houses, you technically lease the land from each other. You both may agree on lease payments, which can be nominal or a token amount, to acknowledge this legal arrangement.
How Many Cross Lease Properties Are There In NZ?
Presently, New Zealand boasts approximately 200,000 cross-lease arrangements, with Auckland alone accounting for half of this total, specifically, around 100,000. Notably, a significant portion of these Auckland cross leases is situated on the North Shore. This is because when the Auckland Harbour Bridge was constructed, it encouraged more residents to settle on the northern side of the bridge by following cross lease legislation.
What Is A Cross Lease Title
Want to know what is a cross lease title in New Zealand? Well, cross leasing is a type of property ownership where two or more people own the land jointly as tenants in common. This arrangement is governed by a cross-lease agreement, and each owner has a share in the land and exclusive rights to their portion. Typically a half share if there are two flats or a one-third share if there are three flats.
The Issues with Cross Lease
Cross leases often impose restrictions on owners, including limitations on having pets, leasing the flat, and making alterations or erecting buildings without consent from other owners.
A common issue with cross leases arises when additional rooms, often conservatories, are constructed, altering the dimensions of the flat. It's crucial to meticulously examine the Flats Plan to ensure it accurately reflects the real on-site situation. Any disparities between the actual buildings on-site and the dimensions depicted on the Cross Lease Plan could potentially constitute a title defect.
Moreover, you must obtain consent from your lessee/lessor neighbour for any additions to your cross lease property. This requirement is separate from obtaining a building consent from the local Council. Failing to secure your lessor/lessee's consent for certain additions can potentially breach the cross-lease agreement.
Comprehensive insurance, covering earthquake and fire risks, is also essential for each owner with a cross lease title. Some cross-leases may even stipulate that all owners must have the same insurer.
It's crucial to note that the terms of each cross-lease agreement can vary significantly. Therefore, we strongly recommend that you allow us to thoroughly review the terms of your cross lease title. Our goal is to provide you with a clear understanding of how these specific terms and restrictions might influence the use of your property in the future.
Buying A Cross Lease Property
When considering the purchase of a cross-lease property, it's essential to carefully assess the lease's limitations in light of your intended property use and potential development plans. This evaluation is crucial to ensure your ability to meet these obligations effectively.
Additionally, when dealing with a cross-lease property, it's vital to establish clear boundaries between areas designated for exclusive use and those considered common property. While many exclusive use and common areas are clearly demarcated on the flat plan or by physical features like fences or grass/concrete, some properties may lack such clarity, leading to potential disputes among property owners.
How To Get Out Of A Cross Lease Title?
Cross lease properties can be somewhat burdensome and involve many issues so it’s better to get out of your cross lease title as soon as possible.
However, the process of exiting a cross-lease title can be a complex process, and it typically requires legal guidance. In some cases, exiting a cross-lease may involve negotiations with co-owners and potentially converting the property to a fee simple title. The process can vary depending on individual circumstances and the terms of the cross-lease.
To navigate this process effectively and understand the terms of your unique cross-lease agreement, it's crucial to consult with us. CIVIX has a team of licensed cadastral surveyors, town planners, engineers, and lawyers who are well equipped to guide you in this matter.
Call us at 09 303-1113 or email us at info@civix.co.nz to know more about what is a cross lease nz and what is cross lease title. We are always ready to assist you.