Cross Lease Properties 

What is a cross lease?

A cross lease property is one where multiple people jointly own an undivided share in a piece of land, and lease part of the land back to individuals in the group. The houses on the land are usually flats or townhouses. The lease creates rights of exclusive use and enjoyment for each flat, and rights in respect of common areas, such as driveways.

Key things to consider

  • Relationship with neighbours and common areas
    The implication of being on a cross lease is that you will share ownership of the land with one or more leaseholders, who will be your neighbours. Each leaseholder will have a responsibility to maintain common areas, and disputes may arise with disagreements as to the treatment of common areas. There may also be other limitations, such as the household pets you can own, as they may interfere with the quiet enjoyment of the other owners. Before purchasing a cross lease property, weigh up the limitations of the lease with your intended use and development of the property to ensure you can fulfil your obligations under the lease.
  • Consent for additions and alterations
    How you maintain and develop a cross lease property is restricted and connected to the rights of other owners. When thinking about adding a structure to the property, consider whether the structure is on common property, whether it is attached, and whether it is enclosed. Before you can make external changes to your property, or changes that would affect the common areas, you will need to obtain written consent of all the other owners. If consent is not obtained, you risk the other owners claiming remedies against you.
  • Flat plan and title
    It is important to confirm that what is physically on the ground of the property is correctly recorded on the title and flat plan. Similarly, if there have been external additions or alterations to the flat, these must be recorded on the flat plan. If this is incorrect, this is considered a defect in the title. Rectifying defects requires a new flat plan that illustrates these additions. This can be expensive as it will involve surveyors, the local authority, and legal costs.
    Be aware that if you are selling a cross lease property and there is a defective title, the purchaser can raise an objection and may have the right to cancel the sale and purchase agreement or negotiate a reduction in the purchase price.
  • Insurance
    Often owners will use different insurers for their respective flats. Where one flat is damaged and requires the input of other owners and their separate insurers, this can create disputes and delays in settling insurance claims. We advise you to consult the current owners about their insurance providers prior to purchasing a cross lease property. Co-ordination between insurance companies is also necessary for damage to any common areas.

Summary

When thinking about buying or selling a cross-lease property, carefully look at the terms of the lease and title. Please contact us with any queries you have. We are happy to help.

DISCLAIMER: The content of this document is general in nature and is not intended as a substitute for specific professional advice on any matter and should not be relied upon for that purpose.

Rachael is a North Canterbury local, born and bred in Woodend. She graduated from the University of Canterbury with a Bachelor of Laws and a Bachelor of Arts (majoring in Mass Communications) in 2014. While studying, Rachael worked at Christchurch law firm, MDS Law, for two years. In 2015, Rachael commenced work as a solicitor in Rangiora.

For further information on buying your first home please contact Rachael.



Rachael Zaronis (LLB, BA)
Solicitor / Director

First Floor Conway Building
188 High Street
PO Box 576
Rangiora 7400

Ph 03 909 0101
Fax 03 359 8240
rachael@conwaylaw.co.nz