Is you crosslease title deficient?
If the buildings on site do not match your Cross Lease flats plan then your title is probably deficient. If this is the case then we advise that you either rectify the Cross Lease flats plan or convert your property to a freehold title.
In most cases we strongly recommend converting cross lease properties to freehold.
Three key reasons:
1. Your property may worth more as a freehold title than a cross lease title, you will find it easier to market and to sell;
2. You will be able to renovate and alter your freehold property without asking the neighbour’s permission every time.
3. You will not have ongoing costs every time a property alteration is completed and the Cross Lease flats plan requires updating.
Why do I have to do anything?
When you own a cross leased property, you and your neighbour own the land together. You only lease the area shown on the Cross Lease flats plan. You may also have an exclusive use area (normally your lawn and garden). If you change the outline of your building (even adding on an additional level) then you are occupying an area outside your lease area until the Cross Lease flats plan is updated in agreement with your neighbour.
In a worst-case scenario, this could lead too;
- Legal action from your neighbour (or future neighbour) and in extreme cases could require the removal of the addition.
- Banks may not lend if they become aware that the title is defective (as a defective title may adversely affect their security).
- Loss of sale, when selling the property you may have a problem that could lead to either the sale falling through or having to be renegotiated. This could affect a whole chain of purchasers in a domino-effect where multiple vendors and purchasers’ conditional settlements are affected.
So what do you do to get the process underway?
Act early and call a Registered Professional Surveyor for advice you can rely on. “We can manage the whole process for you – whether you choose to do a cross lease rectification or prefer to convert the property to freehold,” said Mark Finlayson, Director, Envivo.
“We often receive panic calls from people selling their house, where the prospective purchaser has noticed that the plans are not the same as what is on-site. Updating a cross lease title is not a quick process as the property usually needs to be re-surveyed and an application for Resource Consent lodged with Council. Cross lease rectifications and cross lease conversion to freehold are both legal processes which involve licensed surveyors, lawyers, planners and Auckland Council.”
Our Envivo team are experts in this area.
There are over 216,000 cross lease titles in New Zealand, nearly 50% of which are in Auckland. Any advantages in cross lease developments were removed when the Resource Management Act 1991 came in to effect. They were common thirty years ago as they were a less expensive way of subdividing. Now, both cross leases and subdivisions need to comply with the same site coverage rules, density controls and development control infringement rules.
Deficient cross leases are very common. This is a legal matter and can become costly and extremely frustrating to owners. Often the issues are historical where one owner has done an alteration or addition but has not updated the Cross Lease to reflect the changes. The property may have changed hands since then. As Cross Lease titles are created around the footprint of the building, any changes require the title to be updated.
- Once a popular form of title for flats, townhouses to circumvent subdivision rules.
- Land and buildings owned by occupants.
- They are tenants in common with each other.
- Flats are then leased from the joint owners, usually for 999 years.
- Cross lease terms may be varied, unexpected or outdated (for example, no pets).
- Some old cross leases do not have exclusive-use areas so gardens are shared.
- Permission from neighbours needed for changes to properties.