A cross lease title was historically one of the two most common ways a property could be subdivided and contains rights of ownership and rights of use.
New cross leases are not very common now.
If you are looking to buy a property which is a cross lease title you should look carefully at the terms of the lease.
A cross lease title creates two or more legal estates with multiple owners owning an undivided share in the freehold land and individually leasing the flats on the property.
The owners have an undivided share in the underlying land and also a leasehold estate created by lease, usually for a term of 999 years.
It is usual to have sole and exclusive use of an area marked on the title plan. The restricted areas and common areas are usually also shown on the plan.
The lease relates to your restricted area and has covenants that the flat owner must comply with.
Some examples of covenants included in a lease are:
a) You are required at all times to keep the flat, garage and the area marked land with flat in a neat and tidy condition and in good repair.
b) You will be liable for a 1/2, 1/3, 1/4 etc. share of the cost to keep and maintain in good order, repair and condition, common parts of the land. This includes grounds, driveway, common parking areas, paths, fences and other common amenities (if any) which are not the responsibility of an individual flat owner.
c) Pets are permitted under the lease unless they unreasonably interfere with the quiet enjoyment of others or create a nuisance.
d) Each flat owner must, at their own cost and expense, keep and maintain in good order, condition and repair, both the interior and exterior of the flat, including any electrical and plumbing equipment, drains, roof, spouting, downpipes and other amenities serving the flat.
e) A separate and comprehensive insurance policy (including fire and earthquake risks) for the full insurable value of the flat must be kept at all times. It is each flat owner’s responsibility to arrange insurance cover for their flat.
f) The owner of each flat has the right to let their flat, provided that they ensure that they enter into a tenancy agreement with the subtenant.
There are limitations to adding anything to the flat which will alter the external dimensions of the flat without correcting the flat plan. Any structural alterations to the flat will need written consent from the owners of the other flats. If this written consent has not been obtained at the time of the alteration, or can no longer be located, the vendor can ask the current owner or owners to give their consent. The giving of consent by the other flat owner or owners may depend on the current relationship between the parties.
You need to look carefully at the title plan to any cross lease property to ensure that the outline of the building shown on the plan coincides with the present building.
If there has been additions or alterations to external dimensions which are not shown on the plan, then this is considered a “defect” in the title.
If you do intend to alter the external dimensions of the flat (e.g. add on a conservatory) you will need to have the property re-surveyed and a new flat plan deposited to Land Information New Zealand to depict the new external dimensions of the flat. This can be costly as it will involve surveyors, the local authority and legal costs.
Care needs to be taken in relation to any cross leases that have had earthquake repairs or been rebuilt after the earthquakes without a new flat plan, as the dimensions of the flat may have changed.
It is important to be aware of the differences between a cross lease title and a fee simple title when purchasing a property. You should be aware of any limitations and restrictions of the cross lease title. We recommend when buying a cross lease property, you should ensure you have the ability to have the title checked by your lawyer.