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Cross Lease Titles

By Alice Floyd, Planner, Baseline Group | Oct 11, 2024

Cross lease titles are a common form of property ownership in New Zealand. Introduced as a common form of ownership during the 1980’s, cross lease titles are commonly implemented so multiple people own a share of the underlying land. Each leaseholder has the exclusive right to occupy their individual dwellings, typically a house or unit. Cross lease titles both share in the freehold ownership of the land and a long-term lease for the house, which is typically 999 years. While cross leases provide for a more affordable property option, they also come with some difficult baggage that reduces the individual rights of the dwelling owners. Here are some key considerations and other options to work around them.

1. Key Considerations:

  • Limited Control: You share ownership and decision-making authority over the land with other co-owners. This can limit your ability to make modifications to your home or the land without their consent.
  • Renovations: Any alterations to the property (like extensions or additions) generally require approval from the other owners sharing the lease.
  • Maintenance and Responsibility: You may share responsibility for maintaining shared spaces (like driveways or lawns), and disagreements over upkeep can arise.
  • Restrictions on Use: Cross lease titles often come with restrictions, such as limitations on renting out the property or conducting business from home.

2. Legal Complexities:

  • Obsolete Titles: Cross lease titles are considered outdated by some property professionals, and many prefer freehold (fee simple) titles because of the greater control and simplicity.
  • Lease Changes: Over time, disputes can arise if the lease plans are not updated to reflect changes made to the property. For example, adding a deck or garage without formally updating the lease plan can create issues during resale.

3. Resale and Market Perception:

  • Buyers in some markets may be less willing to purchase cross lease properties due to the potential for complications, which can affect the resale value.
  • Properties on cross lease titles can sometimes be cheaper than freehold properties, which may be attractive to first-time buyers. However, the ongoing complexities and potential legal costs in the future should be factored in.

In lieu of the above, there are solutions to secure your ownership of your cross-lease property in order to cement financial freedom in choice. If you are looking at purchasing a cross-lease property, don’t let the title deter you, you can convert a cross-lease title to fee simple in a few simple steps. Similarly, if you already own a cross-lease title there are a multitude of solutions in order to improve the value of the property. Below are some steps to undertake if you are looking to purchase, or already own a property with a cross-lease title.

  • Consult a Property Lawyer: Before buying a cross-lease property, consult a property lawyer who can explain the specific terms of the lease and any restrictions. They can offer solutions as to explain how to work around the cross lease. In addition to legal advice, the lawyer will be able to provide other property information which is not always available to the general public.
  • Consult a Planning Consultancy: A planning consultancy is able to apply to the relevant district Council to have the cross-lease title to a fee simple title – a much more secure form of tenure. A planning consultancy is familiar with this process an is able to provide a simple, customer focussed solution to enable the conversion to take place in a simplified manner

Cross lease properties can offer good value, but they come with trade-offs. Make sure you're fully informed about the implications before making a decision. If you are looking to improve the value of your cross-lease property, get in touch with Baseline Group today.

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