By Jeff Irving – Survey Director – firstname.lastname@example.org
Following on from our previous blog post that outlines the basics when it comes to cross-lease titles, this time we’re going to take a deeper look at cases where they’ve caused more problems than solutions. But first, here’s a little background on what makes cross-lease sections unique.
Dating back to the 1960s, cross leases worked by creating a number of titles on one piece of land; however, each party technically owns the entire property even though their home rests on only a part of it. They’re commonly found in complexes that share ‘common areas’ such as driveways or green spaces, but it’s in subdivided flats and larger homes where issues more commonly arise between neighbours.
In the years since, they have potentially caused more problems than solutions, as the rules that surround them create tension between neighbours, landlords, lawyers and local councils responsible for issuing resource consent. This is because, with any work done to one property, the entire ‘flat plan’ of all the properties needs consent and may even need to be updated. So even by adding a deck, garden shed or conservatory, it’s relatively easy to make your title defective in the eyes of your local council or any prospective purchaser.
In 2017, an Auckland mother of two discovered her neighbour had begun extensive renovations on their property. She says her home, “was flooded with mud and glass, her plants are dying or dead, and entry to her house blocked by trucks after her neighbour demolished their house” (Stuff, 2017).
One regulation of cross lease titles is that to get work done on any one property, consent is required from everyone who lives on the entire plot of land. And even though this hadn’t been sought, the council had approved resource consent for work to commence – something that happens more often than you’d expect.
The reason that consent is required from everyone who lives on the entire plot is because people who hold cross leases technically own every building on it, with theirs then leased back to them for anywhere up to 999 years. With any work that alters the bird’s-eye view or ‘flat plan’ of all the properties, the plan needs to be updated otherwise all the titles become defective. And the confusion that arises from this has been the source of a number of disputes between neighbours and is a major reason that the Law Commission has recommended the abolishment of cross leases.
Well, that entirely depends on your situation.
If you’re a property owner considering subdividing your property into a number of titles, our recommendation is that you opt for freehold titles over cross leases. They can be more expensive when comparing the two, but they hold greater value to prospective tenants and property owners due to the independence and flexibility they offer.
If you currently live in or own a property on a cross lease title, you do have the ability to convert your title to freehold. You will need to engage a surveyor that can create a plan of your property to be submitted to your local council in order to gain a subdivision consent. At Baseline Group, our planners & surveyors are specialists that understand the process and are very experienced in all subdivision and crosslease matters
If you have any questions about what goes into the application process, or what your options are surrounded cross lease titles, feel free to get in touch.