From The Legal Beagle Team 24/05/2016

Cross leases are common in New Zealand with over 216,000 throughout the country, with more than 50% of them in Auckland. They were invented by a group of lawyers as a way of subdividing land cheaply and without having to meet specific land sizes for a property. So for instance, a cross lease property could have two homes on a plot of land which would normally only have one. But cross lease properties can cause a lot of trouble when buying and selling, or even just between neighbours, which is why people often want to convert their cross lease property to a fee simple one.

What’s Wrong With Cross Lease Properties?

There are certain issues which pop up with cross lease properties which can create huge problems for some people, but none for others. It just depends on your personal point of view. A cross lease property is often cheaper to buy and not as popular, making it easier to buy one. There are some problems though that do pop up which you need to be aware of.

• You need to get permission from your other title holders if you want to add any additions to your home and they can say no.
• When you buy or sell your property, the flats plan (the diagram of all the buildings on the cross lease) needs to match exactly what the buildings actually are on the property. If they are not, you might not get a mortgage approved until it is corrected or updated which requires an expensive surveying report.
• Your flat neighbours can use your garden for a party, unless it is written into the cross lease that it is for your use exclusively. Otherwise it will be known as common ground and everyone can use it.
• Some cross leases are outdated and may say you cannot have a pet on the property.

Changing A Cross Lease To A Fee Simple

Fee simple is basically a technical term meaning freehold. If your property is fee simple, you own it outright and make your own choices without needing permission from neighbours to make changes. You do however need to have consent from your local council to do some work on it, so always check with them or a lawyer before building, renovating or starting major earthworks.

If you have decided you want to change your property from cross lease to fee simple, the first thing to do is chat with your lawyer. They are the ones who will guide you through the process and tell you the steps you need to follow to do it. But some things you need to think about are:

• It can be really costly in some cases with legal fees, surveying costs and possibly the cost of upgrading services.
• The council might not approve it if the land is actually too small for a separate title to be issued.
• If you have a mortgage, the bank needs to approve your changing request.
• All the other owners need to approve your change request too.

Disclaimer: The information on this page is general information only and must not be relied on as legal advice. Legal Beagle is not a law firm or a substitute for a law firm. We are unable to provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defences, options, selection of legal documents or strategies.