Cross-lease titles were originally introduced as a cost-effective way to navigate subdivision rules. Although they were once viewed as practical, they have become a source of legal challenges for property owners, particularly regarding renovations, shared responsibilities, and resale.
It’s therefore essential to seek legal advice before purchasing or making any alterations to a cross-lease property.
What is a Cross Lease?
A cross-lease typically involves two or more homes, commonly referred to as “Flats,” built on a single freehold title. Each owner holds a share of the underlying land and has a long-term lease (often lasting 999 years) for their Flat.
A memorandum of lease is recorded on each title, outlining each owner’s rights and responsibilities. In most cases, Flat owners are both lessors (as co-owners of the land) and lessees (in relation to their individual Flats).
Each Flat owner has exclusive use of their Flat and, in some cases, exclusive use of part of the land surrounding it (to the exclusion of the other Flat owners). Common areas, such as driveways, are typically shared by all Flat owners.
Common clauses to be aware of in the Lease
The memorandum of lease typically includes rules about what owners can and cannot do concerning their Flats and the surrounding land. Most leases contain clauses that:
- Prohibit structural alterations or additions (e.g., building a deck, garage, or fence) without the written consent of all other owners.
- Define exclusive use areas, such as backyards. However, not all cross-lease titles include exclusive use areas; in such cases, the remainder of the land is shared among Flat owners.
- Dictate the terms of Insurance – Some leases specify that Flat owners must hold a joint insurance policy.
- Restrict pets, particularly those that could cause a nuisance.
- Limit the use of the Flats to residential purposes, potentially preventing home-based business activities, even on a small scale.
- State requirements for maintaining common areas, typically mandating that driveways and accessways be always kept clear.
Understanding the fine print is crucial so that Flat owners are aware of their obligations under the lease.
Planning to buy, sell, or renovate a Cross-Lease property? Reach out to us first.
Since lease terms vary from one cross-lease to another, and not every cross-lease provides for an exclusive use area for each Flat, it is crucial to review the title and lease before any purchase, renovation, or sale.
Whether you’re buying, selling, or planning to make changes to your property, Armstrong Murray’s property team can help ensure your plans are legally sound and clearly understood.
If you’d like us to assist you with your next property purchase, get in touch with our team on enquiries@armstrongmurray.co.nz or 09 489 9102.
This article is brief and general in nature. You should not treat it as legal advice and should seek professional advice before taking any action in relation to the matters dealt with in this post. Armstrong Murray accepts no liability for losses suffered by any person or organisation who may rely directly or indirectly on this post.
