What is the cost of converting a cross lease to fee simple title?
The cost to convert a cross-lease to a fee simple title can vary widely depending on several factors, including the complexity of the conversion, location, legal fees, surveying costs, and other associated expenses.
Fees for the Resource consent application, Land Transfer Survey, Council fees and LINZ fees for converting a cross lease to fee simple title would be approximately $15,000 + GST per flat/title. For example, one cross-lease property converted into two fee simple/freehold titles would be roughly $25,000-$30,000 total. However, an accurate quote would be provided on a site-by-site basis. This excludes legal fees.
What is the difference between a cross lease and fee simple title?
A cross lease title is where multiple individuals own an undivided share of the underlying title and lease the area of their buildings for a period of 999 years from the other owners. As such the title is based on accurate depiction of the buildings on the land.
A fee simple or freehold title is based on the dimensions of the land and the owner has exclusive ownership of both the land and the buildings located that land.
What difficulties are there with cross lease properties?
With cross leases is that the underlying land is in joint ownership with all parties involved in the cross lease and each owner leases the portion of land their dwelling is located on from all the other owners.
This can create problems when you are purchasing or selling a cross lease as additional checks need to be undertaken to ensure the title is not defective i.e the cross lease plan not matching the buildings that are actually on the site. This can be problematic as it is frequently only picked up late in the process when the Solicitor’s look at the titles.
Depending on how the cross lease documents are written, additions to your property e.g. a new garage, carport or extension to your house may require neighbour’s permission to do so. They may not provide this.
If additions are undertaken without the neighbour’s consent, as their sign-off will be required, it may be near impossible to update your cross lease title.
Why should cross lease owners convert to fee-simple?
The benefits of upgrading a cross lease title to fee-simple title are:
- fee-simple is considered a better form of title and is encouraged by Solicitors
- you don’t need your neighbours permission to complete additions to your property if you have a freehold site, which
- removes the risk of disputes if you complete alterations without consent on a cross lease title
- you don’t have to update your title if you undertake additions to your property
- increase in property value
- there are less restrictions with a fee simple title and as such it is easier to sell
