What is a Cross-Lease Subdivision?
While not as common as they once were, many properties in Auckland have a cross-lease title. This means, the section’s ownership is shared by the owner of each dwelling built on the property. For instance, if you purchase a unit within a four-unit cross leased development, you will be the registered owner of:
- An undivided one-fourth share in the land and buildings with the owners of the other three units, and
- A long-term lease, from all four of the building owners-in-common (including you), for your particular unit.
Cross-leased properties will often have shared driveways and other services. The cost for maintenance or replacement of these is also shared between the owners.
Cross-Lease Plan Updates
When any changes are made on a cross-lease property, such as building a deck or a carport, all homeowners should agree to them. Council Consents are often required and the cross-lease plan should be updated. If it’s not, the property’s Record of Title can be deemed ‘defective.’ This can cause issues further down the track if you are selling your property or applying for a bank loan.
To avoid such issues, when changes are made to a cross-lease property, the cross-lease plan should be updated. This requires surveying and a lodging of an updated cross-lease plan which we can handle for you.
Cross-lease to Freehold Conversion
Because the owners of cross leased homes all own an equal share in the section their homes are built on, all proposed changes to any part of the property will usually require the approval of all the other home owners. This restriction means prospective buyers may find cross leased houses less appealing than freehold. For this reason, many cross leased sections are being converted to freehold. Learn more about why you should consider completing a cross lease conversion to freehold title.
If you are thinking of changing your property’s title from cross lease to freehold, there is a process you must go through and we can assist you with it.
The Cross Lease Conversion Process
- Obtain a Resource Consent for the conversion – don’t forget to get the agreement of the other owners first.
- Obtain Consent for any required site works, e.g., driveways, drainage etc.
- Undertake the land transfer survey
- Register the cross-lease conversion (Undertaken by your Solicitor).
Read more more in-depth about the cross-lease to fee simple process.
As licensed cadastral surveyors, we can take care of all Consents for this work.
Cross Lease FAQ
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 but 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
The Subdivision Process
The subdivision surveying for every land development we undertake follows the same five-step process to ensure complete transparency and satisfaction for every Thornley and Associates client.
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