Do you freak out when you see ‘cross lease’ at the bottom of a property advertisement because you’re not sure what it means and you’re too shy to ask? You’re not alone. Cross leases are probably the most complicated form of property ownership in New Zealand and lots of people struggle to understand them. Here’s a quick cheat sheet to help you out.
If you buy a cross lease property you become a part owner of every building on the plot of land, not just the one you occupy, with the other leaseholders.
Each cross lease holder is granted what is called a registered leasehold estate of the particular area and building that they occupy. These leases are usually for 999 years and each one will set out exclusive areas of occupation as well as any shared or common areas. In other words, your house or unit is set apart just for you and your family, but you have equal access to shared areas (like a driveway, or garages, or a common garden area).
A cross lease title (the legal document that sets out a person’s right to or ownership of a property) also includes a plan of the footprint of the property.
It’s a good idea to check this to see that it matches the property you are looking at – make sure you ask your lawyer about any unexpected additions, like decks, or alterations to access.
Cross lease ownership means that any structural changes to the property or shared areas must be agreed upon by all the owners. This means you might need to get the other owners’ agreement on making any changes to the property – even for things like painting the exterior, building a deck or putting up a fence.
Maintaining good relations with your neighbours is always a good idea, but it’s essential when you’re in a cross lease situation. Covenants (terms, conditions and restrictions on the property that are noted on the title) will spell out the rules. It’s really important that you understand what these mean and what impact they may have on how you use and enjoy the property.
Remember too that it doesn’t matter what kind of ownership a property has, you need to do your homework before you sign on the dotted line.
A title search will help you find out all the facts about the property’s ownership, boundary and access, as held by Land Information New Zealand (LINZ).
Remember to look out for easements or covenants that may be different to differ from your understanding of the property, such as rules about who can live in it, car parking and access. A Land Information Memorandum (LIM) will also show you information held by the local council about the property and land.
It’s a really good idea to get a lawyer who can help you navigate all these different documents and understand what they mean. Start talking to them before you begin the house hunting process.