Curly cross-lease queries
Posted: 18th August 2010
If you're thinking of buying - or preparing to sell -
a cross-lease home on freehold land, you need to
understand what makes a "cross-lease" so different.
Cross-leases explained
A cross-lease is the common name for a composite
certificate of title for a home that shares the freehold land
it
is built on, with a neighbouring home. The certificate of
title
acknowledges:
- The undivided share of the land
- The exclusive areas for use by each home
- The lease of each home and any other structure that
has been built on that land - for example, a garage,
carport or deck.
Possible defective title
If the building outline has changed since the original
certificate of title flat plan was prepared, the title may be
defective. So if you see any differences between the
property you have inspected or own and the original flat
plan, you need to investigate further.
The present standard agreement for sale and purchase of
real estate is the REINZ/ADLS form 8th edition 2006 (3).
This includes clauses that help in defining what is a
defective title, and whether the potential purchaser can
require the vendor to organise fixing any defects in the
title.
Changes to the property that are likely to make a title
defective include:
- Building an additional bedroom
- Enclosing a deck to convert it to a conservatory
- Building a garage attached to the dwelling, with
internal access.
Changes to the property that are unlikely to make a title
defective, provided they have been built in the exclusive
area for the home, include a:
- Carport
- Deck
- Stand-alone garage
- Pergola
Fixing a defective title
If the title is defective, a surveyor must prepare a new
flat
plan showing the new outline of the buildings. Any relevant
consents must be obtained from the Council and Land
Information New Zealand (LINZ) has to approve the new
plan.
Then the existing cross-lease must be surrendered and any
mortgage released. Finally, a new cross-lease must be
prepared by issuing a new composite certificate of title with
a new mortgage registered on that 'perfected' title. The
neighbour (as co-lessor) must also sign the surrender and
new cross-lease.
Putting things 'right' with co-lessors
and the Council
Most additions to a cross-leased property also require
colessors'
consent to ensure that there is no breach of the
lease. If this consent is not available you at least need to
be aware that you could face a similar problem when it's
your turn to sell the property.
Often, additions and alterations require Council consent
too.
If you want to sell and didn't obtain the necessary
building
consent or final Code Compliance Certificate, try to rectify
matters before listing your property for sale. Talk to the
Council and check what action might be needed.
If buying, obtain a Land Information Memorandum (LIM) or
a Property CD from the Council. This will help you find out
whether any additions had the Council's consent and
received a final Code Compliance Certificate. Alternatively,
you can inspect the property file at the Council's offices.
If
any additions to the property are not listed in the Council
file or still need to be signed off, you may be able to
require
the vendor to fix the problem.
If you require any further information or have any
queries, please contact Judy Yeoman.