Understanding a cross lease.

Do you panic 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 understand;

If you hold a cross lease you own an interests in the property. A share of the freehold title in common with the other cross 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 ownership of a property)also includes a plan of the footprint of the property, which is called a ‘flats plan’.
• 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.
• 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 to look out for easements or covenants that may be different to your understanding of the property, such as rules about who can live in it, animals, car parking and access.

The best idea is to get a lawyer who can help you navigate all these different documents and understand what they mean.