Many Kiwis don’t think twice about buying a cross-leased property, with a majority of them living happily ever after alongside their neighbours.
Although ideal, a cross-leased property is jointly owned, according to Rainey Collins Lawyers. This means owning one comes with a number of challenges, and may require the help of conveyancing lawyers.
What is a Cross-Lease?
A cross-lease is an arrangement where the occupants own the building and the land as tenants in common. Each tenant joins in the long-term leasing of each unit.
Cross leasing is one of the two most common ways to subdivide a property. The idea behind is that the cross-lease properties are not considered a subdivision, and are therefore protected from the rigorous requirement set by the Council for subdivisions.
Challenges of Owning a Cross-Lease Property
A cross-lease property is jointly owned, and any maintenance or development work would require the consent of the other owners. Most cross-leases also state that the property can only be used for residential purposes, which could be a problem if you want to run a business from your home.
To put it simply, most decisions regarding the property require the unanimous support of all the owners.
Overcoming the Cross-leasing Conflicts
There are things you can do to avoid conflicts in cross leasing. If you have not bought the property yet, make sure to check the agreement before signing. Check that the bird’s eye view of the property reflects the footprint on the cross-lease plan. Make sure you understand the all the terms on the lease as well, what limitations exist, and what your obligations are with the common property.
If you already bought the property, consider changing the title from cross-lease to freehold. Freehold will give you the owner exclusive rights of use and enjoyment of the land. To convert, however, you need to comply with the requirements of the plan, among other things. Make sure to consult a conveyancing lawyer to guide you throughout the process.
Cross leasing may come with a host of advantages, but much like with any other type of home ownership, it is not without the challenges. The most responsible thing you can do is to ensure you know everything there is to know about the lease, and to seek the right advice from the right people.