From the 1960s through to as late as the 1980s, cross-leases were the most popular form of subdividing land, as it used to be a very cheap process. However, in 1991 the government introduced the Resource Management Act, and this changed things significantly. These days, many pieces of land that are listed on cross lease titles are being transferred to other types of land ownership. BMC Law has released a statement explaining why.
Essentially, under a cross lease, a number of owners all co-own a piece of land, and each private area is leased from all the other owners. Usually these areas are leased for a practically endless amount of time—usually 999 years—in order to replicate true ownership.
This can be an issue for people when renovations are being undertaken, as any owner making major changes to their property first needs the approval of all other co-owners.
Similarly, all decision made about common areas, such as roads or driveways, must also be made through all the other co-owners.
When selling a property that is owned via a cross lease title, the flats plan must be accurate. Since this type of property ownership was popular decades ago, often properties have been modified, and the flats plan has not been updated. This can lead to issues during sales, either reducing prices, or delaying a sale to the point that the buyer may move on.
It’s common today for people who own land via a cross lease title to switch over to what is known as a fee simple title. This can be a complex legal procedure, but with the help of a legal professional it can be done. Generally speaking, the process of upgrading from a cross lease title to a fee simple title also increases the value of the property, it particularly improves the market value on re-sale or the time it can take to achieve a sale.
To find out more about cross leases, and what your options regarding them are, visit the BMC Law website here: https://www.bmc-law.co.nz/