A guide to cross lease properties

Publish Date : 17 Oct 2017

Neighbourly disputes about repairs and development of cross lease properties have been getting attention in the media recently.

This is because cross leases can be complicated and not everyone is aware of their rights and responsibilities – or what Auckland Council’s obligations are.

What is a cross lease?

Cross leases are a form of residential property lease that allow individuals to own a share in a piece of land without the need for a subdivision.

Owners of cross lease properties each have a title that gives them shared ownership of land with the other title owners – each owner then leases the area their house or yard occupies from the other owners, under the terms of the lease.

Recently released research from Auckland Council’s Research and Evaluation Unit shows there are around 100,000 cross lease titles in the Auckland region, on just under 40,000 cross lease schemes.

Each cross lease agreement determines each owner’s rights and obligations, such as when consent from other owners in the cross lease is needed when making changes to a property.

Depending on the specific wording in each lease, property owners on a cross lease who want to make structural alterations to their buildings, including adding an extension or carrying out a complete redevelopment, may need to get approval from their neighbour or neighbours on the same cross lease development before starting work.

Without the approval, a neighbour might be able to put a stop to the work.

Seek legal advice

Ian McCormick, the council’s General Manager Building Consents, says that seeking legal advice will help bring more clarity for prospective buyers of a cross lease property.

“Cross leases can be quite complex to navigate. People need to look carefully to see whether a cross lease is the right sort of property for them, as they come with number of responsibilities that must be upheld.

“Our best advice is for prospective buyers of a cross lease property or those thinking about making changes to a cross-lease property they already own is to speak to a solicitor to have all the issues surrounding cross leases explained to you.  Each cross lease can be different.”

Auckland Council’s responsibilities  

Auckland Council’s responsibilities regarding cross leases are set out under the Building Act.

When we grant building consent to change or demolish a cross lease property our role is to verify that the building consent applicant has an interest in the land that meets the definition of ‘owner’ under the Building Act.

Once we have verified the applicant is an owner, the Building Act compels us to approve the building consent if the works applied for comply with the Building Code.

Problems can arise under cross lease subdivisions as the Building Act requires only one owner to sign off any building consent application, and this can be done without the knowledge or consent of the other cross lease owners.

The council has no role in looking further into an applicant’s property interests or restrictions, such as whether or not they are under a cross lease structure and what their lease obligations are. It is up to the applicant to fulfil those obligations.

The council does not have the ability to refuse to grant a building consent because an applicant has not complied with the requirements under their cross lease.

If this leads to a dispute between cross lease owners, it is a private civil matter between the owners.

More information on cross leases can be found on the Auckland Council website.

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