Selling a Cross Lease Property in Christchurch

Cross lease titles are common across Christchurch, particularly in suburbs developed between the 1960s and 1990s. Selling a cross lease property requires understanding the specific obligations and potential complications that cross lease ownership creates.

What a Cross Lease Title Is

Under a cross lease arrangement, multiple property owners each hold an undivided share of the freehold title to the overall land. Each owner also holds a lease over their specific dwelling and immediate curtilage (garden area) from the other co-owners. The lease typically runs for 999 years. The key implication is that all owners of the cross lease have an interest in each other's properties - changes to any dwelling that are not reflected in the registered flats plan require the consent of all co-owners and a new plan to be registered.

The Flats Plan Issue

Every cross lease property has a registered flats plan that defines the footprint of each dwelling. If any owner has made alterations to their dwelling - adding a garage, extending the house, enclosing a carport, adding a deck - without updating the flats plan, there is an inaccuracy in the title. This is a very common situation in Canterbury. A title with an inaccurate flats plan is a defective title. Buyers who discover this during due diligence will typically require the vendor to rectify the title before or at settlement, or seek a price adjustment. The cost of updating a flats plan is approximately $1,500-$3,000 depending on the complexity of the survey work required.

Earthquake Insurance Complications

Cross lease titles created specific complications in the Canterbury earthquake recovery. Insurance repairs on cross lease properties required the agreement of all co-owners. Where co-owners were uninsured, underinsured, or absent, obtaining agreement for repairs was often impossible. Some Canterbury cross lease properties still carry the legacy of incomplete or disputed earthquake repairs. Buyers who encounter these situations will need careful legal advice about their options.

What to Do Before Listing

Before listing a cross lease property, check whether the current flats plan accurately reflects the dwelling as built. If alterations have been made, obtain legal advice about whether the plan needs updating and what this involves. Disclose the cross lease nature of the title prominently in your marketing - buyers need to factor in the legal complexity and insure the property accordingly. Your solicitor can review the title and advise on any issues before listing.

Information from Harcourts (freehold vs cross lease guide) and Canterbury property law practitioners. For general information only - always obtain independent legal advice before selling a cross lease property.