Does anybody own a cross lease residential property?

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TeaLeaf

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#2378619 19-Dec-2019 15:07

itxtme:

Issues with neighbours are mainly irrelevant to a crosslease. A crosslease is a share of the whole land parcel. It was commonly used in the 70's and 80's when the cost of subdivison meant this loophole method was preferrable. This was cleaned up in 1991 RMA changes.

Things to consider with a crosslease have been laid out above involving physical changes to the building. Many flat plans do not have rules around fences on your private area, so some of the warnings I think are bit over the top. Read the flat plan!

One thing I didnt understand was you DO own the property, you just share it. I thought the word "lease" meant the other person owned the land and it was a 999yr lease. So even if they say no to me raising the roof, oh well. That is the only change I had intended, but 3 years off anyway.

I totally agree. I was curious to see if anyone else felt this way.

Another thing, just because you are freehold doesnt mean the neighbour cant block your easement/drive with his boat the same as they can on a cross lease.

As itxt points out its all in the paper work.

This particular property I am looking at is ABUNDANT with plans and legalities, Im use to reading them but got lost there was so much haha, especially the builders/architects log as the house is being built i couldnt read his hand writing rofl.

Im offering roughly 18% less than what its peak value was, given Auckland has reclaimed a big chunk in the last 4 months of that 10% loss, I feel Im almost making money just by buying it for the price. If Auck does get back to its peak in late 2016 (which is a few % away I believe), then I feel Im definitely safe guarding against any end of the world economics like bloomberg has us at (2nd most likely country in the world to majorly crash ie 40%). No doubt I think we are due a correction, but I dont think it will be as bad as Ireland 08. We produce some physical goods, Dairy worries me with it becoming unpopular in some countries and Tourism has always worried me.

If i make 15% via the purchase, I feel thats all anyone can do in this market to mitigate risk, aside from paying the same amount to rent (if you put the amount as interest only it works out exactly the same as the 2 bedroom shoe box in central auck we had rented with screaming babies and neighbours who after 2 talks wont stop partying until 3am on a Wednesday to Sunday). Im getting too old for the city, does that make sense?

I "think" its a good move, bank manager said its a good buy and hes so grouchie but he was pleasantly surprised. Im middle aged, all my money is locked up Aussie, my friend who Im thinking of getting back with as a partner wants a baby, I want a baby. And if all goes well I can retire up Kerikeri in 10 years (oh such a long way off though).

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gehenna

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#2378626 19-Dec-2019 15:33

itxtme:

Issues with neighbours are mainly irrelevant to a crosslease.

Legally maybe. They're certainly relevant to your stress levels and wellbeing.

TeaLeaf

5078 posts

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#2378680 19-Dec-2019 18:08

gehenna:

itxtme:

Issues with neighbours are mainly irrelevant to a crosslease.

Legally maybe. They're certainly relevant to your stress levels and wellbeing.

Id say they are little difference to freehold. Even with a perfectly set out cross lease, people can be pricks just as much as they can to a freehold neighbour, ie park where they shouldnt.

The only issue is when you want to change something, but the other cross lease has to have a legitimate reason they can stop you, but not for no reason. And as with freehold you have to go through council.

In saying that if you have a lawyer who printed his own degree on a Canon dot matrix, then you could have issues due to lack of legality and definition. Those quality of cross lease are rare and the ones that give it an unworthy bad name in the vast majority of cases

That is why when buying one you have a lawyer do the LIM etc. Although peak of the market people were buying houses, cross lease and freehold with no conditions. Id rather go put my deposit on red at the casino lol.

bfginger

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#2380639 23-Dec-2019 20:29

Would the adding of a second storey to a house on a cross leased property be seen as a change to the cross lease footprint plan?

MattKPJ

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#3085733 6-Jun-2023 20:25

Hi there, Re-opening this discussion.

Has anyone had any issue with insurance for structures not listed on the Flats Plan?

This is currently hypothetical - We'd like to built a deck & a car port - All with other cross leasee's written permission.

We don't however want to spend 20k adding it to the Flats Plan. Our lawyer is saying that those structures cannot be insured.

Anyone come across this type of situation?

Handle9

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#3085803 6-Jun-2023 22:57

MattKPJ:

Hi there, Re-opening this discussion.

Has anyone had any issue with insurance for structures not listed on the Flats Plan?

This is currently hypothetical - We'd like to built a deck & a car port - All with other cross leasee's written permission.

We don't however want to spend 20k adding it to the Flats Plan. Our lawyer is saying that those structures cannot be insured.

Anyone come across this type of situation?

Just don't do it.

You'll make your title defective which will make your property hard to sell and cost you significant money when you do go to sell. Many banks won't lend on a defective title.

It's not a great situation to be in. You're better off to bite the bullet and sell then buy a new property with the features you want. At least then you aren't paying for improvements which reduce the value of your property.

Handsomedan

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#3085865 7-Jun-2023 10:20

MattKPJ:

Hi there, Re-opening this discussion.

Has anyone had any issue with insurance for structures not listed on the Flats Plan?

This is currently hypothetical - We'd like to built a deck & a car port - All with other cross leasee's written permission.

We don't however want to spend 20k adding it to the Flats Plan. Our lawyer is saying that those structures cannot be insured.

Anyone come across this type of situation?

25 years ago, we had a previous home that was also crosslease.

We managed to build a deck without having to get things signed off as such, due to it not technically being attached to the building, therefore not changing the footprint - it was considered a temporary structure, as it was able to be removed without affecting the house itself.

Not sure how much things have changed since then, but driving past the place, the deck is still there and it's had many owners since.

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Paul1977

4785 posts

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#3086068 7-Jun-2023 13:20

Our last house was cross-lease. We added a deck and a carport (neither of which needed consent), and I didn't even consider they might not be covered by insurance. We didn't even realise we were meant to get the other cross leasees approval, so we just did it (fortunately the only comment we got from the neighbour was that it looked good!).

Since they didn't require consent these would never have been added to any council plans, but it didn't cause any issues when we sold.

I obviously did the whole thing wrong, but it didn't cause me any issues (I don't remember if we got the other leasees to sign something before we sold about the deck and carport). I'd be asking your insurance company what they will and won't insure.

EDIT:

https://www.raineycollins.co.nz/your-resources/articles/what-is-a-defective-cross-lease-title-still-causing-problems

The below reads to me like a deck and carport don't need to go on the title as long as the following conditions are met:

If the following applies, remedy can be by way of written consent by ALL flat owners in the cross-lease development:

If the improvement is NOT ATTACHED to the “flat” or dwelling and IS on the exclusive use area for that “flat”. For example, a garage or granny flat. This structure can be either enclosed or not.
If the improvement is ATTACHED to the “flat” or dwelling and IS on the exclusive use area for that “flat” but is NOT ENCLOSED. For example, a carport.

Such written consent should be signed and dated, and should include the names of all registered proprietors in the cross-lease development, the title and lease numbers and an explanation of exactly what is being consented to.

It is worth noting that such consent can be relied on even after a change in registered proprietors and should be passed on to new owners as part of the sale disclosures.

CokemonZ

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#3086077 7-Jun-2023 13:51

Had two crossleases in the past - one which sounds exactly like yours, essentially a separate house and yard, but a shared driveway.

We built a deck (with permission of the other 3) but they wouldn't give us permission to enclose the carport. Bit frustrating, and somewhat unreasonable as it wouldn't have impacted anyone. In the end we put up that corrugated plastic stuff, so we could easily take it down if it was an issue.

Point being - neighbours can have an impact, though most modern neighbours won't likely care - it'll be the people that have lived there for 30 years or landlords who by default say no to everything.

MattKPJ

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#3090118 14-Jun-2023 20:12

Thanks everyone.

@Paul1977 - An interesting read. I wonder where this information comes from? Be interesting to see it in it's original council/legislation form?

Has anyone had any experience with converting cross lease to fee simple? I imagine it's generally a huge can of worms. Interested to hear peoples experiences.

Cheers

Handle9

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#3090122 14-Jun-2023 20:21

MattKPJ:

Thanks everyone.

@Paul1977 - An interesting read. I wonder where this information comes from? Be interesting to see it in it's original council/legislation form?

Has anyone had any experience with converting cross lease to fee simple? I imagine it's generally a huge can of worms. Interested to hear peoples experiences.

Cheers

MJ

It depends hugely on your situation. In some cases (2 properties, separated services, complies with current planning rules etc) it can be relatively straightforward and cost around $25k.

If you have lots of properties on the title and/or they've used a cross lease to get around things like height to boundary rules it's almost impossible - we had this one and gave up.

TeaLeaf

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#3090851 16-Jun-2023 20:27

Some say converting to freehold title will add a bit, but often with pipes going everywhere it can end up costing money.

Make sure you meet the neighbours that your title is with and that should any common infrstructure be required it can be settled over a coffee or beerfridge. Is it just you two, or is there a second set of cross lease properties? Quite common on ~half acre blocks chopped up.

The only thing I will say is make sure the Neighbour is the sort you will get along with should something mutual be required....

aside from that there is no difference to a block that is freehold.

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